Abercrombie & Fitch 2011 Annual Report Download - page 26

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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 Amended and Restated Credit Agreement (the “Amended and Restated Credit
Agreement”) and our Term Loan Agreement include financial and other covenants that impose
restrictions on our financial and business operations.
Our Amended and Restated Credit Agreement expires on July 27, 2016, and market conditions could
potentially impact the size and terms of a replacement facility. The commitment of the lenders to make
loans under the Term Loan Agreement expires on February 22, 2013 and the Term Loan Agreement has a
maturity date of February 23, 2017.
Both our Amended and Restated Credit Agreement and our Term Loan Agreement contain 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 Amended and Restated Credit Agreement and/or the Term Loan Agreement.
The inability to obtain credit on commercially reasonable terms, or a default under the current
Amended and Restated Credit Agreement and/or the Term Loan 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.
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