Rue 21 2010 Annual Report Download - page 55

rue21, inc. and subsidiary
Notes to Consolidated Financial Statements
For the Year Ended January 29, 2011
(Dollars in thousands, unless otherwise indicated)
Note 1 — Business and Summary of Significant Accounting Policies
Organization
rue21, inc. (the Company or rue21) is a specialty retailer of junior and young men’s apparel and accessories
with 638, 535, and 449 stores as of January 29, 2011, January 30, 2010 and January 31, 2009 respectively, in various
strip centers, regional malls and outlet centers throughout the United States. Sales are generally transacted for cash,
checks and through the acceptance of third-party credit and debit cards.
On November 13, 2009, the Company completed an initial public offering of 7,780,252 shares of common
stock at a price to the public of $19.00 per share, of which 1,650,000 shares were sold by the Company, 6,130,252
were sold by the selling shareholders (including 913,590 by members of the Company’s management). Upon
completion of the offering, the Company received proceeds of approximately $29,156, net of underwriters’
discounts and commissions. On February 26, 2010, the Company completed an offering of 6,961,958 shares of
common stock, including 908,081 shares of common stock subsequently sold pursuant to the underwriters’ over-
allotment option, at a price of $28.50 per share, all of which were sold by funds advised by Apax Partners L.P., the
Company’s principal stockholder and certain members of the Company’s management. The Company received no
proceeds from the offering and incurred approximately $0.6 million in expense related to the offering.
In conjunction with the initial public offering of common stock, the Company was reincorporated in Delaware.
The Company’s authorized capital stock consists of 200,000,000 shares of common stock, par value $0.001 per
share, and 10,000,000 shares of preferred stock, par value $0.001 per share. The consolidated financial statements
do not reflect the reclassification of the common stock, $0.004 par value to common stock, $0.001 par value, other
than the related adjustment to par value and the increase in the number of authorized shares.
Principles of Consolidation
The consolidated financial statements include all the accounts of the Company and its wholly owned
subsidiary “r services, llc”. All intercompany transactions and balances have been eliminated in consolidation.
At January 29, 2011, the Company operated as one reporting segment.
Fiscal Year
The Company’s fiscal year is 52 or 53 weeks ending on the Saturday nearest to January 31 of the following
year. These consolidated financial statements were prepared for the 52 weeks ended January 29, 2011, “Fiscal Year
2010”. As used herein, “Fiscal Year 2009” and “Fiscal Year 2008” refer to the 52 week period ended January 30,
2010 and January 31, 2009, respectively.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions. These estimates and assumptions 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 net sales and expenses during the reporting period. Actual results
could differ from those estimates. On an ongoing basis, management reviews its estimates based on currently
available information. Changes in facts and circumstances may result in revised estimates.
Seasonality
Our business is seasonal and historically we have realized a higher portion of our net sales, net income and
operating cash flows in the second through the fourth fiscal quarters, attributable to the impact of the back-to-school
and holiday selling seasons. As a result, our working capital requirements fluctuate during the year, increasing in
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