Express 2013 Annual Report Download - page 56

Table of Contents
Prior to March 1, 2014, the Senior Notes could have been redeemed in part or in full at a redemption price equal to the principal amount plus a make-whole
premium, calculated in accordance with the indenture governing the Senior Notes, and accrued and unpaid interest. On or after March 1, 2014, the Senior
Notes may be redeemed in part or in full at the following percentages of the outstanding principal amount prepaid: 104.38% prior to March 1, 2015; 102.19%
on or after March 1, 2015, but prior to March 1, 2016; and at the principal amount on or after March 1, 2016. In the first quarter of 2011, $25.0 million of
Senior Notes were repurchased on the open market at a price of 108.75% of the principal amount. In the second quarter of 2011, $24.2 million of Senior
Notes were repurchased on the open market at an average price of 109.21% of the principal amount.
The indenture governing the Senior Notes contains customary covenants and restrictions on the activities of Express, LLC, Express Finance, and Express,
LLC's restricted subsidiaries, including, but not limited to, the incurrence of additional indebtedness; payment of dividends or distributions in respect of
capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or
disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the
sale of substantially all of Express, LLC's assets. Certain of these covenants will be suspended if the Senior Notes are assigned an investment grade rating by
both Standard & Poor and Moody's Investors Service and no default has occurred or is continuing. If either rating on the Senior Notes should subsequently
decline to below investment grade, the suspended covenants will be reinstated.
Loss on Extinguishment
In connection with the Senior Notes repurchases in 2011, the Company recognized a $6.9 million loss on extinguishment of debt. Of this loss on
extinguishment of debt, the premium on the repurchases represented $4.4 million. The remaining loss on extinguishment consisted of the write-off of
unamortized debt issuance costs and unamortized discount totaling $2.5 million.
In connection with amending and restating the existing Revolving Credit Facility in 2011, the Company recognized a $0.3 million loss on extinguishment of
debt, which consisted of the write-off of unamortized debt issuance costs.
In connection with the prepayment of the Term Loan in 2011, the Company recognized a $2.4 million loss on extinguishment of debt, which consisted of the
write-off of unamortized debt issuance costs.
Losses on extinguishment of debt were recorded as interest expense in the Consolidated Statements of Income and Comprehensive Income. The write-offs of
unamortized debt issuance costs and unamortized discounts represent a non-cash adjustment to reconcile net income to net cash provided by operating
activities within the Consolidated Statements of Cash Flows.
Fair Value of Debt
The fair value of the Senior Notes was estimated using a number of factors, such as recent trade activity, size, timing, and yields of comparable bonds and
is, therefore, within Level 2 of the fair value hierarchy. As of February 1, 2014, the estimated fair value of the Senior Notes was $210.6 million.
Letters of Credit
The Company may enter into various trade letters of credit ("trade LCs") in favor of certain vendors to secure merchandise. These trade LCs are issued for a
defined period of time, for specific shipments, and generally expire 3 weeks after the merchandise shipment date. As of February 1, 2014 and February 2,
2013, there were no outstanding trade LCs. Additionally, the Company enters into stand-by letters of credit ("stand-by LCs") on an as-need basis to secure
merchandise and fund other general and administrative costs. As of February 1, 2014 and February 2, 2013, outstanding stand-by LCs totaled $2.0 million
and $2.1 million, respectively.
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On May 24, 2012, the Board authorized the Company to repurchase up to $100.0 million of the Company's common stock (the "Repurchase Program") from
time to time in open market or privately negotiated transactions. The Repurchase Program was completed during the third quarter of 2013 following the
repurchase of 5.6 million shares of the Company's common stock for approximately $100.0 million since May 24, 2012. During 2013, the Company
repurchased 1.6 million shares of its common stock for a total of $35.1 million, including commissions. During 2012, the Company repurchased 4.0 million
shares of its common stock for a total of $65.1 million, including commissions.
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