Abercrombie & Fitch 2013 Annual Report Download - page 37

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37
Future Cash Requirements and Sources of Cash
Over the next twelve months, the Company’s primary cash requirements will be to fund operating activities, including the
acquisition of inventory, and obligations related to compensation, rent, taxes and other operating activities, as well as capital
expenditures and paying of quarterly dividend payments to stockholders subject to the A&F Board of Directors’ approval. The
Company also has availability under the Amended and Restated Credit Agreement as a source of additional funding. In
addition, on February 21, 2013, the Company drew down the full $150 million available under the Term Loan Agreement to
take advantage of the current lending market and to increase its flexibility and liquidity. The Company expects to generate
positive free cash flow defined as operating cash flow less capital expenditures for Fiscal 2013.
Subject to suitable market conditions, A&F expects to continue to repurchase shares of its Common Stock. The Company
anticipates funding these cash requirements with available cash from operations and as deemed appropriate, the Amended and
Restated Credit Agreement and the Term Loan Agreement proceeds.
The Company is not dependent on dividends from its foreign subsidiaries to fund its U.S. operations or make
distributions to A&F's shareholders. Unremitted earnings from foreign subsidiaries, which are considered to be invested
indefinitely, would become subject to income tax if they were remitted as dividends or were lent to A&F or a U.S. affiliate.
Off-Balance Sheet Arrangements
As of February 2, 2013, the Company did not have any off-balance sheet arrangements.
Contractual Obligations
Payments due by period (thousands)
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Operating Lease Obligations (1) $ 2,635,519 $ 421,577 $ 758,711 $ 586,752 $ 868,479
Purchase Obligations 161,615 161,615 — — —
Other Obligations 41,584 18,634 9,493 1,110 12,347
Dividends ———— —
Totals $ 2,838,718 $ 601,826 $ 768,204 $ 587,862 $ 880,826
(1) Includes leasehold financing obligations of $71.7 million and related interest. Refer to Note 17, "LEASEHOLD FINANCING
OBLIGATIONS," of the Notes to Consolidated Financial Statements for additional reference.
Operating lease obligations consist primarily of non-cancelable future minimum lease commitments related to store
operating leases. See Note 12, “LEASED FACILITIES,” of the Notes to Consolidated Financial Statements included in “ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K, for further
discussion. Excluded from the obligations above are amounts related to portions of lease terms that are currently cancelable at
the Company's discretion. While included in the obligations above, in many instances, the Company has options to terminate
certain leases if stated sales volume levels are not met or the Company ceases operations in a given country. Operating lease
obligations do not include common area maintenance (“CAM”), insurance, marketing or tax payments for which the Company
is also obligated. Total expense related to CAM, insurance, marketing and taxes was $168.6 million in Fiscal 2012.
The purchase obligations category represents purchase orders for merchandise to be delivered during Fiscal 2013 and
commitments for fabric expected to be used during upcoming seasons.
Other obligations consist primarily of asset retirement obligations and information technology contracts.
Due to uncertainty as to the amounts and timing of future payments, the contractual obligations table above does not
include tax (including accrued interest and penalties) of $16.0 million related to uncertain tax positions at February 2, 2013.
Deferred taxes are also not included in the preceding table. For further discussion, see Note 15, “INCOME TAXES,” of the
Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA” of this Annual Report on Form 10-K.
The table above does not include estimated future retirement payments under the Chief Executive Officer Supplemental
Executive Retirement Plan (the “SERP”) for the Company’s Chairman and Chief Executive Officer with a present value of
$18.5 million at February 2, 2013. See Note 20, “RETIREMENT BENEFITS,” of the Notes to Consolidated Financial
Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on
Form 10-K and the description of the SERP to be included in the text under the caption “EXECUTIVE OFFICER
COMPENSATION” in A&F’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on June 20, 2013,
incorporated by reference in “ITEM 11. EXECUTIVE COMPENSATION” of this Annual Report on Form 10-K.
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