Express 2011 Annual Report Download - page 30

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to redesign or re-label our products or rename our brand, any of which could have a material adverse effect on
our business, financial condition, results of operations, or cash flows.
Our substantial indebtedness and lease obligations could adversely affect our financial flexibility and our
competitive position.
We have, and we will continue to have, a significant amount of indebtedness. As of January 28, 2012, we had
$198.5 million of outstanding indebtedness (net of unamortized original issue discounts of $2.3 million). As of
January 28, 2012, we had no borrowings outstanding and $193.6 million available under our $200.0 million secured
Asset-Based Loan Credit Agreement (the “Opco Revolving Credit Facility”). Our substantial level of indebtedness
increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our
indebtedness. We also have, and will continue to have, significant lease obligations. As of January 28, 2012, our
minimum annual rental obligations under long-term operating leases for 2012 and 2013 were $178.4 million and
$158.4 million, respectively. Our substantial indebtedness and lease obligations could have other important
consequences to you and significant effects on our business. For example, they could:
• increase our vulnerability to adverse changes in general economic, industry, and competitive
conditions;
• require us to dedicate a substantial portion of our cash flow from operations to make payments on our
indebtedness and leases, thereby reducing the availability of our cash flow to fund working capital,
capital expenditures, and other general corporate purposes;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate;
• restrict us from exploiting business opportunities;
• make it more difficult to satisfy our financial obligations, including payments on our indebtedness;
• place us at a disadvantage compared to our competitors that have less debt and lease obligations; and
• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt
service requirements, execution of our business strategy, or other general corporate purposes.
In addition, our existing credit agreements and the indenture governing the 8
3
⁄
4
% Senior Notes (“Senior Notes”)
contain, and the agreements evidencing or governing other future indebtedness may contain, restrictive covenants
that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply
with those covenants could result in an event of default which, if not cured or waived, could result in the
acceleration of all of our indebtedness.
Our indebtedness may restrict our current and future operations, which could adversely affect our ability to
respond to changes in our business and to manage our operations.
Our existing credit agreement and the indenture governing the Senior Notes contain financial restrictions on us and
our restricted subsidiaries, including restrictions on our or our restricted subsidiaries’ ability to, among other things:
• place liens on our or our restricted subsidiaries’ assets;
• make investments other than permitted investments;
• incur additional indebtedness;
• prepay or redeem certain indebtedness;
• merge, consolidate or dissolve;
• sell assets;
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