Abercrombie & Fitch 2013 Annual Report Download - page 75

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21. CONTINGENCIES
A&F is a defendant in lawsuits and other adversary proceedings arising in the ordinary course of business. Legal costs
incurred in connection with the resolution of claims and lawsuits are generally expensed as incurred, and the Company
establishes reserves for the outcome of litigation where it deems appropriate to do so under applicable accounting rules. The
Company’s assessment of the current exposure could change in the event of the discovery of additional facts with respect to
legal matters pending against the Company or determinations by judges, juries, administrative agencies or other finders of fact
that are not in accordance with the Company’s evaluation of claims. Actual liabilities may exceed the amounts reserved, and
there can be no assurance that final resolution of these matters will not have a material adverse effect on the Company’s
financial condition, results of operations or cash flows. The Company has established accruals for certain matters where losses
are deemed probable and reasonably estimable. There are other claims and legal proceedings pending against the Company for
which accruals have not been established.
22. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2011, Accounting Standards Codification 820-10, “Fair Value Measurements and Disclosures,” (“ASC 820-10”)
was amended to clarify certain disclosure requirements and improve consistency with international reporting standards. This
amendment is to be applied prospectively and became effective for the Company beginning January 29, 2012. The adoption did
not have a material effect on our consolidated financial statements.
Accounting Standards Codification Topic 220, “Comprehensive Income,” was amended in June 2011 to require entities to
present the total of comprehensive income, the components of net income, and the components of other comprehensive income
either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment
does not change the items that must be reported in other comprehensive income or when an item of other comprehensive
income must be reclassified to net income under current GAAP. This guidance became effective for the Company’s fiscal year
and interim periods beginning January 29, 2012. The adoption did not have a material effect on our consolidated financial
statements.
In February 2013, the FASB issued ASU 2013-02, which further amends Accounting Standards Codification Topic 220,
"Comprehensive Income." The ASU contains new requirements related to the presentation and disclosure of items that are
reclassified out of other comprehensive income. The new requirements will give financial statement users a more
comprehensive view of items that are reclassified out of other comprehensive income. ASU 2013-02 is effective for the
Company's fiscal year and interim periods beginning after December 15, 2012, and is to be applied prospectively. Since the
guidance relates only to presentation and disclosure of information, adoption is not expected to have a material effect on our
consolidated financial condition or results of operations.
23. PREFERRED STOCK PURCHASE RIGHTS
On July 16, 1998, A&F’s Board of Directors declared a dividend of one Series A Participating Cumulative Preferred
Stock Purchase Right (the “Rights”) for each outstanding share of Class A Common Stock, par value $0.01 per share (the
"Common Stock"), of A&F. The dividend was paid on July 28, 1998 to stockholders of record on that date. Shares of Common
Stock issued after July 28, 1998 and prior to May 25, 1999 were issued with one Right attached. A&F’s Board of Directors
declared a two-for-one stock split (the “Stock Split”) on the Common Stock, payable on June 15, 1999 to the holders of record
at the close of business on May 25, 1999. In connection with the Stock Split, the number of Rights associated with each share
of Common Stock outstanding as of the close of business on May 25, 1999, or issued or delivered after May 25, 1999 and prior
to the “Distribution Date” (as defined below), was proportionately adjusted from one Right to 0.50 Right. Each share of
Common Stock issued after May 25, 1999 and prior to the Distribution Date has been, and will be issued, with 0.50 Right
attached so that all shares of Common Stock outstanding prior to the Distribution Date will have 0.50 Right attached.
The Rights are initially attached to the shares of Common Stock. The Rights will separate from the Common Stock after
a Distribution Date occurs. The “Distribution Date” generally means the earlier of (i) the close of business on the 10th day after
the date (the “Share Acquisition Date”) of the first public announcement that a person or group (other than A&F or any of
A&F’s subsidiaries or any employee benefit plan of A&F or of any of A&F’s subsidiaries) has acquired beneficial ownership of
20% or more of A&F’s outstanding shares of Common Stock (an “Acquiring Person”), or (ii) the close of business on the 10th
business day (or such later date as A&F’s Board of Directors may designate before any person has become an Acquiring
Person) after the date of the commencement of a tender or exchange offer by any person which would, if consummated, result
in such person becoming an Acquiring Person. The Rights are not exercisable until the Distribution Date. After the Distribution
Table of Contents ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)