Look at the Management Discussion and Analysis. Find the section that outlines the various types of risk that Reitmans faces. Choose 3 of the types of risk, and for each one, explain the nature of that risk and how Reitmans is minimizing the risk. Foreign Currency Risk The Company purchases a significant amount of its merchandise with US dollars and as such significant volatility in the US dollar vis--vis the Canadian dollar can have an adverse impact on the Company's gross margin. The Company has a variety of alternatives that it considers to manage its foreign currency exposure on cash flows related to these purchases. This includes, but is not limited to, various styles of foreign currency option or forward contracts, not to exceed six months, and spot rate purchases. A foreign currency option contract represents an option or obligation to buy a foreign currency from a counterparty. Credit risks exist in the event of failure by a counterparty to fulfill its obligations. The Company reduces this risk by dealing only with highly-rated counterparties, normally major Canadian financial institutions. For the year ended January 28, 2012, the Company satisfied its US dollar requirements primarily through spot rate purchases. The Company has performed a sensitivity analysis on its US dollar denominated financial instruments, which consist principally of cash and cash equivalents of $27,547 and trade payables of $3,840 to determine how a change in the US dollar exchange rate would impact net earnings. On January 28, 2012, a 1% rise or fall in the Canadian dollar against the US dollar, assuming that all other variables, in particular interest rates, had remained the same, would have resulted in a $166 decrease or increase, respectively, in the Company's net earnings for the year ended January 28, 2012. The Company has performed a sensitivity analysis on its derivative financial instruments, a series of call and put options on US dollars, to determine how a change in the US dollar exchange rate would impact net earnings. On January 28, 2012, a 1% rise or fall in the Canadian dollar against the US dollar, assuming that all other variables had remained the same, would have resulted in a $580 decrease or increase, respectively, in the Company's net earnings for the year ended January 28, 2012. Interest Rate Risk Interest rate risk exists in relation to the Company's cash and cash equivalents, defined benefit pension plan and SERP. Market fluctuations in interest rates impacts the Company's earnings with respect to interest earned on cash and cash equivalents that are invested in bank bearer deposit notes and bank term deposits with major Canadian financial institutions and commercial paper with a rating not less than R1. Overall return in the capital markets and the level of interest rates affect the funded status of the Company's pension plans. Adverse changes with respect to pension plan returns and the level of interest rates from the date of the last actuarial valuation may have a material adverse effect on the funded status of the retirement benefit plans and on the Company's results of operations. The Company has unsecured borrowing and working capital credit facilities available up to an amount of $125,000 or its US dollar equivalent that it utilizes for documentary and standby letters of credit, and the Company funds the drawings on these facilities as the payments are due. The Company has performed a sensitivity analysis on interest rate risk at January 28, 2012 to determine how a change in interest rates would impact equity and net earnings. For the year ended January 28, 2012, the Company earned interest income of $1,367 on its cash and cash equivalents. An increase or decrease of 25 basis points in the average interest rate earned during the year would have increased equity and net earnings by $321 or decreased equity and net earnings by $235, respectively. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The Company has performed a sensitivity analysis at January 28, 2012 to determine how a change in interest rates, in relation to the Company's retirement benefit plans, would impact the benefit costs included in other comprehensive income. A one percentage point decrease in the year-end discount rate would have resulted in an increase of approximately $4,300 in benefit costs included in other comprehensive income for the year ended January 28, 2012, whereas a one percentage point increase would have resulted in a decrease of approximately $3,800. The Company's expected long-term rate of return on Plan assets reflects management's view of long-term investment returns. The effect of a 1% variation in such rate of return would have a nominal impact on the total benefit costs included in net earnings and total comprehensive income. Equity Price Risk Equity price risk arises from available-for-sale equity securities. The Company monitors the mix of equity securities in its investment portfolio based on market expectations. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the Chief Executive Officer. The Company has performed a sensitivity analysis on equity price risk at January 28, 2012, to determine how a change in the market price of the Company's marketable securities would impact equity and other comprehensive income. The Company's equity investments consist principally of preferred shares of Canadian public companies. The Company believes that changes in interest rates influence the market price of these securities. A 5% increase or decrease in the market price of the securities at January 28, 2012, would result in a $3,036 increase or decrease, respectively, in equity and other comprehensive income for the year ended January 28, 2012. The Company's equity securities are subject to market risk and, as a result, the impact on equity and other comprehensive income may ultimately be greater than that indicated above