Express 2011 Annual Report Download - page 50

• In the second quarter, we repurchased $24.2 million of Senior Notes on the open market at an average
price of 109.21% of the principal amount, or $26.4 million; and
• In the fourth quarter, we prepaid the entire $119.7 million outstanding balance of the Opco Term Loan.
Following these transactions, as of January 28, 2012, we had cash and cash equivalents of approximately $152.4
million and $193.6 million of availability under the Opco Revolving Credit Facility.
Our cash position is seasonal as a result of building up inventory for the next selling season and, as a result, our
cash and cash equivalents during the spring are usually lower when compared to the rest of the year. Our cash
balances generally increase during the summer selling season and then increase further during the Fall and
holiday seasons. We believe that cash generated from operations and the availability of borrowings under our
Opco Revolving Credit Facility or other financing arrangements will be sufficient to meet working capital
requirements, anticipated capital expenditures, and scheduled debt payments for at least the next 12 months.
Cash Flow Analysis
A summary of operating, investing and financing activities are shown in the following table:
Year Ended
2011 2010 2009
(in thousands)
Provided by operating activities ................ $212,609 $ 219,958 $ 200,721
Used in investing activities ................... (77,236) (54,843) (26,873)
Used in financing activities ................... (170,775) (211,757) (115,559)
(Decrease) increase in cash and cash equivalents . . (35,400) (46,642) 58,289
Cash and cash equivalents at end of period ....... $152,362 $ 187,762 $ 234,404
Net Cash Provided by Operating Activities
The majority of our operating cash inflows are derived from sales. Our operating cash outflows generally consist
of payments to merchandise vendors (net of vendor allowance), employees for wages, salaries, and other
employee benefits, and landlords for rent. Operating cash outflows also include payments for income taxes and
interest payments on long-term debt. Net cash provided by operating activities was $212.6 million in 2011
compared to $220.0 million in 2010, a decrease of $7.4 million. Relative to the fifty-two weeks ended
January 28, 2012, the decrease in cash provided by operations primarily related to the following:
• Items included in net income provided $224.0 million of cash during 2011 compared to $191.5 million
during 2010. The increase in the current year was primarily driven by improved operating results of our
business and lower interest expense. As discussed in the “Results of Operations” section above, this
was primarily the result of higher average dollar sales and the ongoing execution of our go-to-market
strategy, as well as continued debt reduction. These items were offset by higher taxes in the current
year as a result of improved operating results and the change in our tax status during the second quarter
of 2010.
• The increase in cash provided by items included in net income discussed above was more than offset
by $11.3 million of cash used for working capital increases during 2011 compared to $28.5 million of
cash provided in 2010. Working capital is subject to cyclical operating needs, the timing of receivable
collections and payable and expense payments, and the seasonal fluctuations in our operations. The
working capital increase in 2011 was primarily attributable to an increase in inventories and income tax
liability. The increase in inventories primarily reflects funding for continued e-commerce growth, new
stores, and new category growth, while the increase in income tax liability was driven by our status as a
corporation for all of 2011 versus only 9 months in 2010 and timing of tax payments.
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