Abercrombie & Fitch 2010 Annual Report Download - page 26

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Table of Contents
laws and regulations that we are subject to, as well as their scope and reach, increases significantly and heightens our risks. If these
laws and regulations were to change, or were violated by our management, employees, suppliers, vendors or other parties with whom
we do business, the costs of certain merchandise could increase, or we could experience delays in shipments of our merchandise, be
subject to fines or penalties, or suffer reputational harm, which could reduce demand for our merchandise and adversely affect our
business and results of operations. Failure to protect personally identifiable information of our customers or associates could subject
us to considerable reputational harm as well as significant fines, penalties and sanctions both domestically and abroad. In addition,
changes in federal, state and international minimum wage laws and other laws relating to employee benefits could cause us to incur
additional wage and benefits costs, which could hurt our profitability. We are also subject to U.S. securities laws and regulations as
well as stock exchange rules which could subject us to enforcement actions, de-listing and adverse legal sanctions for non-compliance.
Changes in the Regulatory or Compliance Landscape Could Adversely Affect Our Business and Results of Operations.
Laws and regulations at the state, federal and international levels frequently change, and the ultimate cost of compliance cannot
be precisely estimated. In addition, we cannot predict the impact that may result from changes in the regulatory landscape. Any
changes in regulations, the imposition of additional regulations, or the enactment of any new or more stringent legislation including
those related to health care, taxes, transportation and logistics, privacy, environmental issues, trade, product safety or employment and
labor, could adversely affect our business and results of operations.
Our Unsecured Credit Agreement Includes Financial and Other Covenants That Impose Restrictions on Our Financial and
Business Operations.
Our unsecured credit agreement expires on April 12, 2013 and market conditions could potentially impact the size and terms of a
replacement facility.
In addition, our unsecured credit agreement contains financial covenants that require us to maintain a minimum coverage ratio
and a maximum leverage ratio. If we fail to comply with the covenants and are unable to obtain a waiver or amendment, an event of
default would result, and the lenders could declare outstanding borrowings immediately due and payable. If that should occur, we
cannot guarantee that we would have sufficient liquidity at that time to repay or refinance borrowings under the unsecured credit
agreement.
The inability to obtain credit on commercially reasonable terms, or a default under the current unsecured credit agreement, could
adversely impact our liquidity and results of operations.
Our Operations may be Affected by Regulatory Changes Related to Climate Change and Greenhouse Gas Emissions.
Our operations may be affected by regulatory changes related to climate change and greenhouse gas emissions. We are uncertain
how the U.S. and international economies will be affected by potential legislation and public reactions. As a result, the effect this
could have on our operations is presently unknown.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
23