Express 2011 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 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

Estimated future amortization expense will approximate the following (in thousands):
2012 .............................................. $1,536
2013 .............................................. 1,221
2014 .............................................. 718
2015 .............................................. —
2016 .............................................. —
Thereafter .......................................... —
Total .............................................. $3,475
7. Related Party Transactions
Transactions with Limited Brands
On July 6, 2007, in connection with the Golden Gate Acquisition, the Company entered into a Transition Service
Agreement (“Transition Service Agreement”) pursuant to which Limited Brands’ affiliates provided support in
various operational areas including, among other things, human resources, real estate, tax, marketing, logistics,
technology, and product sourcing. The provision of these services under the Transition Service Agreement
expired in July 2010.
The Company entered into a logistics services agreement with an affiliate of Limited Brands on October 5, 2009,
which took effect in February 2010 and ends on April 30, 2016, to replace the logistics services provided to the
Company by Limited Brands under the Transition Service Agreement. The Limited Brands affiliate provides
certain inbound and outbound transportation and delivery services, distribution services, and customs and
brokerage services. The agreement will continue thereafter unless it is terminated by either party on no less than
24 months’ prior notice. In no event may the termination of the agreement occur between October 1 of any
calendar year and the last day of February of the next calendar year. In addition, merchandise sourcing services
are provided by Mast Global Fashions, an affiliate of Limited Brands.
On July 29, 2011, Limited Brands divested its remaining ownership in the Company and, as a result of this
disposition, Limited Brands and their affiliates were no longer related parties as of the end of the second quarter
of 2011. The 2011 related party activity with Limited Brands and their affiliates described below includes only
those expenses transacted prior to Limited Brands’ disposition of the Company’s common stock.
The Company incurred charges from affiliates of Limited Brands for various transaction services, including
home office rent, which is included in selling, general, and administrative expenses. The costs of merchandise
sourcing services and logistics services, including distribution center rent, are included in cost of goods sold,
buying, and occupancy costs. The amounts included in the Consolidated Statements of Income and
Comprehensive Income are as follows:
2011 2010 2009
(in thousands)
Merchandise Sourcing ......................... $198,162 $434,642 $464,709
Transaction and Logistics Services ............... $ 24,788 $ 58,098 $ 67,467
The Company’s outstanding liability related to merchandise sourcing and transaction and logistics services
provided by affiliates of Limited Brands included in accounts payable and accrued expenses—related parties on
the Consolidated Balance Sheets was $68.3 million and $8.6 million, respectively, as of January 29, 2011.
Prior to the IPO, under the Limited Liability Company Agreement of Express Parent (“LLC Agreement”),
Limited Brands was entitled to receive a cash payment at the same time payments were made under an advisory
agreement with Golden Gate (“Advisory Agreement”) equal to the product of (i) the amount of the fees actually
67