Abercrombie & Fitch 2010 Annual Report Download - page 70

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Table of Contents
ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
DESIGN AND DEVELOPMENT COSTS
Costs to design and develop the Company's merchandise are expensed as incurred and are reflected as a component of
"Marketing, General and Administrative Expense."
NET INCOME PER SHARE
Net income per basic share is computed based on the weighted-average number of outstanding shares of Class A Common Stock
("Common Stock"). Net income per diluted share includes the weighted-average effect of dilutive stock options, stock appreciation
rights and restricted stock units.
Weighted-Average Shares Outstanding and Anti-Dilutive Shares (in thousands):
2010 2009 2008
Shares of Common Stock issued 103,300 103,300 103,300
Treasury shares (15,239) (15,426) (16,484)
Weighted-Average — basic shares 88,061 87,874 86,816
Dilutive effect of stock options, stock appreciation rights and restricted stock units 1,790 735 2,475
Weighted-Average — diluted shares 89,851 88,609 89,291
Anti-Dilutive shares 6,019(1) 6,698(1) 3,746(1)
(1) Reflects the number of stock options, stock appreciation rights and restricted stock units outstanding, but excluded from the
computation of net income per diluted share because the impact would be anti-dilutive.
SHARE-BASED COMPENSATION
See Note 3, "Share-Based Compensation."
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Since actual results may differ from those estimates, the Company revises its estimates and
assumptions as new information becomes available.
3. SHARE-BASED COMPENSATION
Financial Statement Impact
The Company recognized share-based compensation expense of $40.6 million, $36.1 million and $42.0 million for the fifty-two
week periods ended January 29, 2011, January 30, 2010 and January 31, 2009, respectively. The Company also recognized
$14.7 million, $12.8 million and $15.4 million in tax benefits
67