Express 2010 Annual Report Download

Download and view the complete annual report

Please find the complete 2010 Express annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

2010 ANNUAL REPORT

Table of contents

  • Page 1
    2010 ANNUAL REPORT

  • Page 2

  • Page 3
    ... We are very pleased to present to you the first Annual Report for Express, Inc. While we are a well-known specialty retailer... are just getting started and potential and opportunities abound for our business. Today Express is one of the largest specialty retail apparel brands in the United States and...

  • Page 4
    A crowd gathers in the heart of the city to watch the hottest style spectacle ever to hit the streets. Seventy feet of sidewalk runway meets fashion's top models for a city catwalk that turns "typically reserved for socialites" into "social life for all".

  • Page 5
    "THE BEST THING ABOUT WORKING IN THE BUSINESS OF FASHION IS THAT EVERY MOMENT SEEMS FULL OF NOTHING BUT POSSIBILITIES" -Michael Weiss President and CEO

  • Page 6
    ..."I LOOK TO THE PAST WITH A GREAT DEAL OF PRIDE THINKING ABOUT HOW MUCH EXPRESS HAS EVOLVED IN WHAT HAS SEEMED LIKE A FEW SHORT YEARS...NOT DECADES. MORE ...03 04 05 06 07 08 09 2010 was a milestone year for the brand in many regards. On May 13, 2010, Express was listed for the first time on ...

  • Page 7
    2010

  • Page 8

  • Page 9
    ...of the field team. Our E-Commerce business had a record-breaking year in 2010. E-Commerce sales rose 60%, accounting for more than 8% of our total sales for the year. We also introduced m.express.com, Express' first mobile commerce site and expanded our customer relationship efforts through enhanced...

  • Page 10

  • Page 11
    ...whiskey and wayfarers make the best accessories. We opened 23 new stores in 2010 - the most new stores we have opened in a single year in ...Express a great company that I am so very proud and honored to be a part of. On the surface, there is much to be proud of in terms of our accomplishments in 2010...

  • Page 12
    CASUAL If the suit makes the man, the leisure suit must have been made by man. JEANS Jeans should be worn tight where it matters, loose when it matters and for the lucky ones, on the floor as much as possible. STUDIO The perfect suit should catch the eye, please the wallet and own the boardroom. ...

  • Page 13
    CASUAL Style is beyond trend, a woman with confidence can rock a basic t-shirt like it's a party dress. JEANS The built-in glamour of jeans can make you feel like a stiletto-toed maven even while barefoot. STUDIO As long as the elements of proportion and shape are in mind, fashion has no rules. ...

  • Page 14
    Taking over Miami, our Sidewalk Runway models captured the night. South Beach style-lovers gathered for a preview of the Express March 2011 Collection.

  • Page 15
    LIVE LIFE WHERE IT ALL HAPPENS. LOVE EVERY BEAT OF THE CITY. OWN EVERY SECOND OF THE SCENE.

  • Page 16
    WE ARE FASHION ATTITUDE STYLE MODERN INTERNATIONAL LIFE SEXY PARTY GLAM BEAUTY COOL FAVORITES SWANK PLAY FRILLS LOVE

  • Page 17
    ... ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2011 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-34742 EXPRESS...

  • Page 18
    Table Of Contents Part I ...4 ITEM 1. BUSINESS ...4 ITEM 1A. RISK FACTORS ...14 ITEM 1B. UNRESOLVED STAFF COMMENTS ...28 ITEM 2. PROPERTIES ...28 ITEM 3. LEGAL PROCEEDINGS ...29 ITEM 4. REMOVED AND RESERVED ...29 Part II ...30 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER ...

  • Page 19
    ... those expressed in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report on...

  • Page 20
    ...Annual Report on Form 10-K, the term Express Parent refers to Express Parent LLC prior to the Reorganization, and to Express, Inc. after the Reorganization. The term "Express Topco" refers to Express... brand image that we seek to project. Our 2010 net sales were comprised of approximately 65% women's...

