American Eagle Outfitters 2006 Annual Report Download - page 15

AMERICAN EAGLE OUTFITTERS, INC.
TABLE OF CONTENTS
Page
Number
PART I
Item 1. Business ................................................................. 1
Item 1A.RiskFactors .............................................................. 7
Item 1B.Unresolved Staff Comments ................................................. 10
Item 2. Properties ................................................................ 11
Item 3. Legal Proceedings ......................................................... 11
Item 4. Submission of Matters to aVote of Security Holders .............................. 11
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder MattersandIssuer
Purchases of Equity Securities ............................................. 12
Item 6. Selected Consolidated Financial Data .......................................... 14
Item 7. Management’s Discussion andAnalysis of Financial Condition and Results of
Operations ............................................................. 16
Item 7A.Quantitative and Qualitative DisclosuresAbout Market Risk ....................... 28
Item 8. Financial Statements and Supplementary Data ................................... 29
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ............................................................. 60
Item 9A.Controls and Procedures .................................................... 60
Item 9B.Other Information ......................................................... 62
PART III
Item 10. Directors, Executive Officers and Corporate Governance .......................... 62
Item 11. Executive Compensation .................................................... 62
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters...................................................... 62
Item 13. Certain Relationships and Related Transactions, and DirectorIndependence ........... 62
Item 14. Principal Accounting Fees and Services ........................................ 62
PART IV
Item 15. Exhibits, Financial Statement Schedules ........................................ 62
PART I
ITEM 1. BUSINESS.
General
American Eagle Outfitters, Inc., aDelaware corporation, is aleading retailer that operates under the American
EagleOutfitters®and MARTIN +OSATM brands.
American Eagle Outfitters designs, markets and sells its own brand of laidback, current clothing targeting 15 to
25 year-olds, providing high-quality merchandise at affordable prices. We opened our first American Eagle
Outfitters store in the UnitedStates in 1977 and expanded the brand into Canada in 2001. American Eagle®also
distributes merchandise via its e-commerce operation (“ae.com”) which offers additional sizes, colors and styles
of favoriteAE®merchandise and ships to 41 countries around the world. AE’s original collection includes
standards like jeans and graphic Ts, as wellas essentials like accessories, outerwear, footwear, basics and
swimwear under our American Eagle Outfitters, American Eagleand AE brand names. During Fiscal 2006,
American Eagle launched its new intimates sub-brand, aerieTM by American Eagle(“aerie”). The aerie collection
of dormwear and intimates includes bras,undies, camis, hoodies, robes, boxers and sweats for the AE girl.
We also introduced MARTIN +OSA,anew sportswear concept targeting 25 to 40 year-old women andmen, in
the fall of 2006. MARTIN +OSA carries apparel, accessories and footwear, using denim and sport inspiration to
design fun and sport back into sportswear.
As used in this report, allreferences to “we,” “our,” and the“Company” refer to American EagleOutfitters, Inc.
and its wholly-owned subsidiaries. “American EagleOutfitters,” “American Eagle,” “AE,” and the“AE Brand”
refer to our U.S. and Canadian American EagleOutfitters stores, including the aerie sub-brand and ae.com.
“MARTIN +OSA”refers to our new sportswear concept launched during Fiscal 2006. “Bluenotes” refers to the
Bluenotes/Thriftys specialty apparel chainwhich we operated in Canada prior to its disposition duringFiscal
2004.
As of February 3, 2007, we operated 906 American Eagle Outfitters stores in the UnitedStates and Canada
(including three aerie stand-alone stores) and five MARTIN+OSAstores.
In December 2004, we completed the disposition of Bluenotes to 6295215 Canada Inc. (the “Bluenotes
Purchaser”), aprivately held Canadian company. As aresult, our Consolidated Statements of Operations and
Consolidated Statements of Cash Flowsreflect Bluenotes’ results of operations as discontinuedoperations for all
periods presented. See Note 9 of the Consolidated Financial Statements for additional information regarding this
transaction.
In January 2006, we entered into an agreementtosell certain assets of National Logistics Services (“NLS”) to
6510965 Canada Inc. (the “NLS Purchaser”), aprivately held Canadian company. The sale of these assets was
completed in February 2006, at whichtime weexited our NLS operations. As aresult, our Consolidated Balance
Sheets reflect the assets subject totheagreement as held-for-sale for all periods presented. See Note 9 of the
Consolidated Financial Statements for additional information regarding this transaction.
Our financial year is a52/53 week year that ends on the Saturday nearest toJanuary 31. As used herein, “Fiscal
2008” and “Fiscal 2007” refer to the 52 week periods ending January 31, 2009 and February 2, 2008,
respectively. “Fiscal 2006” refers to the 53 week period ended February 3, 2007. “Fiscal 2005” and “Fiscal
2004” refer to the 52 week periods ended January 28, 2006 and January 29, 2005, respectively.
Information concerning our business segments and certain geographic information is contained in Note 2ofthe
Consolidated Financial Statements included in this Form 10-K and is incorporated herein by reference.
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