Express 2014 Annual Report Download - page 25

manufacturers. A rise in energy costs could adversely affect consumer spending and demand for our products and
increase our operating costs, both of which could have a material adverse effect on our financial condition and
results of operations.
Changes in tax requirements, results of tax audits, and other factors may cause fluctuations in our effective
tax rate and operating results.
We are subject to income tax in local, national, and international jurisdictions. Our tax returns and other tax
matters are also subject to examination by the Internal Revenue Service and other tax authorities and
governmental bodies. These examinations may challenge certain of our tax positions, such as the timing and
amount of deductions and allocations of taxable income to various jurisdictions. The results of any tax audits
could adversely affect our financial results. Furthermore, our effective tax rate in a given period may be
materially impacted by changes in the mix and level of earnings by taxing jurisdiction and deductibility of stock
based compensation.
In addition, we are subject to income tax in numerous jurisdictions, and in the future as a result of our growth
plans we may be subject to income tax in additional jurisdictions, including international and domestic locations.
Our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions.
Fluctuations in tax rates and duties could have a material adverse effect on our financial condition, results of
operations, or cash flows.
We may recognize impairment on long-lived assets.
Our long-lived assets, primarily stores and intangible assets, are subject to periodic testing for impairment. Store
assets are reviewed using factors including, but not limited to, our future operating plans and projected future
cash flows. Failure to achieve our future operating plans or generate sufficient levels of cash flow at our stores
could result in impairment charges on long-lived assets, which could have a material adverse effect on our
financial condition or results of operations.
Our Stockholder Rights Plan and anti-takeover provisions in our charter documents and Delaware law may
discourage or delay acquisition attempts for us that our stockholders might consider favorable.
Effective June 12, 2014, we adopted a stockholder rights plan which could discourage potential acquisition
proposals and could delay or prevent a change in control of the Company, even in situations that may be
considered beneficial by some of our stockholders. The rights plan may substantially dilute the stock ownership
of a person or group that attempts to acquire a large interest without first negotiating with our Board of Directors.
These deterrents could also adversely affect the price of our common stock.
Our certificate of incorporation and bylaws also contain provisions that may make the acquisition of the
Company or a change in our management or Board of Directors more difficult without the approval of our Board
of Directors. These provisions:
• establish a classified Board of Directors so that not all members of our Board of Directors are elected at
one time;
• authorize the issuance of undesignated preferred stock, the terms of which may be established, and the
shares of which may be issued without stockholder approval, and which may include super voting,
special approval, dividend, or other rights or preferences superior to the rights of the holders of
common stock;
• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a
meeting of our stockholders; and
• establish advance notice requirements for nominations for elections to our Board of Directors or for
proposing matters that can be acted upon by stockholders at stockholder meetings.
21