  • Page 21
    We report one segment, which includes the operation of our brick and mortar retail stores and the express.com e-commerce website,...centers in which we operate. Substantially all of our stores were profitable in 2010. Proven and Experienced Team. Michael Weiss, our President and Chief Executive Officer...

  • Page 22
    ...over each of the next five years, which represents annual store growth of approximately 3-5%, with slightly less than ...July 2008, we launched our e-commerce platform at express.com, providing us with a direct-to-consumer... our sales. In the third quarter of 2010, we added a mobile application to allow ...

  • Page 23
    our customers who look to us to provide the latest fashions and quality at an attractive value. We believe we have developed a portfolio of products that have significant brand value, including the Editor pant, Essential and 1MX shirts, and our Stella, Zelda, and Eva lines of denim. We believe our ...

  • Page 24
    ... facility is received from our Columbus distribution facility and sent directly to customers via third-party delivery services. In the Fall of 2010, we transitioned our fulfillment operations to the facility in Groveport from a facility in Warren, Pennsylvania, which was also owned and operated by...

  • Page 25
    ...has significantly improved our productivity, contributing to an increase in net sales per gross square foot from $260 in 2001 to $346 in 2010. Our average retail store is approximately 8,700 gross square feet and generates approximately $2.9 million per year in sales. The first table below indicates...

  • Page 26
    Store Locations The following store list shows the number of stores we operated as of January 29, 2011 in the United States and Puerto Rico: Location Count Location Count Location Count Alabama ...Arizona ...Arkansas ...California ...Colorado ...Connecticut ...Delaware ...District of Columbia ......

  • Page 27
    ... and reduce capital investment and risk. Internet Website Since July 2008, customers have been able to purchase our merchandise over the Internet at our website, express.com. In 2010, our e-commerce sales increased 60% relative to 2009, but still only represented approximately 8% of our net sales in...

  • Page 28
    ... of our products as a result of celebrities who wear Express clothing. In 2010, Express was referenced in a number of editorial and television credits...improved operational efficiencies, scalability, increased management control, and timely reporting that allow us to identify and respond to trends in ...

  • Page 29
    ... Fall selling patterns as well as the impact of the holiday season. In 2010, approximately 56% of our net sales were generated in the Fall season (third... on our website, www.express.com, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all...

  • Page 30
    furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act of 1934"), as soon as reasonably practicable after filing such material electronically with, or otherwise furnishing it to, the SEC. The SEC maintains a website that contains electronic...

  • Page 31
    demand between the time we design and order our merchandise and the season in which this merchandise will be sold. There can be no assurance that our new product offerings will have the same level of acceptance as our product offerings in the past or that we will be able to adequately and timely ...

  • Page 32
    department stores, to generate consumer traffic in the vicinity of our stores and the continuing popularity of the shopping center as a shopping destination. Our sales volume and traffic generally may be adversely affected by, among other things, a decrease in popularity of malls or other shopping ...

  • Page 33
    world, primarily in Asia and Central and South America. Political, social or economic instability in Asia, Central or South America, or in other regions in which our manufacturers are located, could cause disruptions in trade, including exports to the United States. Other events that could also ...

  • Page 34
    We depend on key executive management and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business. We depend on the leadership and experience of our key executive management. The loss of the services of any of our executive management ...

  • Page 35
    Our business depends in part on a strong brand image, and if we are not able to maintain and enhance our brand, particularly in new markets where we have limited brand recognition, we may be unable to attract sufficient numbers of customers to our stores or sell sufficient quantities of our products...

  • Page 36
    ...entered into on October 5, 2009 and took effect in February 2010, Mast also provides certain inbound and outbound transportation and delivery services... of our merchandise distribution, transaction processing, financial accounting and reporting, the efficiency of our operations, and our ability to ...

  • Page 37
    ...a wide variety of employee claims against us, including general discrimination, privacy, labor and employment, ERISA and disability claims. For example, Express, LLC is named as a defendant in a purported class action lawsuit alleging various California state labor law violations. See "Item 3. Legal...

