Rue 21 2010 Annual Report Download - page 48

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In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, “Improving Disclosures
about Fair Value Measurements” (ASU 2010-6). ASU 2010-6 amends the FASB’s authoritative guidance related to
fair value measurements and disclosures to require additional disclosures related to transfers between levels in the
hierarchy of fair value measurements. ASU 2010-6 is effective for interim and annual fiscal years beginning after
December 15, 2009. The standard does not change how fair values are measured. The Company has adopted the
guidance without any impact on the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Our principal market risk relates to interest rate sensitivity, which is the risk that future changes in interest rates
will reduce our net income or net assets. Our senior secured credit facility accrues interest at the Bank of America
N.A. base rate, defined at our option as the prime rate or the Eurodollar rate plus applicable margin, which ranges
from 1.25% to 3.00% set quarterly dependent upon average net availability under our senior secured credit facility
during the previous quarter. Because our senior secured credit facility bears interest at a variable rate, we will be
exposed to market risks relating to changes in interest rates, if we have a meaningful outstanding balance. As of
January 29, 2011, we had no outstanding borrowings under our revolving facility, nor did we have any borrowings
during fiscal year 2010. We had outstanding balances under our senior secured credit facility during fiscal year 2009
prior to our initial public offering, but we do not believe we are significantly exposed to changes in interest rate risk.
We currently do not engage in any interest rate hedging activity and currently have no intention to do so in the
foreseeable future.
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