Express 2011 Annual Report Download - page 49

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
2011 2010 2009
(in thousands)
Net income .................................. $140,697 $127,388 $ 75,307
Depreciation and amortization ................... 65,335 65,062 69,668
Interest expense, net (a) ........................ 35,792 59,477 52,738
Income tax expense ........................... 94,868 14,354 1,236
EBITDA .................................... 336,692 266,281 198,949
Non-cash deductions, losses, charges (b) ........... 14,044 14,579 12,128
Non-recurring expenses (c) ..................... — 2,090 5,908
Transaction expenses (d) ....................... — 2,628 1,656
Permitted Advisory Agreement fees and
expenses (e) ............................... — 12,752 7,153
Non-cash expense related to equity incentives ...... 10,089 5,296 2,052
Foreign currency translation .................... (411) — —
Other adjustments allowable under our existing credit
agreements (f) .............................. 3,026 5,672 1,904
Adjusted EBITDA ............................ $363,440 $309,298 $229,750
(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 and other allowable adjustments 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 advisory fees and expenses paid to 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 2011, we had the following significant cash transactions outside the normal course of business:
• In the first quarter, we repurchased $25.0 million of Senior Notes on the open market at a price of
108.75% of the principal amount, or $27.2 million;
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