We are exposed to market risk due to foreign currency and interest rate fluctuations, each as described more fully below.
We use forward exchange contracts to manage currency risk primarily related to intercompany loans denominated innon-functional currencies. The forward exchange contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings,there by off setting the current earnings effect of there-measurement of related intercompany loans. We recognized a gain of $4.1 million and $9.6 million in selling, general and administrative expenses related to derivativeinstruments for the fiscal years ended February 1, 2020 and February 2, 2019, respectively. The aggregate fair value of theforward exchange contracts as of February 1, 2020 and February 2, 2019 was a net asset of $1.1 million and a net liability of$0.2 million, respectively, as measured by observable inputs obtained from market news reporting services, such asBloomberg,and industry-standard models that consider various assumptions, including quoted forward prices, time value, volatility factors,and contractual prices for the underlying instruments, as well as other relevant economic measures. A hypothetical strengthen ingor weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of February 1,2020 would result in a gain of $10.2 million or a loss of $8.4 million in value of the forwards, options and swaps. We do not use derivative financial instruments for trading or speculative purposes. We are exposed to counterparty credit riskon all of our derivative financial instruments and cash equivalent investments. We manage counterparty risk according to theguidelines and controls established under comprehensive risk management and investment policies. We continuously monitorour counterparty credit risk and utilize a number of different counterparties to minimize our exposure to potential defaults. We donot require collateral under derivative or investment agreements.
The per annum interest rate on our $420 million revolving credit facility is variable and is based on one of (i) the U.S. prime rate,(ii) LIBOR or (iii) the U.S. federal funds rate. We had no outstanding balance on our revolving credit facility as of February 1, 2020and February 2, 2019. In 2017, the Financial Conduct Authority, the regulatory body of LIBOR, announced its intention to stopcompelling banks to submit rates for the calculation of LIBOR after 2021. The U.S. Federal Reserve, in conjunction with theAlternative Reference Rate Committee, has proposed the replacement of U.S. dollar LIBOR rates with a new index calculatedby short-term repurchase agreements backed by U.S. Treasury securities called the Secured Overnight Financing Rate (“SOFR”). Whether or not SOFR is generally accepted as the LIBOR replacement remains in question and the future of LIBOR at this timeis uncertain. Our revolving credit facility matures in November 2022, therefore, we anticipate that we will amend our revolvingcredit facility prior to the LIBOR quotation termination date. There can be no assurances as to what alternative reference ratesmay be and whether such rates will be more or less favorable than LIBOR and any other unforeseen impacts of the potentialdiscontinuation of LIBOR. Our Senior Notes' per annum interest rate is fixed. We do not use derivative financial instruments to hedge interest rate exposure.We limit our interest rate risks by investing our excess cash balances in short-term, highly-liquid instruments with a maturity of one year or less. We do not expect any material losses from our invested cash balances.Additionally, a hypothetical 10% adversemovement in interest rates would not have a material impact on our financial condition, results of operations or cash flows and we therefore believe that we do not have significant interest rate exposure.