N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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GUESS?, Inc. and Subsidiaries
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On March 28, 2000 a complaint was filed against us in San Diego County Superior Court entitled Snodgrass v. GUESS?, Inc. and GUESS?
Retail, Inc. The complaint purports to be a class action filed on behalf of current and former store management employees in California.
Plaintiffs seek overtime wages and a preliminary and permanent injunction. The parties have stipulated that a limited class composed
only of visual co-managers and co-managers should be certified. The Court certified this limited class on March 16, 2001. The trial date
has been set for November 9, 2001.
On May 4, 2000, a complaint was filed against the Company and Mr. Paul Marciano in the Los Angeles Superior Court Michel
Benasra v. Paul Marciano and GUESS?, Inc. The complaint grows out of the arbitration between the Company and PLB, discussed
above. The plaintiff, the President of PLB, alleges that defendants made defamatory statements about him during the arbitration. Plaintiff
seeks general damages of $50,000,000 and unspecified punitive damages. Defendants moved to compel arbitration of this matter, or
alternatively, to strike the action under the state's anti-SLAPP (Strategic Litigation Against Public Participation) statute. The motion
to compel arbitration was denied and the decision has been appealed. Pending resolution on appeal, this matter has been stayed. No
trial date has been set.
On January 30, 2001, GUESS?, Inc. Maurice Marciano, Armand Marciano, Paul Marciano, and Brian Fleming were named as defendants
in a securities class action entitled David Osher v. GUESS?, Inc., et al., filed in the United States District Court for the Central District of
California. Seven additional class actions have been filed in the Central District, naming the same defendants: Robert M. Nuckols v. GUESS?,
Inc. et al., Brett Dreyfuss v. GUESS?, Inc. et al., both filed February 1, 2001; Jerry Sloan v. GUESS?, Inc., et al., filed February 6, 2001; Jerry
Byrd v. GUESS?, Inc., et al; filed February 13, 2001; Patrick and Kristine Liska v. GUESS?, Inc., et al, filed February 14, 2001; Darrin Wegman
v. GUESS?, Inc., et al., filed February 22, 2001; and Rosie Gindie v. GUESS?, Inc., et al., filed February 22, 2001. All eight complaints purport
to state claims under Section 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and allege that defendants made
materially false and misleading statements relating to the Company's inventory and financial condition during the class period. In Osher,
Nuckols, Byrd, Wegman and Sloan, the class period is February 14, 2000 through January 26, 2001; in Dreyfuss, Liska and Gindie the class
period is February 14, 2000 through November 9, 2000. We are awaiting Court approval of a stipulation to extend our time to respond until
45 days after a lead plaintiff has been appointed and has filed a consolidated amended complaint.
On March 15, 2001, a complaint was filed by Susan Goldman, derivatively on behalf of nominal defendant GUESS?, Inc. against Bryan
Isaacs, Alice Kane, Robert Davis, Armand Marciano, Paul Marciano, Maurice Marciano, Howard Socol and GUESS?, Inc. in the Court of
Chancery for the State of Delaware. The complaint alleges misappropriation of corporate information, insider trading and other purported
breaches of fiduciary duty by the Company and its Board of Directors. Our response is due April 10, 2001.
We cannot predict the outcome of these matters. We believe the outcome of one or more of the above cases could have a material
adverse effect on our results of operations or financial condition. Most major corporations, particularly those operating retail busi-
nesses, become involved from time to time in a variety of employment-related claims and other matters incidental to their business in
addition to those described above. In the opinion of our management, the resolution of any of these pending incidental matters is not
expected to have a material adverse effect on our results of operations or financial condition.
N O T E 1 1 . S A V I N G S P L A N
The Company established the GUESS?, Inc. Savings Plan (the "Savings Plan") under Section 401(k) of the Internal Revenue Code. Under
the Savings Plan, employees ("associates") may contribute up to 15% of their compensation per year subject to the elective limits as
defined by IRS guidelines and the Company may make matching contributions in amounts not to exceed 1.5% of the associates' annual
compensation. The Company's contributions to the Savings Plan for the year ended December 31, 2000, amounted to $0.4 million and
$0.3 million for each of the years ended December 31, 1999 and 1998.
