Rue 21 2010 Annual Report Download - page 68

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Note 9 — Commitments and Contingencies
From time to time, the Company is involved in litigation relating to claims arising out of the normal course of
business. As of the date hereof, the Company is involved in no litigation that the Company believes will have a
material adverse effect on its consolidated financial condition, results of operation, or liquidity.
Note 10 — Related Party Transactions
In May 2003, the Company entered into a letter agreement with Apax Partners, L.P. (Apax) as successor to
Saunders Karp & Megrue, LLC, relating to financial advisory services to be provided to the Company from time to
time. Under the letter agreement, the Company agreed to pay an annual fee of $250 to Apax and to reimburse Apax
for all reasonable out-of-pocket expenses incurred in connection with the letter agreement. In addition, the letter
agreement provided for customary indemnification provisions and terminates once Apax and its affiliates ben-
eficially own, collectively, less than 25% of the Company’s voting common stock. In November 2009, the letter
agreement with Apax was terminated and Apax received a termination fee of $1,500, which was recorded as a
component of selling, general and administrative expenses in the accompanying consolidated statements on
income. We also reimburse Apax for reasonable expenses incurred to attend board of director meetings. Amounts
paid to Apax totaled $35, $1,696 and $250 for fiscal years ended January 29, 2011, January 30, 2010 and
January 31, 2009, respectively.
At January 29, 2011, funds advised by Apax owned approximately 29% of the Company’s outstanding
common stock.
Note 11 — Selected Quarterly Financial Data (Unaudited)
The following table sets forth certain unaudited quarterly financial information (in thousands, except share and
per share amounts):
May 1,
2010
July 31,
2010
October 30,
2010
January 29,
2011
Thirteen Weeks Ended
Fiscal Year 2010
Net Sales .............................. $137,772 $142,950 $163,913 $190,093
Gross profit ............................ 52,231 54,544 60,053 68,003
Net income............................. 5,821 6,391 7,143 10,889
Basic income per common share ............. 0.24 0.26 0.29 0.45
Diluted income per common share ........... 0.23 0.26 0.29 0.44
Weighted average basic common shares
outstanding ........................... 24,248 24,277 24,310 24,335
Weighted average diluted common shares
outstanding ........................... 25,044 25,044 24,972 25,029
64
rue21, inc. and subsidiary
Notes to Consolidated Financial Statements — (continued)