Abercrombie & Fitch 2011 Annual Report Download - page 92

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ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15. LONG-TERM DEBT
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 is available. This
Amended and Restated Credit Agreement serves to amend and restate in its entirety the syndicated
unsecured 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 stated in the
Amended and Restated Credit Agreement, the primary purposes of the agreement are for trade and
stand-by letters of credit in the ordinary course of business, as well as to fund working capital, capital
expenditures, acquisitions and investments, and other general corporate purposes.
The Amended and Restated Credit Agreement has several borrowing options, including interest rates
that are based on: (i) a defined Base Rate, plus a margin based on the Leverage Ratio, payable quarterly;
(ii) an Adjusted Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) plus a margin
based on the Leverage Ratio, payable at the end of the applicable interest period for the borrowing and, for
interest periods in excess of three months, on the date that is three months after the commencement of the
interest period; or (iii) an Adjusted Foreign Currency Rate (as defined in the Amended and Restated Credit
Agreement) plus a margin based on the Leverage Ratio, payable at the end of the applicable interest period
for the borrowing and, for interest periods in excess of three months, on the date that is three months after
the commencement of the interest period. The Base Rate represents a rate per annum equal to the highest of
(a) PNC Bank, National Association’s then publicly announced prime rate, (b) the Federal Funds Effective
Rate (as defined in the Amended and Restated Credit Agreement) as then in effect plus
1
⁄
2
of 1.0% or
(c) the Daily Adjusted Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) as then
in effect plus 1.0%.
The facility fees payable under the Amended and Restated Credit Agreement are based on the
Company’s Leverage Ratio (i.e., the ratio, on a consolidated basis, of (a) the sum of total debt (excluding
specified permitted foreign bank guarantees and trade letters of credit) plus 600% of forward minimum rent
commitments to (b) consolidated earnings, as adjusted, before interest, taxes, depreciation, amortization
and rent (“Consolidated EBITDAR”) for the trailing four-consecutive-fiscal-quarter periods. The facility
fees accrue at a rate of 0.125% to 0.30% per annum based on the Leverage Ratio for the most recent
determination date. The Amended and Restated Credit Agreement requires that the Leverage Ratio not be
greater than 3.75 to 1.00 at the end of each testing period. The Amended and Restated Credit Agreement
also requires that the “Coverage Ratio” for A&F and its subsidiaries on a consolidated basis of
(i) Consolidated EBITDAR for the trailing four-consecutive-fiscal-quarter period to (ii) the sum of, without
duplication, (x) net interest expense for such period, (y) scheduled payments of long-term debt due within
twelve months of the date of determination and (z) the sum of minimum rent and contingent store rent, not
be less than 2.00 to 1.00 at the end of each testing period. The Company was in compliance with the
applicable ratio requirements and other covenants at January 28, 2012. Interest rates on borrowings under
the Amended and Restated Credit Agreement are generally based upon market rates plus a margin based on
the applicable Leverage Ratio.
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