Rue 21 2011 Annual Report Download - page 58

rue21, inc. and subsidiary
Notes to Consolidated Financial Statements — (continued)
Fiscal Year Ended
January 28,
2012
January 29,
2011
January 30,
2010
Current-deferred tax assets .............................. $ 5,121 $ 5,024 $ 4,286
Noncurrent-deferred tax liabilities ........................ (11,585) (5,651) (4,249)
Total ................................................ $ (6,464) $ (627) $ 37
The following table summarizes the activity related to our unrecognized tax benefits:
Gross balance as of January 31, 2009 ................................................ $146
Prior period tax positions — (decrease) .............................................. (111)
Gross balance as of January 30, 2010 ................................................ 35
Prior period tax positions — (decrease) .............................................. (1)
Gross balance as of January 29, 2011 ................................................ 34
Prior period tax positions — (decrease) .............................................. (34)
Gross balance as of January 28, 2012 ................................................ $ 0
The gross amount of unrecognized tax benefits at fiscal years ended 2011, 2010, and 2009 was $0, $34 and
$35, respectively. Over the next 12 months the company believes that there will be no material change in
unrecognized tax benefits.
The Company classifies interest and penalties as an element of tax expense. The amount of tax related interest
and penalties for fiscal years ended 2011, 2010 and 2009, respectively, was not material.
The Company files a consolidated U.S. Federal Tax returns as well as various state tax returns. The Company’s
U.S. Federal tax returns are open for further audit by taxing authorities for the periods of 2007 through 2011. The
principal state jurisdictions that remain open to examination for the periods 2007 and forward are: Pennsylvania,
Texas, North Carolina, Illinois, and West Virginia.
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 January 28, 2012, the Company believes that a loss is reasonably possible but that such potential
losses, individually or in the aggregate, will not 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
beneficially 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 of
Income. We also reimburse Apax for reasonable expenses incurred to attend board of director meetings. Amounts
paid to Apax totaled $9, $35 and $1,696 for fiscal years 2011, 2010, and 2009, respectively.
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