  • Page 38
    In addition to increased regulatory compliance requirements, changes in laws could make ordinary conduct of our business more expensive or require us to change the way we do business. For example, changes in federal and state minimum wage laws could raise the wage requirements for certain of our ...

  • Page 39
    our minimum annual rental obligations under long-term operating leases for 2011 and 2012 were $164.4 million and $139.3 million, respectively. Our substantial indebtedness and lease obligations could ...

  • Page 40
    ...-time non-cash tax benefit of $31.8 million in the second quarter of 2010. In addition, we may be subject to periodic audits by the Internal Revenue... establish and maintain adequate internal controls over financial reporting, we may not be able to report our financial results in a timely and reliable...

  • Page 41
    We restated our financial statements for the July 7, 2007 to February 2, 2008 period and 2008 after certain accounting errors were identified that we determined to be material. Management identified the following material weaknesses in its internal controls: (1) we did not have the appropriate ...

  • Page 42
    Because of the equity ownership of Golden Gate and Limited Brands and the Stockholders Agreement, we are considered a "controlled company" for purposes of the NYSE listing requirements. As such, we are exempt from the NYSE corporate governance requirement that our board of directors meet the ...

  • Page 43
    Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price. Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affect the price of our common ...

  • Page 44
    ... 404 of the Sarbanes-Oxley Act of 2002 and related rules and regulations and beginning with our Annual Report on Form 10-K for the year ending January 28, 2012, our management will be required to report on, and our independent registered public accounting firm to attest to, the effectiveness of our...

  • Page 45
    ... proceedings is set forth in Note 14 to our Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" in Part II of this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 4. [Removed and Reserved] 29

  • Page 46
    ...common stock reported on the NYSE since the IPO for the periods indicated. Market Price High Low 2010 Fourth quarter ...Third quarter ...Second quarter (beginning May 13, 2010) ...... record as of the close of business on December 16, 2010. Our ability to pay dividends is restricted by the terms...

  • Page 47
    ... in our common stock and the respective indexes on May 13, 2010, which was the first day our stock was traded on the NYSE...29/11 Dow Jones U.S. Apparel Retailers Index 5/13/10 7/31/10 10/30/10 1/29/11 Express, Inc...S&P 500 ...Dow Jones U.S. Apparel Retailers Index ... Dollars $100.00 $100.00 $100...

  • Page 48
    ... data as of January 29, 2011 and January 30, 2010 and for the years ended January 29, 2011, January 30, 2010, and January 31, 2009 are derived from our audited Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. The selected historical consolidated financial data...

  • Page 49
    ... in this Annual Report on Form 10-K. Predecessor July 7, 2007 February 4, through 2007 Year Ended Year Ended February 2, through 2010 2009 2008...12, 2010, in connection with the IPO, we converted from a Delaware limited liability company into a Delaware corporation and changed our name to Express, Inc...

  • Page 50
    (3) Comparable sales have been calculated based upon stores that were open at least thirteen full months as of the end of the reporting period. For 2010 and 2009, comparable sales include e-commerce merchandise sales. Excluding c-commerce sales, comparable sales increased (decreased) 7% and (6)% for...

  • Page 51
    ... elsewhere in this Annual Report on Form 10-K, particularly in the section entitled "Risk Factors." Overview Express is a nationally ...in higher traffic and transactions at our stores and online. Expand Our Store Base In 2010, we opened 23 new stores operated by us and closed five stores. As of ...

  • Page 52
    ... and swimwear, and the introduction in the third quarter of m.express.com, Express's first mobile commerce site. E-commerce sales represented 8% of our total net sales in 2010. Sales growth to last year was relatively consistent by quarter in 2010 and we expect to see this channel grow to 10% to...

