ABERCROMBIE FITCH CO DE

5. FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized based on a three-level hierarchy. The three levels of inputs to measure fair value are as follows:

•Level 1—inputs are unadjusted quoted prices for identical assets or liabilities that are available in active markets that the Company can access at the measurement date.

•Level 2—inputs are other than quoted market prices included within Level 1 that are observable for assets or liabilities, directly or indirectly.

•Level 3—inputs to the valuation methodology are unobservable.

The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The following table provides the three levels of the hierarchy and the distribution of the Company’s assets measured at fair value on a recurring basis, as of August 3, 2024 and February 3, 2024:

(1)Level 1 assets consisted of investments in money market funds and U.S. treasury bills. Level 2 assets consisted of time deposits with original maturities of less than three months.

(2)Level 2 assets consisted of time deposits with original maturities greater than three months, but less than one year.

(3)Level 2 assets and liabilities consisted primarily of foreign currency exchange forward contracts.

(4)Level 1 assets consisted of investments in money market funds. Level 2 assets consisted of trust-owned life insurance policies.

The Company’s Level 2 assets and liabilities consisted of:

•Trust-owned life insurance policies, which were valued using the cash surrender value of the life insurance policies;

•Time deposits with original maturities of three months or less were recorded at cost, approximating fair value, due to the short-term nature of these investments;

•Time deposits with original maturities greater than three months were recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets; and

•Derivative instruments, primarily foreign currency exchange forward contracts, which were valued using quoted market prices of the same or similar instruments, adjusted for counterparty risk.

Fair value of long-term borrowings

The Company’s borrowings were carried at historical cost in the accompanying Condensed Consolidated Balance Sheet as of February 3, 2024. On July 15, 2024 (the “Redemption Date”), Abercrombie & Fitch Management Co. (“A&F Management”) redeemed all of its outstanding senior secured notes at par value, which had a fixed 8.75% interest rate and were scheduled to mature on July 15, 2025 (the “Senior Secured Notes”). As of the Redemption Date, the Senior Secured Notes were no longer deemed outstanding.