Express 2014 Annual Report Download - page 36

The effective tax rate was 38.8% in 2014 compared to 39.7% in 2013. The reduction in the tax rate for 2014 was
primarily related to the release of uncertain tax positions following the conclusion of an IRS examination. Refer
to Note 7 of the Consolidated Financial Statements for additional information. We anticipate our effective tax
rate will be approximately 40.0% in 2015.
The effective tax rate for 2013 was 39.7% compared to 40.0% for 2012.
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 Revolving Credit Facility. Our primary
cash needs are for merchandise inventories, payroll, store rent, and capital expenditures, primarily associated
with opening new stores, remodeling existing stores, and information technology projects. The most significant
components of our working capital are merchandise inventories, accounts payable, and other accrued expenses.
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 three to five 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.
Our cash position is seasonal as a result of building up inventory for the next selling season and, as a result, our cash
flows from operations during the spring are usually lower when compared to the rest of the year. Our cash balances
generally increase during the summer selling season, decrease in the fall as we build our inventory for the holiday
selling season, and then increase over the course of the holiday selling season. We believe that cash generated from
operations and the availability of borrowings under our Revolving Credit Facility will be sufficient to meet working
capital requirements and anticipated capital expenditures for at least the next 12 months.
Cash Flow Analysis
A summary of cash provided by or used in operating, investing, and financing activities are shown in the
following table:
Year Ended
2014 2013 2012
(in thousands)
Provided by operating activities ................ $156,570 $ 195,075 $269,364
Used in investing activities .................... (116,098) (105,462) (99,884)
Used in financing activities .................... (4,938) (33,331) (65,551)
Increase in cash and cash equivalents ............ 34,275 55,587 103,935
Cash and cash equivalents at end of period ........ $346,159 $ 311,884 $256,297
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, employees for wages, salaries, and other employee benefits, and landlords
for rent. Operating cash outflows also include payments for income taxes and interest on long-term debt.
Net cash provided by operating activities was $156.6 million in 2014 compared to $195.1 million in 2013, a
decrease of $38.5 million. For the 52-week period ended January 31, 2015, the decrease in cash provided by
operations primarily related to the following:
• Items included in net income provided $171.0 million of cash during 2014 compared to $197.9 million
during 2013. The decrease in the current year was primarily driven by the decreased performance of the
business as discussed in “Overview” and “Results of Operations,” which was partially offset by an
increase in non-cash charges for impairment and depreciation and amortization.
32