  • Page 53
    ... and the impact of the holiday season. Generally, the annual sales split is approximately 45% for the Spring season (...from e-commerce increased 60% from 2009 to 2010 and comprised 8% of our net sales in 2010. Sales from e-commerce increased by 231% from...reporting period. In the fourth quarter of 37

  • Page 54
    ... Financial Statements. In connection with the IPO and Reorganization, the Advisory Agreement and the LLC Agreement were terminated effective May 12, 2010, and, therefore, we no longer incur costs related to these agreements. Other Factors Affecting Our Results Certain important factors impacted the...

  • Page 55
    ... with public company reporting and corporate governance ...Express, Inc., followed by the liquidation of Express Parent. As a result, we recorded a net deferred tax asset and one-time, non-cash tax benefit of $31.8 million. Senior Notes Offering and Prepayment of Term C Loan. On March 5, 2010...

  • Page 56
    ...related to the increase in e-commerce sales. Gross Profit The following table shows cost of sales and gross profit in dollars for the stated periods: 2010 Year Ended 2009 (in thousands) 2008 Cost of goods sold, buying and occupancy costs ...Gross profit ...40 $1,227,490 $ 678,324 $1,175,088 $ 545...

  • Page 57
    ... related to new public company costs, and $2.7 million in costs related to the Senior Notes offering completed on March 5, 2010 and the IPO completed on May 18, 2010. Selling, general, and administrative expenses decreased $37.9 million in 2009 compared to 2008. The decline in selling, general, and...

  • Page 58
    ... loss on extinguishment of debt associated with the early repayments of the Term C Loan and Term B Loan in the first quarter of 2010 and second quarter of 2010, respectively, partially offset by $14.3 million lower interest expense on the Senior Notes at an interest rate of 8 3⁄ 4% versus the Term...

  • Page 59
    ... GAAP financial measures, net income and earnings per diluted share. 2010 Earnings per Diluted Share Weighted Average Diluted Shares Outstanding (in thousands, except per share amounts) Net Income Reported GAAP Measure ...Transaction Costs (a) * ...Advisory/LLC Fees (b) * ...Interest Expense...

  • Page 60
    ... EBITDA and Adjusted EBITDA for the stated periods: 2010 Year Ended 2009 (in thousands) 2008 EBITDA ...Adjusted EBITDA ... $266,281 $309,298 $198,949 $229,750 $ 83,514 $137,198 EBITDA and Adjusted EBITDA have been presented in this Annual Report on Form 10-K and are supplemental measures of...

  • Page 61
    ... differences between EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, for the stated periods. 2010 Year Ended 2009 (in thousands) 2008 Net income (loss) ...Depreciation and amortization ...Interest expense, net (a) ...Income tax expense ...EBITDA ...Non...

  • Page 62
    ... currently anticipate reducing debt by $25.0 million in the first quarter of 2011 using cash on hand, as was previously announced in our third quarter 2010 earnings release. Our cash position is seasonal as a result of building up inventory for the next selling season and, as a result, our cash and...

  • Page 63
    ...to our transition to a stand-alone business were $14.3 million in 2010 compared to $10.2 million in 2009. Net cash used in investing activities... and the IPO. Net cash used by financing activities was $211.8 million during 2010 as compared to $115.6 million in 2009, an increase of $96.2 million....

  • Page 64
    ... credit facility that became effective March 5, 2010 in connection with the Senior Notes offering. The amendment, among other things, (1) permitted the issuance of the Senior Notes and the guarantees thereof by Express Holding and Express, LLC's subsidiaries, (2) increased the applicable interest...

  • Page 65
    ... to the Opco term loan that became effective March 5, 2010 in connection with the Senior Notes offering. The amendment, among other things, (1) permitted the issuance of the Senior Notes and the guarantees thereof by Express Holding and its subsidiaries, (2) increased the applicable interest rate...

  • Page 66
    ...governing the Opco term loan requires that annual prepayments of principal be made within five ...requires that Express Holding maintain a Leverage Ratio for the most recently completed reporting period ...terminated on August 6, 2010. Senior Notes On March 5, 2010, Express, LLC and Express Finance, as co...

