American Eagle Outfitters 2006 Annual Report Download - page 41

receipt of the remaining $0.2 million, the Company repaid the outstanding principal balance of the loan in full
and terminated the loan agreement. Anominal amount of interest was paid under thePIDA loan during Fiscal
2006.
Unsecured Demand Lending Arrangement
During Fiscal 2006, the Company received atemporary increase in the amount available for lettersofcredit
under its unsecured demand lending agreement. This increase will be usedtosupport commitmentsfor
merchandise inventory purchases and will remain in place until terminated by the Company. As aresult of the
increase, the Company has a$130.0 million unsecured letter of creditfacility for letters of creditand a$40.0
million unsecured demand line of creditthat can be used for letters of creditand/or direct borrowing, totaling
$170.0 million. The interest rate is at the lender’s prime lending rate (8.25% at February 3, 2007) or at LIBOR
plus anegotiated margin rate. Because there were no direct borrowings during any of the past three years, there
were no amounts paid for interest on this facility. At February 3, 2007, letters of creditinthe amount of $70.5
million were outstanding on this facility, leaving aremaining available balance on the line of $99.5 million.
Uncommitted Letter of Credit Facility
During Fiscal 2006, the Company also received atemporary increase in the amount available for lettersofcredit
under its uncommitted letter of creditfacility with aseparate financial institution. This increase will be usedto
support commitmentsfor merchandise inventory purchases and will remain in place until terminated by the
Company. As aresult of the increase, theCompany has an uncommitted letter of creditfacility for $100.0
million. At February 3, 2007, letters of creditin the amount of $48.3 million were outstanding on this facility,
leaving aremaining available balance on the line of $51.7 million.
Non-revolving Term Facility
During Fiscal 2004, the Company retired its $29.1 million non-revolving term facility (the “term facility”) for
$16.2 million. The term facility required annual payments of $4.8 million, with interest at the one-month
Bankers’ Acceptance Rate plus 140 basis points, and was originally scheduled to mature in December 2007.
Interest paid under the term facility was $1.2 million for Fiscal 2004.
PAGE 52 ANNUAL REPORT 2006
7. Other Comprehensive Income
The accumulatedbalances of other comprehensive income includedaspart of the ConsolidatedStatements of
Stockholders’ Equity follow:
(In thousands)
Before
Tax
Amount
Tax
(Expense)
Benefit
Other
Comprehensive
Income
Balance at January 31, 2004 $ 6,078 $(2,389) $ 3,689
Unrealized loss on investments (372) 145 (227)
Reclassificationadjustmentforgain realized in net income related to sale of
available-for-sale securities (6) 2(4)
Foreign currency translation adjustment (1) 4,581 2,734 7,315
Reclassificationadjustmentforloss realized in net income related to the
disposition of Bluenotes 2,467 -2,467
Unrealized derivative gains on cash flow hedge 116 (45) 71
Reclassificationadjustmentforlosses realized in net income related to
termination of the cash flow hedge 714 (277) 437
Balance at January 29, 2005 13,578 170 13,748
Unrealized loss on investments (1,072) 430 (642)
Reclassificationadjustmentforlosses realized in net income related to sale
of available-for-sale securities 159 (60) 99
Foreign currency translation adjustment 8,823 - 8,823
Balance at January 28, 2006 21,488 540 22,028
Unrealized loss on investments (276) 85 (191)
Reclassificationadjustmentforlosses realized in net income related to sale
of available-for-sale securities 578 (222) 356
Reclassificationadjustmentforgain realized in net income related to the
transfer of investment securities from available-for-sale classification to
trading classification (287) 110 (177)
Foreign currency translation adjustment (1,180) -(1,180)
Reclassificationadjustmentforloss realized in net income related to the
disposition of National Logistics Services 878 -878
Balance at February 3, 2007 $21,201 $513$21,714
(1) During Fiscal 2004, the Company reclassified the income tax provision related to its foreign currency
translation gains, as it is the Company’s intention to utilize the earnings of its foreign subsidiaries in the
foreign operationsforanindefinite period of time. See Note 10 of the Consolidated Financial Statements for
additional information.
The components of accumulated other comprehensive income were as follows:
For the Years Ended
(In thousands)
February 3,
2007
January 28,
2006
Net unrealized losses on available-for-sale securities, net of tax $(811) $ (799)
Foreign currency translation adjustment 22,525 22,827
Accumulated other comprehensive income $21,714 $22,028
AMERICAN EAGLE OUTFITTERS PAGE 53