Famous Footwear 2013 Annual Report Download - page 42

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40 2013 BROWN SHOE COMPANY, INC. FORM 10-K
In addition, we are exposed to translation risk because certain of our foreign operations utilize the local currency as their
functional currency and those financial results must be translated into United States dollars. As currency exchange rates
fluctuate, translation of our financial statements of foreign businesses into United States dollars aects the comparability
of financial results between years.
INTEREST RATES
Our financing arrangements include $7.0 million of outstanding variable rate debt under the Credit Agreement at
February 1, 2014. We also have $200.0 million in principal value of Senior Notes, which bear interest at a fixed rate
of 7.125%. Changes in interest rates impact fixed and variable rate debt dierently. For fixed rate debt, a change in
interest rates will only impact the fair value of the debt, whereas a change in the interest rates on variable rate debt
will impact interest expense and cash flows.
At February 1, 2014, the fair value of our long-term debt is estimated at approximately $210.5 million based upon
the pricing of our Senior Notes at that time. Market risk is viewed as the potential change in fair value of our debt
resulting from a hypothetical 10% adverse change in interest rates and would be $5.4 million for our long-term debt
at February 1, 2014.
Information appearing under the caption Risk Management and Derivatives in Note 12 and Fair Value Measurements in
Note 13 to the consolidated financial statements is incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as
such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of
our management, including our principal executive ocer and principal financial ocer, we conducted an evaluation of
the eectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework).
Based on our evaluation, our principal executive ocer and principal financial ocer have concluded that the Company’s
internal control over financial reporting was eective as of February 1, 2014. The eectiveness of our internal control
over financial reporting as of February 1, 2014, has been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in its report which is included herein.