American Eagle Outfitters 2011 Annual Report Download - page 44

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Table of Contents
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 ongoing basis, our
management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.
Recent Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-05, Presentation of
Comprehensive Income ("ASU 2011-05"). ASU 2011-05 requires that all non-owner changes in stockholders' equity be presented either in a single continuous
statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net
income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other
comprehensive income and the total of comprehensive income. In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for
Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income ("ASU 2011-12"). ASU 2011-12 defers the
requirement to present reclassifications out of accumulated other comprehensive income as required by ASU 2011-05. For public entities, the amendments in
ASU 2011-05 and ASU 2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and are to be
applied retrospectively, with early adoption permitted. The Company is currently evaluating the impact of ASU 2011-05 and ASU 2011-12 on its financial
statement presentation of comprehensive income and will adopt in Fiscal 2012.
In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment ("ASU 2011-08"). ASU 2011-08 permits an entity to first assess
qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for
determining whether it is necessary to perform the two-step goodwill impairment test. ASU 2011-08 applies to all companies that have goodwill reported in
their financial statements. The provisions of ASU 2011-08 are effective for annual and interim goodwill impairment tests performed for fiscal years beginning
after December 15, 2011. The Company will adopt ASU 2011-08 in Fiscal 2012. As a result of the adoption, the Company does not expect an impact to its
Consolidated Financial Statements.
Foreign Currency Translation
The Canadian dollar is the functional currency for the Canadian business. In accordance with Accounting Standards Codification ("ASC") 830, Foreign
Currency Matters, assets and liabilities denominated in foreign currencies were translated into U.S. dollars (the reporting currency) at the exchange rate
prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into U.S. dollars at the monthly average
exchange rate for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas, related translation
adjustments are reported as an element of other comprehensive income in accordance with ASC 220, Comprehensive Income (refer to Note 11 to the
Consolidated Financial Statements).
Cash and Cash Equivalents, Short-term Investments and Long-term Investments
Cash includes cash equivalents. The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be
cash equivalents.
As of January 28, 2012, short-term investments include treasury bills purchased with a maturity of greater than three months, but less than one year. It
also includes auction rate securities ("ARS") classified as available for sale that the Company expects to be redeemed at par within 12 months.
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