American Eagle Outfitters 2009 Annual Report Download - page 20

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis of financial condition and results of operations are based upon our
Consolidated Financial Statements and should be read in conjunction with those statements and notes thereto.
This report contains various “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent our
expectations or beliefs concerning future events, including the following:
• the planned opening of 14 new American Eagle stores, 20 new aerie stores, and five new 77kids stores in the
United States and Canada during Fiscal 2010;
• the selection of approximately 20 American Eagle stores in the United States and Canada for remodeling
during Fiscal 2010;
• the planned closure of 15 to 25 American Eagle stores in the United States and Canada during Fiscal 2010;
• the planned opening of two new franchised American Eagle stores in the Middle East during Fiscal 2010;
• the planned closure of all 28 MARTIN+OSA stores and cessation of all online and corporate operations for
the brand in Fiscal 2010;
• the success of aerie by American Eagle and aerie.com;
• the success of 77kids by american eagle and 77kids.com;
• the expected payment of a dividend in future periods;
• the possibility of growth through acquisitions, internally developing additional new brands, and/or engaging
in future franchise agreements;
• the possibility that we may be required to take additional temporary impairment charges or net impairment
losses recognized in earnings relating to our investment securities;
• the possibility that the amounts drawn on our demand borrowing agreements will be called for repayment
and that the facilities may not be available for future borrowings; and
• the possibility that we may be required to take additional store impairment charges related to under-
performing stores.
We caution that these forward-looking statements, and those described elsewhere in this report, involve
material risks and uncertainties and are subject to change based on factors beyond our control, as discussed within
Part I, Item 1A of this Form 10-K. Accordingly, our future performance and financial results may differ materially
from those expressed or implied in any such forward-looking statement.
Critical Accounting Policies
Our Consolidated Financial Statements are prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”), which require us to make estimates and assumptions that may affect the
reported financial condition and results of operations should actual results differ from these estimates. We base our
estimates and assumptions on the best available information and believe them to be reasonable for the circum-
stances. We believe that of our significant accounting policies, the following involve a higher degree of judgment
and complexity. Refer to Note 2 to the Consolidated Financial Statements for a complete discussion of our
significant accounting policies. Management has reviewed these critical accounting policies and estimates with the
Audit Committee of our Board.
Revenue Recognition. We record revenue for store sales upon the purchase of merchandise by customers.
Our e-commerce operation records revenue upon the estimated customer receipt date of the merchandise. Revenue
is not recorded on the purchase of gift cards. A current liability is recorded upon purchase, and revenue is
recognized when the gift card is redeemed for merchandise.
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