  • Page 67
    .... Topco Credit Facility On June 26, 2008, Express Topco, as borrower, entered into a $300.0...B Loan and a $150.0 million Term C Loan. On March 5, 2010, in connection with the Senior Notes offering, all of the Term C Loan...and are not included above. Estimated annual expense incurred for such charges are...

  • Page 68
    ...accounting policies and estimates and believes that the following involve a higher degree of judgment or complexity and are most significant to reporting its results of operations and financial position and are, therefore, discussed as critical. The following critical accounting policies reflect the...

  • Page 69
    ... of and for the year ended January 29, 2011. Intangible Assets Intangible assets with indefinite lives, primarily trade names, are reviewed for impairment annually in the fourth quarter and may be reviewed more frequently if indicators of impairment are present. The impairment review is performed by...

  • Page 70
    Description of Policy Judgments and Uncertainties Effect if Actual Results Differ from Assumptions A 100 basis point change in the royalty rate used and discount rate would not result in an impairment in the current year. Leasehold Improvements Leasehold improvements are reviewed for impairment ...

  • Page 71
    ... and liabilities are recognized for the estimated future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of our assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the...

  • Page 72
    ... on the calculation of the rate. As of January 29, 2011, the rate on the outstanding balance of our Opco term loan was 4.54%. For 2010, a 100 basis point change in interest rates would have increased or decreased interest expense by approximately $1.2 million. We did not borrow any amounts under the...

  • Page 73
    ... DATA. Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Express, Inc.:... all material respects, the financial position of Express, Inc. and its subsidiaries at January 29, 2011 and January 30, 2010, and the results of their operations and their...

  • Page 74
    EXPRESS, INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except Per Share Amounts) January 29, 2011 January 30, 2010 ASSETS CURRENT ASSETS: Cash and cash equivalents ...Receivables, net ...Inventories ...Prepaid minimum rent ...Other ...Total current assets ...PROPERTY AND EQUIPMENT ...Less...

  • Page 75
    EXPRESS, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per Share Amounts) 2010 2009 2008 NET SALES ...COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS ...Gross profit ...OPERATING EXPENSES: Selling, general, and administrative expenses ...Other operating expense, net ......

  • Page 76
    EXPRESS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Amounts in Thousands)...of restricted shares ...Repurchase of equity shares ...Share-based compensation ...BALANCE, January 30, 2010 ...Net income ...Distributions ...Dividends paid ...Impact of Reorganization (Notes 1 and 11) ......

  • Page 77
    EXPRESS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) 2010 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ...$ 127,388 $ 75,307 $ (29,036) Adjustments to reconcile net income (loss) to net cash ...

  • Page 78
    ... to the acquisition by Golden Gate Private Equity, Inc. ("Golden Gate") in 2007 (the "Golden Gate Acquisition"), and Express Finance Corp. ("Express Finance"). Express Finance was formed on January 28, 2010 for the purpose of serving as co-issuer of the the $250 million Senior Notes ("Senior Notes...

  • Page 79
    ...of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period, as well as the related ...maturity of three months or less. As of January 29, 2011 and January 30, 2010, cash, held in treasury securities, totaled $168.9 million and $216.8 million, ...

  • Page 80
    ... the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy as of January 30, 2010. There were no outstanding derivatives as of January 29, 2011. The following table presents the Company's assets measured at fair value on a recurring...

  • Page 81
    ...with private label credit cards. Each private label credit card bears the logo of the Express brand and can be used at any of the Company's retail store locations or ...The accrued liability as of January 29, 2011 and January 30, 2010 was $4.4 million and $3.5 million, respectively, and is included in ...

  • Page 82
    ...commerce website. Intangible assets with indefinite lives are reviewed for impairment annually in the fourth quarter, or more frequently if indicators of ...The Company did not incur any impairment charges on intangible assets in 2010, 2009, or 2008. Leases and Leasehold Improvements The Company has ...

  • Page 83
    ... at fair value as follows: January 29, 2011 January 30, 2010 Balance Sheet Balance Sheet Location Fair Value Location Fair Value (in thousands... differences that currently exist between the tax basis and the financial reporting basis of the Company's assets and liabilities. Valuation allowances are...

