Abercrombie & Fitch 2011 Annual Report Download - page 49

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Net Income and Net Income per Diluted Share
Net income for Fiscal 2010 was $150.3 million compared to $0.3 million for Fiscal 2009. Net income
per diluted share for Fiscal 2010 was $1.67 compared to $0.00 for Fiscal 2009. Net income per diluted
share for Fiscal 2010 included store-related asset impairment charges of approximately $0.34 per diluted
share associated with 26 stores and store exit charges of approximately $0.03 per diluted share associated
with the closure of 64 domestic stores. Net income per diluted share for Fiscal 2009 included store-related
asset impairment charges of approximately $0.23 per diluted share associated with 99 stores and a loss per
diluted share from discontinued operations, net of tax, of approximately $0.89.
FINANCIAL CONDITION
Liquidity and Capital Resources
Historical Sources and Uses of Cash
Seasonality of Cash Flows
The retail business has two principal selling seasons: the Spring season which includes the first and
second fiscal quarters (“Spring”) and the Fall season which includes the third and fourth fiscal quarters
(“Fall”). As is typical in the apparel industry, the Company experiences its greatest sales activity during the
Fall season due to Back-to-School and Holiday sales periods, particularly in the U.S. The Company relies
on excess operating cash flows, which are largely generated in the Fall season, to fund operating expenses
throughout the year and to reinvest in the business to support future growth. The Company also has a credit
facility and the term loan agreement available as sources of additional funding.
Credit Agreements
On July 28, 2011, the Company entered into an unsecured amended and restated credit agreement (the
“Amended and Restated Credit Agreement”) under which up to $350 million will be available. The
Amended and Restated Credit Agreement serves to amend and restate, in its entirety, the credit agreement
dated April 15, 2008 as previously amended (the “Prior Credit Agreement”). The primary reasons for
entering into the Amended and Restated Credit Agreement were to extend the termination date from
April 12, 2013 to July 27, 2016 and to reduce fees and interest rates.
As of March 16, 2012, the Company had approximately $350 million available under the Amended
and Restated Credit Agreement. The Company had no borrowings outstanding under the Amended and
Restated Credit Agreement on January 28, 2012. The Company had $43.8 million outstanding under the
Prior Credit Agreement on January 29, 2011 denominated in Japanese Yen. The average interest rate was
2.4% for the fifty-two weeks ended January 28, 2012.
The Amended and Restated Credit Agreement has a Leverage Ratio and a Coverage Ratio. The
Company was in compliance with the applicable ratio requirements and other covenants at January 28,
2012.
The Amended and Restated Credit Agreement is described in Note 15, “Long-Term Debt,” of the
Notes to Consolidated Financial Statements.
Subsequent to year end, the Company entered into a $300 million Term Loan Agreement to take
advantage of the current lending market and to increase its flexibility and liquidity. Refer to Note 21,
“Subsequent Event,” of the Notes to Consolidated Financial Statements for further discussion.
Stand-by letters of credit outstanding on January 28, 2012 and January 29, 2011 were immaterial.
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