Express 2011 Annual Report Download - page 48

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EBITDA and Adjusted EBITDA
The following table presents EBITDA and Adjusted EBITDA for the stated periods:
Year Ended
2011 2010 2009
(in thousands)
EBITDA .................................... $336,692 $266,281 $198,949
Adjusted EBITDA ............................ $363,440 $309,298 $229,750
EBITDA and Adjusted EBITDA have been presented in this Annual Report on Form 10-K and are supplemental
measures of financial performance that are not required by, or presented in accordance with GAAP. EBITDA is
defined as consolidated net income before depreciation and amortization, interest expense (net), which includes
amortization of debt issuance costs and debt discounts and losses on debt extinguishment, and income taxes.
Adjusted EBITDA is calculated in accordance with the agreements governing our existing debt arrangements and
is defined as EBITDA adjusted to exclude the items set forth in the following table.
EBITDA is included in this Annual Report on Form 10-K because it is a key metric used by management to
assess our operating performance. Adjusted EBITDA is included in this Annual Report on Form 10-K because it
is a measure by which our lenders evaluate our covenant compliance. The Opco Term Loan contained a leverage
ratio covenant and the Opco Revolving Credit Facility contains a fixed charge coverage ratio covenant that we
must meet if we do not meet the excess availability requirement under the Opco Revolving Credit Facility, and
both covenants are calculated based on Adjusted EBITDA. Non-compliance with the financial ratio covenants
contained in the Opco Revolving Credit Facility could result in the acceleration of our obligations to repay all
amounts outstanding under this agreement. In addition, the Opco Revolving Credit Facility and the indenture
governing the Senior Notes contain covenants that restrict, subject to certain exceptions, our ability to incur
additional indebtedness or make restricted payments, such as dividends, based, in some cases, on our ability to
meet leverage ratios or fixed charge coverage ratios. Adjusted EBITDA is a material component of these ratios.
EBITDA and Adjusted EBITDA are not measures of our financial performance or liquidity under GAAP and
should not be considered as alternatives to net income as a measure of operating performance, cash flows from
operating activities as a measure of liquidity, or any other performance measure derived in accordance with
GAAP. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for
management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax
payments, and debt service requirements. EBITDA and Adjusted EBITDA contain certain other limitations,
including the failure to reflect our cash expenditures, cash requirements for working capital needs, and cash costs
to replace assets being depreciated and amortized and exclude certain non-recurring charges that may occur in
the future. Management compensates for these limitations by relying primarily on our GAAP results and by
using EBITDA and Adjusted EBITDA only supplementally. Our measures of EBITDA and Adjusted EBITDA
are not necessarily comparable to other similarly titled captions of other companies due to potential
inconsistencies in the methods of calculation.
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