  • Page 84
    ...based on known claims and an estimate of incurred but not reported ("IBNR") claims. IBNR claims are estimated using historical claim ...million and $21.1 million, as of January 29, 2011 and January 30, 2010, respectively, and is included in deferred revenue on the Consolidated Balance Sheets. The...

  • Page 85
    ...the Company reports results as a single segment, which includes the operation of its Express brick and mortar retail stores and the express.com e-...for interest was $40.6 million, $51.6 million, and $16.3 million in 2010, 2009, and 2008, respectively. The Golden Gate affiliate's portion of cash paid ...

  • Page 86
    ...and distribution center facility in Columbus, Ohio. The lease is for a 75 month period that commenced February 1, 2010 and expires on April 30, 2016 and requires annual minimum market rent payments of approximately $1.3 million for the first five years and $1.4 million thereafter. The lease contains...

  • Page 87
    ...LC if the Company were to default on any of the guaranteed leases. The Limited Brands stand-by LC was reduced through the September 30, 2010 expiration date with the overall reduction in guaranteed lease payments. The available balance of the Limited Brands stand-by LC was $6.4 million as of January...

  • Page 88
    ... merchandise sourcing Transition Service Agreement, applied to the cost of products for which the Company is otherwise required to source through Mast. After July 6, 2010, the Company may obtain all of its products and related services on the open market as it does with the other 40% of products not...

  • Page 89
    ...the time of payment of such Advisory Agreement fees. Effective May 12, 2010, the LLC Agreement, including the advisory arrangement with Limited Brands, was ...Gate an annual management fee equal to the greater of (i) $2.0 million per fiscal year or (ii) 3% of adjusted EBITDA of Express Holding....

  • Page 90
    ... 1 of the United States Internal Revenue Code, effective May 2, 2010. The Company, therefore, is subject to federal and state tax expense beginning May 2, 2010. The Reorganization, for tax purposes, was deemed a contribution by Express Parent of its assets and liabilities to the Company, followed by...

  • Page 91
    through to the members due to Express Parent's partnership tax treatment. The taxable gain correspondingly increased... that created deferred income taxes as of January 29, 2011 and January 30, 2010. Deferred tax assets and liabilities represent the future effects on income taxes resulting from...

  • Page 92
    ... tax positions of $0.1 million as of January 29, 2011. There was no liability for uncertain tax positions as of January 30, 2010. As part of the Reorganization, Express Investment Corporation, a Golden Gate entity, and the management holding companies merged with and into the Company on May 12...

  • Page 93
    ... up to $30.0 million of swing line advances and up to $45.0 million to be available in the form of letters of credit. On February 5, 2010, Express Holding, as parent guarantor, and Express, LLC, as borrower, entered into an amendment to the Opco revolving credit facility that became effective March...

  • Page 94
    ...annum above the federal funds rate, plus an applicable margin rate. On February 5, 2010, Express Holding and Express, LLC entered into an amendment to the Opco term loan that became effective March 5, 2010 in connection with the Senior Notes offering. The amendment, among other things, (1) permitted...

  • Page 95
    ...governing the Opco term loan requires that annual prepayments of principal be made within five... that Express Holding maintain a Leverage Ratio for the most recently completed reporting period ... terminated on August 6, 2010. Senior Notes On March 5, 2010, Express and Express Finance co-issued, in...

  • Page 96
    ...term of the Senior Notes using the effective interest method. On March 10, 2010, the Company used the $85.2 million of cash received from issuing the ...accordance with the agreement. Topco Credit Facility On June 26, 2008, Express Topco, as borrower, entered into a $300.0 million secured term loan...

  • Page 97
    ... accrued interest on an arm's length rate basis, and were secured by a pledge of all equity interests of Express Holding by the executive management member. On February 9, 2010, management promissory notes totaling $5.6 million were repaid in full by each member of management, and therefore interest...

