American Eagle Outfitters 2011 Annual Report Download - page 14

Table of Contents
Failure to comply with regulatory requirements
As a public company, we are subject to numerous regulatory requirements. Our policies, procedures and internal controls are designed to comply with
all applicable laws and regulations, including those imposed by the Sarbanes-Oxley Act of 2002, the SEC and the NYSE. Failure to comply with such laws
and regulations could have a material adverse effect on our reputation, financial condition and on the market price of our common stock.
Our ability to obtain and/or maintain our credit facilities
We believe that we have sufficient cash flows from operating activities to meet our operating requirements. In addition, the banks participating in our
various credit facilities are currently rated as investment grade, and all of the amounts under the credit facilities are currently available to us at the discretion
of the respective financial institutions. We draw on our credit facilities to increase our cash position to add financial flexibility. Although we expect to
continue to generate positive cash flow despite the current economy, there can be no assurance that we will be able to successfully generate positive cash flow
in the future. Continued negative trends in the credit markets and/or continued financial institution failures could lead to lowered credit availability as well as
difficulty in obtaining financing. In the event of limitations on our access to credit facilities, our liquidity, continued growth and results of operations could be
adversely affected.
Our efforts to expand internationally
We have entered into franchise agreements with multiple franchisees to open and operate stores throughout the Middle East, Northern Africa, Eastern
Europe, Hong Kong, China, Israel and Japan over the next several years. While the franchise arrangements do not involve a capital investment from us and
require minimal operational involvement, the effect of these arrangements on our business and results of operations is uncertain and will depend upon various
factors, including the demand for our products in new markets internationally. Furthermore, although we provide store operation training, literature and
support, to the extent that the franchisee does not operate its stores in a manner consistent with our requirements regarding our brand and customer experience
standards, the value of our brand could be negatively impacted. A failure to protect the value of our brand or any other adverse actions by a franchisee could
have an adverse effect on our results of operations and our reputation.
Other risk factors
Additionally, other factors could adversely affect our financial performance, including factors such as: our ability to successfully acquire and integrate
other businesses; any interruption of our key infrastructure systems; any disaster or casualty resulting in the interruption of service from our distribution
centers or in a large number of our stores; any interruption of our business related to an outbreak of a pandemic disease in a country where we source or
market our merchandise; changes in weather patterns; the effects of changes in current exchange rates and interest rates; and international and domestic acts of
terror.
The impact of any of the previously discussed factors, some of which are beyond our control, may cause our actual results to differ materially from
expected results in these statements and other forward-looking statements we may make from time-to-time.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
We own two buildings in urban Pittsburgh, Pennsylvania which house our corporate headquarters. These buildings total 186,000 square feet and
150,000 square feet, respectively. We lease one location near our headquarters, which is used primarily for store and corporate support services, totaling
approximately 51,000 square feet. This lease expires in 2024.
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