Express 2010 Annual Report Download - page 61

The following table presents a reconciliation of the differences between EBITDA and Adjusted EBITDA to net
income, the most directly comparable GAAP financial measure, for the stated periods.
Year Ended
2010 2009 2008
(in thousands)
Net income (loss) ............................. $127,388 $ 75,307 $ (29,036)
Depreciation and amortization ................... 65,062 69,668 79,105
Interest expense, net (a) ........................ 59,477 52,738 33,199
Income tax expense ........................... 14,354 1,236 246
EBITDA .................................... 266,281 198,949 83,514
Non-cash deductions, losses, charges (b) ........... 14,579 12,128 21,112
Non-recurring expenses (c) ..................... 2,090 5,908 18,660
Transaction expenses (d) ....................... 2,628 1,656 3,596
Permitted Advisory Agreement fees and
expenses (e) ............................... 12,752 7,153 4,238
Non-cash expense related to equity incentives ...... 5,296 2,052 2,069
Other adjustments allowable under our existing credit
agreements (f) .............................. 5,672 1,904 4,009
Adjusted EBITDA ............................ $309,298 $229,750 $137,198
(a) Includes interest income and also includes amortization of debt issuance costs, amortization of debt
discount, and loss on extinguishment of debt.
(b) Adjustments made to reflect the net impact of non-cash expense items such as non-cash rent and expense
associated with the change in fair value of our interest rate swap in accordance with our debt agreements.
(c) Primarily includes expenses related to the development of stand-alone information technology systems in
connection with the termination of our Transition Services Agreement with Limited Brands.
(d) Represents costs incurred related to items such as the issuance of stock, recapitalizations, and incurrence of
permitted indebtedness.
(e) Includes on-going consulting and management services provided by Golden Gate pursuant to the Advisory
Agreement entered into in connection with the Golden Gate Acquisition.
(f) Reflects adjustments permitted under our existing credit agreements, including advisory fees paid to Limited
Brands under the LLC Agreement.
Liquidity and Capital Resources
General
Our business relies on cash flows from operations as our primary source of liquidity. We do, however, have
access to additional liquidity, if needed, through borrowings under our Opco revolving credit facility. Our
primary cash needs are for merchandise inventories, payroll, store rent, capital expenditures associated with
opening new stores and updating existing stores, and information technology. The most significant components
of our working capital are merchandise inventories, accounts payable, and other current liabilities. Our liquidity
position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case
of credit or debit card transactions, within a few days of the related sale and have up to 75 days to pay certain
merchandise vendors and 45 days to pay the majority of our non-merchandise vendors.
In 2010, we had the following significant cash transactions outside the normal course of business:
• March 2010—Used net proceeds of $246.5 million (net of original issue discount) from the
$250.0 million Senior Notes offering, together with cash on hand of $153.8 million, to prepay the Term
C Loan, including the related prepayment penalty and accrued interest and to make a $230.0 million
distribution to our equity holders.
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