Express 2010 Annual Report Download - page 104

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To avoid the expense and uncertainty of further litigation with respect to this matter, on January 11, 2011, the
Company reached a settlement in principle to resolve all claims of plaintiff and other similarly situated class
members that were asserted or could have been asserted based on the factual allegations in the final amended
complaint for this case. The parties are currently negotiating the terms of the settlement agreement which will be
subject to court approval. Under the terms of the proposed settlement, the Company will make up to a total of
$4.0 million available to pay (i) current California employees who worked during the period commencing
January 1, 2007 and ending on the date the court gives preliminary approval for the settlement, or May 15, 2011,
whichever is earlier, (ii) former California employees who worked during the class period and submit valid
claims, and (iii) certain legal fees and expenses on behalf of the plaintiff and the class. After deducting legal fees
and expenses from the $4.0 settlement amount, the proposed settlement will require the Company to pay at least
55% of the remaining amount to class members, irrespective of how many valid claims are submitted. Our
Consolidated Balance Sheet as of January 29, 2011 includes a reserve for our best estimate of the amount the
Company will be required to pay under the terms of the proposed settlement. If the parties cannot agree on the
terms of the settlement agreement, the settlement is not approved by the court, the Company elects to revoke the
settlement due to 5% or more of the class electing to opt-out of the settlement, or the number of former
employees submitting valid claims differs from the the Company’s expectations, then the amount of the reserve
may increase or decrease. The amount of any such change may be material to the Company’s results of
operations or financial condition.
The Company is subject to various other claims and contingencies arising out of the normal course of business.
Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to
have a 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 8
3
⁄
4
%. The Company (“Guarantor”) and
certain of the Company’s indirect wholly-owned subsidiaries (“Guarantor Subsidiaries”) have fully and
unconditionally guaranteed, on a joint and several basis, the Company’s obligations under the Senior Notes. The
following consolidating schedules present the condensed financial information on a combined basis. In the 2009
consolidating balance sheet that follows, the Company reclassified the Guarantor Subsidiaries’ liability from
accrued liabilities to deferred revenue with an offsetting reclassification made to the Subsidiary Issuers’ accrued
liabilities and deferred revenue line items. This reclassification had no impact on either the Guarantor
Subsidiaries’ or Subsidiary Issuers’ total or current liabilities and was not deemed material.
88