  • Page 98
    ...and therefore there were no restricted shares available for grant. In 2010, the Board of Directors of the Company approved, and the Company implemented the Express, Inc. 2010 Incentive Compensation Plan ("2010 Plan"). The 2010 Plan authorizes the Compensation Committee of the Board to offer eligible...

  • Page 99
    ... option holders for the diminution in value of their stock options as a result of the special dividend, as required under the terms of the 2010 Plan and, consequently, did not result in any incremental compensation expense to the Company. These RSUs vest over the remaining vesting period of the...

  • Page 100
    ... was as follows: Grant Date Number of Weighted Average Shares Fair Value (in thousands, except per share amounts) Unvested, January 30, 2010 ...Granted ...Vested ...Repurchased ...Unvested, January 29, 2011 ... 2,836 - (2,557) (59) 220 $1.19 - 1.24 0.97 $1.03 No restricted shares were granted in...

  • Page 101
    ... restricted shares vest over four years in equal 25% increments each year and have pro-rata vesting for each quarter elapsed since the prior annual vesting date. 11. Earnings Per Share The weighted-average shares used to calculate basic and diluted net income (loss) per share has been retroactively...

  • Page 102
    ... 1.3 million shares of common stock were excluded from the computation of diluted EPS for 2010 as the options would be anti-dilutive. No potentially dilutive shares were excluded from the... on a percentage of the employees' eligible annual compensation and years of service. Employee contributions ...

  • Page 103
    ...the Qualified Plan was reinstated for 2010. Participation in the Non-Qualified... in either a lump sum or in equal annual installments over a specified period of up to ... 762 (1,541) (29) $10,733 14. Commitments and Contingencies Express is named as a defendant in a purported class action lawsuit action...

  • Page 104
    ... material adverse effect on the Company's results of operations, financial condition, or cash flows. 15. Guarantor Subsidiaries On March 5, 2010, Express, LLC and Express Finance (the "Subsidiary Issuers"), both wholly-owned indirect subsidiaries of the Company, issued $250.0 million Senior Notes at...

  • Page 105
    ... CONDENSED CONSOLIDATING BALANCE SHEET (Amounts in thousands) January 29, 2011 Subsidiary Guarantor Other Consolidated Express, Inc. Issuers Subsidiaries Subsidiaries Eliminations Total Assets Current assets Cash and cash equivalents ...$ 1,647 $186,115 $ - Receivables, net ...- 9,908 - Inventories...

  • Page 106
    ..., INC. CONDENSED CONSOLIDATING BALANCE SHEET (Amounts in thousands) January 30, 2010 Subsidiary Guarantor Other Consolidated Express, Inc. Issuers Subsidiaries Subsidiaries Eliminations Total Assets Current assets Cash and cash equivalents ...$ Receivables, net ...Inventories ...Prepaid minimum...

  • Page 107
    .... CONDENSED CONSOLIDATING STATEMENT OF INCOME (Amounts in thousands) Subsidiary Issuers 2010 Guarantor Other Subsidiaries Subsidiaries Consolidated Total Express, Inc. Eliminations Net sales ...Cost of goods sold, buying and occupancy costs ...Gross profit ...Selling, general, and administrative...

  • Page 108
    .... CONDENSED CONSOLIDATING STATEMENT OF INCOME (Amounts in thousands) Subsidiary Issuers 2008 Guarantor Other Subsidiaries Subsidiaries Consolidated Total Express, Inc. Eliminations Net sales ...Cost of goods sold, buying and occupancy costs ...Gross profit ...Selling, general, and administrative...

  • Page 109
    ..., INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Amounts in thousands) Subsidiary Issuers 2010 Guarantor Other Subsidiaries Subsidiaries Consolidated Total Express, Inc. Eliminations Operating Activities Net cash provided by (used in) operating activities ...Investing Activities Capital...

