Express 2011 Annual Report Download - page 77

The Company’s outstanding liability to other Golden Gate affiliates, included in accounts payable and accrued
expenses—related parties on the Consolidated Balance Sheets, was $6.0 million and $3.0 million as of
January 28, 2012 and January 29, 2011, respectively.
In December 2009, the Company began providing real estate services to certain Golden Gate affiliates. Income
recognized for these services during 2011 and 2010 was $0.5 million and $0.4 million, respectively. Minimal
income was recognized during 2009. As of January 28, 2012 and January 29, 2011, the Company’s receivable
balance related to these services was $0.1 million.
Prior to the prepayments of the 14.5% Topco Term C Loan (“Term C Loan”) and 13.5% Topco Term B Loan
(“Term B Loan”), collectively referred to as the “Topco Credit Facility”, in February 2010 and May 2010,
respectively, an affiliate of Golden Gate was owed $50.0 million and $58.3 million, respectively. Total interest
expense on the Topco Credit Facility attributed to the Golden Gate affilates was $7.9 million and $14.5 million in
2010 and 2009, respectively. The Company did not incur any interest expense under the Topco Credit Facility in
2011 due to the prepayments of the Topco Credit Facility in the first half of 2010.
During the first and second quarters of 2011, the Company repurchased $25.0 million and $24.2 million of
Senior Notes, respectively, in open market transactions. Of the $49.2 million of Senior Notes repurchased, $40.0
million were held by a Golden Gate affiliate, leaving $10.0 million of Senior Notes owned by a Golden Gate
affiliate outstanding as of January 28, 2012. Interest expense incurred on the Senior Notes attributable to the
Golden Gate affiliate was $1.7 million and $4.0 million, during 2011 and 2010, respectively. There was no
interest on the Senior Notes in 2009.
The Golden Gate affiliate’s portion of cash paid for interest under the Topco Credit Facility and the Senior Notes,
was $3.6 million, $10.1 million, and $14.4 million in 2011, 2010, and 2009, respectively.
8. Income Taxes
Prior to May 2, 2010, the Company was treated as a partnership for federal income tax purposes, and therefore
had not been subject to federal and state income tax (subject to exception in a limited number of state and local
jurisdictions). On May 12, 2010, the Company elected to be treated as a corporation under Subchapter C of
Chapter 1 of the United States Internal Revenue Code (“IRC”), effective May 2, 2010 and was, therefore, 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 the liquidation of Express Parent. The Reorganization resulted in a taxable gain to
Express Parent. Except in those few jurisdictions where Express Parent was taxed directly, the taxable gain
flowed through to the members due to Express Parent’s partnership tax treatment. The taxable gain
correspondingly increased the tax basis in the assets acquired by the Company in the Reorganization. Also, as a
result of the Reorganization, the Company had a liability due to a management holding company totaling $0.8
million as of January 29, 2011. The Company settled this liability by making a final cash payment during the first
quarter of 2011. Additionally, the Company settled a $4.8 million gross liability payable to a Golden Gate entity
during the second quarter of 2011. The Company settled the liability due to Golden Gate by making a final cash
payment during the second quarter of 2011.
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