Abercrombie & Fitch 2015 Annual Report Download - page 44

Table of Contents
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ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
Abercrombie & Fitch Co. (“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and
its subsidiaries are referred to as “Abercrombie & Fitch” or the “Company”), is a specialty retailer that operates stores and direct-
to-consumer operations. Through these channels, the Company sells a broad array of products, including: casual sportswear apparel,
including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters and outerwear; personal care
products; and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, and Hollister brands. The
Company operates stores in North America, Europe, Asia and the Middle East and direct-to-consumer operations in North America,
Europe and Asia that serve its customers throughout the world.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying Consolidated Financial Statements include historical financial statements of, and transactions applicable to,
the Company and reflect its assets, liabilities, results of operations and cash flows.
The Company has interests in a United Arab Emirates business venture and in a Kuwait business venture with Majid al Futtaim
Fashion L.L.C. ("MAF"), each of which meets the definition of a variable interest entity (“VIE”). The Company is deemed to be
the primary beneficiary of these VIEs; therefore, the Company has consolidated the operating results, assets and liabilities of these
VIEs, with MAF's portion of net income presented as net income attributable to noncontrolling interests ("NCI") in the Company's
Consolidated Statements of Operations and Comprehensive Income (Loss) and MAF's portion of equity presented as NCI in the
Consolidated Balance Sheets.
The fifty-two week periods ended January 30, 2016 and January 31, 2015 include the correction of certain immaterial errors relating
to prior periods. Amounts recorded out-of-period for the fifty-two week period ended January 30, 2016 included a reduction to
pre-tax income of $2.0 million and an unrelated tax benefit of $3.2 million. The effect of these corrections increased net income
attributable to A&F for the fifty-two weeks ended January 30, 2016 by $1.6 million. Amounts recorded out-of-period for the fifty-
two week period ended January 31, 2015 included a reduction to pre-tax income of $2.9 million and an unrelated tax benefit of
$0.4 million. The effect of these corrections decreased net income attributable to A&F for the fifty-two weeks ended January 31,
2015 by $2.2 million. The Company does not believe these corrections were material to any current or prior interim or annual
periods that were affected.
Fiscal year
The Company’s fiscal year ends on the Saturday closest to January 31. All references herein to “Fiscal 2015” represent the fifty-
two week fiscal year ended January 30, 2016; to “Fiscal 2014” represent the fifty-two week fiscal year ended January 31, 2015;
and to “Fiscal 2013” represent the fifty-two week fiscal year ended February 1, 2014. In addition, all references herein to “Fiscal
2016” represent the fifty-two week fiscal year that will end on January 28, 2017.
Use of estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting
period. Due to the inherent uncertainty involved with estimates, actual results may differ.
Cash and equivalents
Cash and equivalents include amounts on deposit with financial institutions, United States treasury bills, and other investments,
primarily held in money market accounts, with original maturities of less than three months.