  • Page 110
    ... CONSOLIDATING STATEMENT OF CASH FLOWS (Amounts in thousands) Subsidiary Issuers 2009 Guarantor Other Subsidiaries Subsidiaries Consolidated Total Express, Inc. Eliminations Operating Activities Net cash provided by (used in) operating activities ...Investing Activities Capital expenditures...

  • Page 111
    ... CONSOLIDATING STATEMENT OF CASH FLOWS (Amounts in thousands) Subsidiary Issuers 2008 Guarantor Other Subsidiaries Subsidiaries Consolidated Total Express, Inc. Eliminations Operating Activities Net cash provided by (used in) operating activities ...Investing Activities Capital expenditures...

  • Page 112
    16. Quarterly Financial Data (Unaudited) Summarized unaudited quarterly financial results for 2010 and 2009 follows: 2010 Quarter First Second Third Fourth (in thousands, except per share amounts) Net sales ...Gross profit ...Net income ...Earnings per basic share ...Earnings per diluted share ......

  • Page 113
    ... Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report ... reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934) that occurred during the fourth quarter of 2010 ...

  • Page 114
    ...Executive Compensation- Compensation Committee Report" in the Company's Proxy Statement for its 2011 Annual Meeting of Stockholders. ITEM...Statement for its 2011 Annual Meeting of Stockholders. The following table summarizes share and exercise price information about Express' equity compensation plan ...

  • Page 115
    ... 2007 (incorporated by reference to Exhibit 2.2 to the Express S-1, filed with the SEC on March 25, 2010). Conversion Agreement, dated as of May 10, 2010, by and among Express Parent LLC, Express Management Investors Blocker, Inc., Express Investment Corp., Limited Brands Store Operations, Inc. and...

  • Page 116
    ... Sole Lead Arranger and Sole Bookrunner ("Asset-Based Loan Credit Agreement") (incorporated by reference to Exhibit 10.1 to the Express S-1, filed with the SEC on March 25, 2010). Amendment No. 1 to Asset-Based Loan Credit Agreement, dated as of June 3, 2008 (incorporated by reference to Exhibit 10...

  • Page 117
    ... by reference to Exhibit 10.26 to the Express S-1, filed with the SEC on April 30, 2010). Letter Agreement, dated as of July 23, 2010, between Mylle H. Mangum and Express, Inc. (incorporated by reference to Exhibit 10.1 to Express, Inc.'s Current Report on Form 8-K, filed with the SEC on August...

  • Page 118
    ...incorporated by reference to Exhibit 4.6 to the Express S-1, filed with the SEC on May 11, 2010). List of subsidiaries of registrant Consent of .... Filed herewith. (b) Exhibits The exhibits to this report are listed in section (a)(3) of Item 15 above. (c) Financial Statement Schedules ...

  • Page 119
    ...of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 22, 2011 EXPRESS, INC. By: /s/ MATTHEW C. MOELLERING Matthew C. Moellering, Executive Vice President, Chief Administrative Officer...

  • Page 120
    EXHIBIT INDEX Exhibit No. Document 21.1 23.1 31.1 31.2 32.1 List of subsidiaries of registrant Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification pursuant to Section 302 of the ...

  • Page 121
    Exhibit 21.1 Subsidiaries of Express, Inc. Name Jurisdiction of Formation Express Topco LLC Express Holding, LLC Express, LLC Express Finance Corp. Express GC, LLC Express Fashion Apparel Canada, Inc. Delaware Delaware Delaware Delaware Ohio Canada

  • Page 122
    ... ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-168097) of Express, Inc., of our report dated March 21, 2011 relating to the financial statements, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Columbus, Ohio...

  • Page 123
    ...302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael A. Weiss, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of Express, Inc. for the year ended January 29, 2011; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material...

  • Page 124
    ... THE SARBANES-OXLEY ACT OF 2002 I, Matthew C. Moellering, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of Express, Inc. for the year ended January 29, 2011; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material...

  • Page 125
    ... SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Express, Inc. (the "Company") on Form 10-K for the year ended January 29, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Michael A. Weiss, President and Chief Executive...

  • Page 126

  • Page 127

  • Page 128