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I. Audit Committee Purpose
II. Audit Committee Composition and Meetings
III. Audit Committee Responsibilities and Duties
GUESS?, INC.
Restated Charter of the Audit Committee of the Board of Directors
as adopted by the Board of Directors
on February 26, 2004
I. Audit Committee Purpose
The Audit Committee (the "Committee") is appointed by the Board
of Directors (the "Board") of Guess?, Inc. (the "Company")
to oversee the accounting and financial reporting processes of the Company
and audits of the financial statements of the Company and to prepare the annual
report of Audit Committee required by applicable Securities and Exchange Commission
("SEC") disclosure rules, which report will be included in the Company's
annual proxy statement. Among the matters the Committee will oversee are (a)
the integrity of the Company's financial statements, (b) the Company's compliance
with legal and regulatory requirements, (c) the independent auditor's qualifications
and independence, and (d) the performance of the Company's internal audit
function and independent auditor.
The Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities, and it has direct access to the independent
auditors as well as anyone in the Company. The Committee has the power, in
its sole discretion, to obtain advice and assistance from, and to retain at
the Company's expense, such independent or outside legal counsel, accounting
or other advisors and experts as it determines necessary or appropriate to
carry out its duties, and in connection therewith to receive appropriate funding,
determined by it, from the Company. The Committee also has the power to determine
the level and cost of ordinary administrative expenses necessary or appropriate
in carrying out its duties, with such costs to be borne by the Company.
The independent auditors are ultimately accountable to the Committee. The
Committee shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent auditors (or to nominate
the independent auditors to be proposed for stockholder approval in any proxy
statement).
II. Audit Committee Composition and Meetings
Composition
Audit Committee members shall meet the independence and knowledge requirements
of applicable law and the rules of the SEC and the New York Stock Exchange
(the "Exchange") in effect from time to time (subject to any exceptions
allowed by such rules and any waivers granted by such authorities). No Audit
Committee member shall simultaneously serve on the audit committees of more
than two other public companies.
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall have no relationship to the Company that
may interfere with the exercise of his or her independence from management
and the Company and each of whom shall meet the other independence requirements
and restrictions with respect to audit committee members as set forth in the
corporate governance standards of the Exchange. Each member of the Committee
shall be financially literate, as such qualification is interpreted by the
company's Board in its business judgment, or must become financially literate
within a reasonable period of time after his or her appointment to the Committee.
At least one member of the Committee must have accounting or related financial
management expertise, as the Board interprets such qualification in its business
judgment.
If practicable, at least one member of the Committee must qualify as an "audit
committee financial expert" (as defined by the SEC). The Company will
disclose in its annual report required by Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), whether or not
it has at least one member who is an audit committee financial expert. In
any event, the Committee must include at least one member who the Board determines
has accounting or related financial management experience.
Audit Committee members shall be appointed by and serve at the discretion
of the Board, following the recommendations of the Company's Nominating and
Governance Committee. The Board may designate a Chairperson of the Committee
(a "Chair"). If a Chair is not designated or if the designated Chair
is not present at a meeting, the members of the Committee may designate a
Chair by majority vote of the Committee membership.
Meetings
The Committee shall meet at least four times annually, or more frequently
as it shall determine is necessary to carry out its duties and responsibilities.
The Committee may ask any officer or employee of the Company or the Company's
outside counsel or independent auditor to attend a meeting of the Committee
or to meet with any member of, or consultant to, the Committee and to provide
pertinent information as necessary. In consultation with management, other
Committee members and the independent auditors, the Chair shall prepare and/or
approve an agenda in advance of each meeting. The Committee shall maintain
minutes of meetings, regularly report to the Board regarding the Committee's
activities, and its conclusions with respect to the independent auditor, and
make appropriate recommendations to the Board. Unless the Committee or the
Board adopts other procedures, the provisions of the Company's Bylaws applicable
to meetings of the Board will govern meetings of the Committee.
The Committee shall meet privately in separate executive sessions periodically
and at least annually with management, the director of the internal auditing
department (or the firm selected to perform internal auditing, if such function
is outsourced), the independent auditors, and as a committee to discuss any
matters that the Committee or any of such persons or groups believes should
be discussed. In addition, the Committee, or its Chair, shall communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings prior to the filing of such
statements with the SEC.
