Saks Fifth Avenue 2010 Annual Report Download - page 39

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company’s exposure to market risk primarily arises from changes in interest rates and the U.S. equity
and bond markets. The effects of changes in interest rates on earnings generally have been small relative to other
factors that also affect earnings, such as sales and operating margins. The Company seeks to manage exposure to
adverse interest rate changes through its normal operating and financing activities, and if appropriate, through the
use of derivative financial instruments. Such derivative instruments can be used as part of an overall risk
management program in order to manage the costs and risks associated with various financial exposures. The
Company does not enter into derivative instruments for trading purposes. The Company is exposed to interest
rate risk primarily through its borrowings under its revolving credit facility.
Based on the Company’s market risk sensitive instruments outstanding at January 29, 2011, the Company
has determined that there was no material market risk exposure to the Company’s consolidated financial position,
results of operations, or cash flows as of such date.
Item 8. Financial Statements and Supplementary Data.
Information called for by this item is set forth in the Company’s Consolidated Financial Statements and
supplementary data contained in this report beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company’s management, including the Chief
Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its
disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive
Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were
effective as of such date. The Company’s disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and
that such information is accumulated and communicated to management, including the Chief Executive Officer
and Chief Financial Officer, to allow timely decisions regarding required disclosure.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company 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(e). The Company’s
internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the Company have been detected. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions.
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