Express 2011 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2011 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 112

  • 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Basis of Presentation
Business Description
Express, Inc. (“Express” or the “Company”) is a specialty apparel and accessories retailer of women’s and men’s
merchandise, targeting the 20 to 30 year old customer. Express merchandise is sold through its retail stores and
website. As of January 28, 2012, Express operated 609 primarily mall-based stores in the United States, Canada
and Puerto Rico. Additionally, the Company earns royalties from 7 stores in the Middle East operated through a
development agreement (“Development Agreement”) with Alshaya Trading Co. (“Alshaya”). Under the
Development Agreement, Alshaya operates stores that sell Express-branded apparel and accessories purchased
directly from the Company.
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the
calendar year in which the fiscal year commences. All references herein to “2011”, “2010,” and “2009” represent
the 52-week periods ended January 28, 2012, January 29, 2011, and January 30, 2010, respectively.
Basis of Presentation
In connection with the initial public offering of the Company’s common stock (“IPO”) on May 12, 2010, Express
Parent LLC (“Express Parent”) converted into a Delaware corporation and changed its name from Express Parent
LLC to Express, Inc. This conversion was effective May 2, 2010 for tax purposes. In connection with this
conversion, all of the equity interests in Express Parent, which consisted of Class L, Class A, and Class C units,
were converted into shares of the Company’s common stock at a ratio of 0.702, 0.649, and 0.442, respectively.
The accounting effects of the recapitalization, collectively referred to as the “Reorganization”, are reflected
retrospectively for all periods presented in the Consolidated Financial Statements.
Express owns all of the outstanding equity interests in Express Topco LLC (“Express Topco”), which owns all of
the outstanding equity interests in Express Holding LLC (“Express Holding”). Express Holding owns all of the
outstanding equity interests in Express, LLC and Express Finance Corp. (“Express Finance”). Express, LLC
conducts the operations of the Company and was a division of Limited Brands until it was acquired by an
affiliate of Golden Gate Private Equity, Inc. (“Golden Gate”) in 2007 (the “Golden Gate Acquisition”). Express
Finance was formed on January 28, 2010, solely for the purpose of serving as co-issuer of the 8 3/4% Senior
Notes (“Senior Notes”) issued on March 5, 2010 and described in Note 9.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries.
All intercompany transactions and balances have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles in the United
States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of
revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and
liabilities as of the date of the Consolidated Financial Statements. Actual results may differ from those estimates.
The Company revises its estimates and assumptions as new information becomes available.
57