III. Audit Committee Responsibilities and Duties
Review Procedures
Review and reassess the adequacy of this charter (the "Charter")
at least annually. Submit the Charter to the Board for approval and have
the Charter published as required by applicable law. Review and discuss with Company management and the independent auditors:
(i) the Company's yearly financial results prior to the release of
year-end earnings and the Company's annual audited consolidated financial
statements (including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of Operations")
and the related report of the independent auditors prior to filing or
distribution of such statements,
(ii) the Company's quarterly financial results prior to the release
of quarterly earnings (including the type and presentation of information
to be included in the earnings press releases) and the Company's quarterly
financial statements (including the Company's disclosure under "Management's
Discussion and Analysis of Financial Condition and Results of Operations")
and the related report of the independent auditors prior to filing or
distribution of such statements, and
(iii) the Company's financial information and earnings guidance provided
to analysts and rating agencies.
Such review should include discussion with management and the independent
auditors of:
(a) significant issues regarding, and any material changes to, accounting
and auditing principles and financial statement presentations, practices
and judgments,
(b) the adequacy of internal controls that could significantly affect
the Company's financial statements, and any special audit steps adopted
in light of material control deficiencies,
(c) in the case of year-end financial results, the results of the audit,
and
(d) any items required to be communicated by the independent auditors
in accordance with Statement of Auditing Standards (SAS) No. 61, as
it may be amended or supplemented.
The Chair may represent the entire Committee for purposes of this review.
Review an analysis prepared by management and the independent auditors
of significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements, including an
analysis of the effect of alternative GAAP methods on the Company's financial
statements. In consultation with management, the independent auditors and the internal
auditors, consider the integrity of the Company's financial reporting processes
and internal control policies and procedures. Meet periodically with management to discuss significant financial risk
exposures and the steps management has taken to monitor, control, and report
such exposures. Review significant findings prepared by the independent
auditors and those charged with the internal auditing function together
with management's responses, including the status of previous recommendations. Review with management and the independent auditor the effect of regulations
and accounting initiatives as well as off-balance sheet structures on the
Company's financial statements. Obtain and review timely reports from the independent auditor regarding:
(a) all critical accounting policies and practices to be used by the
Company,
(b) all alternative treatments of financial information within GAAP
that have been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the treatment preferred
by the independent auditor, and
(c) all other material written communications between the independent
auditor and management, including any management letter or schedule
of unadjusted differences.
Such reports may be oral or in writing, but must be provided to the Committee
before any auditor's report is filed with the SEC.
Independent Auditors
Be solely and directly responsible for the appointment, compensation,
retention, evaluation, and oversight of the work of the independent auditor
(including resolution of disagreements between management and the independent
auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for
the Company and, where appropriate, the termination and replacement of such
firm. Such independent auditor shall report directly to and be ultimately
accountable to the Committee. The Committee has the ultimate authority to
approve all audit engagement fees and terms, with the costs of all engagements
to be borne by the Company. Consider whether there should be regular rotation of the independent
auditor. Review and evaluate the lead partner of the independent auditor.
Ensure that the lead audit partner having primary responsibility for the
audit and the reviewing audit partner of the independent auditor are rotated
at least every five years and that other audit partners (as defined by the
SEC) are rotated at least every seven years. Review changes to the Company's auditing and accounting policies and
practices as suggested by the independent auditors, internal auditors or
management. Review and approve the independent auditors' engagement letter and approve
the fees and other significant compensation to be paid to the independent
auditors. Pre-approve all audit services and all non-audit services permitted to
be performed by the independent auditor. Such pre-approval may be given
as part of the Committee's approval of the scope of the engagement of the
independent auditor or on an engagement-by-engagement basis or pursuant
to pre-established policies. In addition, the authority to pre-approve non-audit
services may be delegated by the Committee to one or more of its members,
but such member's or members' non-audit service approval decisions must
be reported to the full Committee at the next regularly scheduled meeting.
The Company shall disclose in its Annual Reports on Form 10-K and its Quarterly
Reports on Form 10-Q any approval of non-audit services during the period
covered by the applicable report. At least annually, obtain and review a report from the independent auditor
describing:
(a) the independent auditor's internal quality-control procedures,
(b) any material issues raised by the most recent internal quality-control
review, or peer review, of the independent auditor, or by any inquiry
or investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent audits
carried out by the independent auditor, and any steps taken to deal
with any such issues, and
(c) all relationships between the independent auditor and the Company
(to assess the independent auditor's independence).
