American Eagle Outfitters 2005 Annual Report Download - page 56

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PAGE 32 AMERICAN EAGLE OUTFITTERS
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JANUARY 28, 2006
1. Business Operations
The Company designs, markets and sells its own brand of laidback, current clothing targeting 15 to 25 year-olds in its
United States and Canadian retail stores. We also operate via our e-commerce operation, ae.com. The American Eagle
brand provides high quality merchandise at affordable prices. American Eagle's collection includes standards like jeans
and graphic Ts as well as essentials like accessories, outerwear, footwear, basics and swimwear. The Company operates
retail stores located primarily in regional enclosed shopping malls in the United States and Canada.
The following table sets forth the approximate consolidated percentage of net sales attributable to each merchandise
group for each of the periods indicated:
For the Years Ended
January 28,
2006
January 29,
2005
January 31,
2004
Men’s apparel and accessories 35% 34% 35%
Women’s apparel and accessories 60% 61% 60%
Footwear – men’s and women’s 5% 5% 5%
Total 100% 100% 100%
2. Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All
intercompany transactions and balances have been eliminated in consolidation. At January 28, 2006, the Company
operated in one reportable segment, American Eagle.
In December 2004, the Company completed the disposition of Bluenotes, which refers to the Bluenotes/Thriftys
specialty apparel chain that we operated in Canada. As a result, the Company’s Consolidated Statements of Operations
and Consolidated Statements of Cash Flows reflect Bluenotes’ results of operations as discontinued operations for
all periods presented. Amounts in the Company’s Consolidated Balance Sheets have not been reclassified to reflect
Bluenotes as discontinued operations. Prior to the disposition, Bluenotes was presented as a separate reportable segment.
Additional information regarding the disposition is contained in Note 9 of the Consolidated Financial Statements.
Fiscal Year
Our financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2005,”
“Fiscal 2004” and “Fiscal 2003” refer to the fifty-two week periods ended January 28, 2006, January 29, 2005 and
January 31, 2004, respectively. “Fiscal 2006” refers to the fifty-three week period ending February 3, 2007.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires our 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. On an