Express 2012 Annual Report Download - page 69

The Golden Gate affiliate’s portion of cash paid for interest under the Topco Credit Facility and the Senior Notes,
was $0.4 million, $3.6 million, and $10.1 million in 2012, 2011, and 2010, respectively.
8. Income Taxes
Prior to May 2, 2010, the Company was treated as a partnership for federal income tax purposes and, therefore,
had not been subject to federal and state income tax (subject to exception in a limited number of state and local
jurisdictions). On May 12, 2010, the Company elected to be treated as a corporation under Subchapter C of
Chapter 1 of the United States Internal Revenue Code (“IRC”), effective May 2, 2010 and was, therefore, subject
to federal and state tax expense beginning May 2, 2010.
The Reorganization, for tax purposes, was deemed a contribution by Express Parent of its assets and liabilities to
the Company, followed by the liquidation of Express Parent. The Reorganization resulted in a taxable gain to
Express Parent. Except in those few jurisdictions where Express Parent was taxed directly, the taxable gain
flowed through to the members due to Express Parent’s partnership tax treatment. The taxable gain
correspondingly increased the tax basis in the assets acquired by the Company in the Reorganization. Also, as a
result of the Reorganization, the Company had liabilities due to a management holding company and an affiliate
of Golden Gate totaling $0.8 million and $4.8 million, respectively, as of January 29, 2011. The Company settled
the liability to the management holding company by making a final cash payment during the first quarter of
2011. Additionally, the Company settled the gross liability payable to an affiliate of Golden Gate by making a
final cash payment during the second quarter of 2011. In the first quarter of 2012, the Company recorded an
additional pre-IPO tax liability of $0.3 million with an offsetting receivable from an affiliate of Golden Gate. The
receivable from the affiliate of Golden Gate was settled in the second quarter of 2012.
The provision for income taxes consists of the following:
2012 2011 2010
(in thousands)
Current:
U.S. federal ................................ $74,306 $76,984 $ 25,623
U.S. state and local .......................... 14,296 18,048 7,746
Foreign ................................... 165 156 —
Total ......................................... 88,767 95,188 33,369
Deferred:
U.S. federal ................................ 3,346 714 (16,085)
U.S. state and local .......................... 615 (949) (2,930)
Foreign ................................... (24) (85) —
Total ......................................... 3,937 (320) (19,015)
Provision for income taxes ........................ $92,704 $94,868 $ 14,354
The following table provides a reconciliation between the statutory federal income tax rate and the effective tax
rate:
2012 2011 2010
Federal income tax rate .................................... 35.0% 35.0% 35.0%
State income taxes, net of federal income tax effect ............. 4.3% 4.7% 4.5%
Entity status change from partnership ........................ — % — % (22.5)%
Partnership income not taxable .............................. — % — % (7.6)%
Other items, net .......................................... 0.7% 0.6% 0.7%
Effective tax rate ......................................... 40.0% 40.3% 10.1%
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