Set clear hiring policies for employees and former employees of the independent
auditor. Review the independent auditors' audit plan prior to the audit. Discuss
scope, staffing, locations, reliance upon management, and internal audit
and general audit approach. Monitor such plan's progress and results during
the year. Consider the independent auditor's judgments about the quality and appropriateness
of the Company's accounting principles as applied in its financial reporting Obtain from the independent auditors any information pursuant to Section
10A of the 1934 Act and take any and all action required by Section 10A
to be taken by the Committee, and cause the Board to take, any and all action
required by Section 10A to be taken by the Board, in response to any such
information. Review with the independent auditors any problems or difficulties the
auditors may have encountered in the course of their audit work, and any
management letter provided by the independent auditors and the Company's
response to that letter. Such review should include:
(a) Any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to required information,
and
(b) Any changes required in the planned scope of the independent audit.
Discuss with the independent auditor any accounting adjustments that
were noted or proposed by the independent auditor but were passed on. Review
any communications between the audit team and the audit firm's national
office respecting auditing or accounting issues presented by the engagement
and any "management" or "internal control" letter issued,
or proposed to be issued, by the audit firm to the Company.
Internal Audit Function and Legal Compliance
Review the budget, plan, changes in plan, activities, responsibilities,
staffing, organizational structure, and qualifications of the internal auditor,
as needed. Review the appointment, performance, and replacement of the senior internal
audit executive, manager or firm. Review significant reports prepared by the internal auditor together
with management's response and follow-up to these reports. On at least an annual basis, review with the Company's counsel any legal
matters that could have a significant impact on the Company's financial
statements, the Company's compliance with applicable laws and regulations,
and any inquiries received from regulators or governmental agencies.
Other Audit Committee Responsibilities
Annually prepare a report as required by, and stating the information
specified by, the proxy rules under the 1934 Act, which report shall be
included in the Company's annual meeting proxy statement (or, if applicable,
information statement in lieu thereof). Recommend to the Board, based on the Committee's review and discussions
with management and the independent auditors, whether or not the audited
financial statements should be included in the Company's Annual Report on
Form 10-K for the last fiscal year for filing with the SEC. Confirm that the Company's interim financial statements to be included
in the Company's Quarterly Report on Form 10-Q have been reviewed by the
Company's independent auditors. Perform any other activities consistent with the Charter, the Company's
Bylaws, and governing law, as the Committee or the Board deems necessary
or appropriate. Maintain minutes of meetings and periodically report to the Board on
significant results of the foregoing activities. Establish, review, and update periodically a Code of Conduct and ensure
that management has established a system to enforce this Code. Establish procedures for the receipt, retention and treatment of complaints
received by the Company from Company employees regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by Company employees of concerns regarding questionable accounting
or auditing matters. Annually perform self-assessment of audit committee performance. Review financial and accounting personnel succession planning within
the Company. Review at least annually a summary of directors' and officers' related
party transactions and potential conflicts of interest and the Company's
policies relating to the avoidance of conflicts of interest. Review past
and proposed transactions between the Company, on the one hand, and any
of its directors or executive officers, on the other hand. Review policies
and procedures as well as audit results associated with directors' and officers'
expense accounts and perquisites, including the use of corporate assets.
Consider the results of any review of any of the foregoing by the Company's
independent auditors. Obtain reports from management, the Company's senior internal auditor,
the independent auditors and internal and external legal counsel that the
Company's subsidiaries and any foreign affiliated entities are in conformity
with applicable accounting and legal requirements. Report regularly to the Board with respect to the quality or integrity
of the Company's financial statements, the Company's compliance with applicable
legal or regulatory requirements, the performance and independence of the
Company's independent auditors, and the performance of the internal audit
function. Confirm that the Company has prepared and filed, on an annual basis after
the Board appoints the Committee and at any subsequent time when the composition
of the Committee changes, the written certification required by the rules
of the Exchange.
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| | | Committee Members |  | Anthony Chidoni |  | Alex Yemenidjian | | Judith Blumenthal | | Gianluca Bolla |
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