Abercrombie & Fitch 2011 Annual Report Download - page 40

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The Company believes that the non-GAAP financial measures are useful to investors as they provide
the ability to measure the Company’s operating performance and compare it against that of prior periods
without reference to the Consolidated Statements of Operations and Comprehensive Income impact of
non-cash, store-related asset impairment charges, charges related to store closures and lease exits, and other
charges associated with legal settlements during the fiscal year and a change in intent regarding the
Company’s ARS. These non-GAAP financial measures should not be used as alternatives to net income per
diluted share or as indicators of the ongoing operating performance of the Company and are also not
intended to supersede or replace the Company’s GAAP financial measures. The table below reconciles the
GAAP financial measures to the non-GAAP financial measures discussed above.
Fifty-Two Weeks Ended
January 28, 2012 January 29, 2011
Net income per diluted share from continuing operations on
a GAAP basis ................................... $1.42 $1.67
Plus: Asset impairment charges(1) .................... 0.49 0.34
Plus: Asset write-downs(2) .......................... 0.10 —
Plus: Store closure and lease exit charges(3) ............ 0.13 0.03
Plus: Legal charges(4) ............................. 0.07 —
Plus: ARS charges(5) .............................. 0.09 —
Net income per diluted share from continuing operations on
a non-GAAP basis ............................... $2.30 $2.05
Plus: Net income from discontinued operations ........ 0.01 —
Net income per diluted share on a non-GAAP basis ....... $2.31 $2.05
(1) The store-related asset impairment charges relate to stores whose asset carrying value exceeded their
fair value. For the fifty-two week period ended January 28, 2012, the charge was associated with
14 Abercrombie & Fitch, 21 abercrombie kids, 42 Hollister and two Gilly Hicks stores. For the
fifty-two week period ended January 29, 2011, the charge was associated with two Abercrombie &
Fitch, two abercrombie kids, nine Hollister and 13 Gilly Hicks stores.
(2) For the fifty-two week period ended January 28, 2012, the charge associated with the asset write-downs
was related to the reconfiguration of three flagship stores and a small write-off related to a cancelled
flagship project.
(3) For the fifty-two week periods ended January 28, 2012 and January 29, 2011, the charges for store
closures and lease exits were associated with lease buyouts and other lease obligations related to stores
closing prior to natural lease expirations, other lease terminations, and other incidental costs associated
with store closures.
(4) For the fifty-two week period ended January 28, 2012, the charge was related to legal settlements
during the fourth quarter.
(5) For the fifty-two week period ended January 28, 2012, the charge associated with the ARS was related
to a change in intent with regard to the Company’s auction rate securities portfolio, which resulted in
recognition of an other-than-temporary impairment.
Net cash provided by operating activities, the Company’s primary source of liquidity, was
$365.2 million for Fiscal 2011. This source of cash was primarily driven by results from operations,
adjusted for non-cash items, an increase in accounts payable and accrued expenses partially offset by
increases in inventory. The Company used $318.6 million of cash for capital expenditures. The Company
37