Edgar Filing: EXPRESS, INC.

2014 Q3 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 1, 2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______ TO ______

Commission File Number 001-34742

EXPRESS, INC.

(Exact name of registrant as specified in its charter)



Delaware		26-2828128
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 Express Drive Columbus, Ohio		43230
(Address of principal executive offices)		(Zip Code)

Telephone: (614) 474-4001

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of outstanding shares of the registrant’s common stock was 84,293,740 as of November 29, 2014.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, and financial results, our plans and objectives for future operations, growth or initiatives, strategies, plans to repurchase shares of our common stock, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:


•	changes in consumer spending and general economic conditions;


•	our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors;


•	fluctuations in our sales and results of operations on a seasonal basis and due to a variety of other factors;


•	significant competition from other retailers;


•	the success of the malls and shopping centers in which our stores are located and customer traffic;


•	our dependence on a strong brand image;


•	our ability to develop and maintain a reliable omni-channel experience for our customers;


•	our reliance on information systems and any failure, inadequacy, interruption, or security failure of those systems;


•	our ability to protect our customer data from fraud or theft;


•	our dependence upon independent third parties to manufacture all of our merchandise;


•	the availability constraints and price volatility of raw materials and labor used to manufacture our products;


•	interruptions of the flow of merchandise from international manufacturers causing disruptions in our supply chain;


•	shortages of inventory, delayed shipments to our online customers, and harm to our reputation due to distribution difficulties or shut-down of distribution facilities;


•	our reliance upon independent third-party transportation providers for substantially all of our product shipments;


•	our dependence upon key executive management;


•	our growth strategy, including our new store growth, e-commerce, and international expansion plans;


•	our leasing substantial amounts of space;


•	our reliance on third parties to provide us with certain key services for our business;


•	claims made against us resulting in litigation;


•	changes in laws and regulations applicable to our business;


•	our ability to protect our trademarks or other intellectual property rights;


•	our substantial indebtedness and lease obligations;


•	restrictions imposed by our indebtedness on our current and future operations and our ability to pay dividends and repurchase shares of common stock;


•	fluctuations in energy costs;


•	changes in taxation requirements or the results of tax audits;


•	impairment charges on long-lived assets; and


•	uncertainty associated with Sycamore Partners' expressed interest in acquiring the company.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. For a discussion of these risks and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended February 1, 2014 ("Annual Report"), filed with the Securities and Exchange Commission (“SEC”) on April 1, 2014, and "Part II - Item 1A. Risk Factors" of this Quarterly Report. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as otherwise required by law.

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INDEX




PART I	FINANCIAL INFORMATION	4

ITEM 1.	FINANCIAL STATEMENTS.	4

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	21

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	30

ITEM 4.	CONTROLS AND PROCEDURES.	31

PART II	OTHER INFORMATION	31

ITEM 1.	LEGAL PROCEEDINGS.	31

ITEM 1A.	RISK FACTORS.	31

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	31

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	32

ITEM 4.	MINE SAFETY DISCLOSURES.	32

ITEM 5.	OTHER INFORMATION.	32

ITEM 6.	EXHIBITS.	32

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PART I – FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS.

EXPRESS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except Per Share Amounts)

(Unaudited)



	November 1, 2014			February 1, 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	217,814		$	311,884
Receivables, net	20,468			17,384
Inventories	350,269			212,510
Prepaid minimum rent	29,084			28,554
Other	22,414			13,129
Total current assets	640,049			583,461

PROPERTY AND EQUIPMENT	840,452			767,661
Less: accumulated depreciation	(424,672		)	(391,539		)
Property and equipment, net	415,780			376,122

TRADENAME/DOMAIN NAME	197,822			197,812
DEFERRED TAX ASSETS	17,434			17,558
OTHER ASSETS	6,985			7,717
Total assets	$	1,278,070		$	1,182,670

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	226,291		$	154,736
Deferred revenue	20,248			28,436
Accrued expenses	86,354			116,035
Total current liabilities	332,893			299,207

LONG-TERM DEBT	199,435			199,170
DEFERRED LEASE CREDITS	128,161			114,509
OTHER LONG-TERM LIABILITIES	105,802			95,215
Total liabilities	766,291			708,101

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’ EQUITY:
Preferred stock – $0.01 par value; 10,000 shares authorized; no shares issued or outstanding	—			—
Common stock – $0.01 par value; 500,000 shares authorized; 90,392 shares and 89,859 shares issued at November 1, 2014 and February 1, 2014, respectively, and 84,292 shares and 83,966 shares outstanding at November 1, 2014 and February 1, 2014, respectively	904			899
Additional paid-in capital	144,778			130,511
Accumulated other comprehensive loss	(844		)	(728		)
Retained earnings	474,995			448,460
Treasury stock – at average cost; 6,100 shares and 5,893 shares at November 1, 2014 and February 1, 2014, respectively	(108,054		)	(104,573		)
Total stockholders’ equity	511,779			474,569
Total liabilities and stockholders’ equity	$	1,278,070		$	1,182,670

See notes to unaudited consolidated financial statements.

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EXPRESS, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in Thousands, Except Per Share Amounts)

(Unaudited)



	Thirteen Weeks Ended					Thirty-Nine Weeks Ended
	November 1, 2014			November 2, 2013		November 1, 2014			November 2, 2013
NET SALES	$	497,608		$	503,808	$	1,439,680		$	1,503,245
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS	340,050			338,543		1,008,724			1,014,656
Gross profit	157,558			165,265		430,956			488,589
OPERATING EXPENSES:
Selling, general, and administrative expenses	126,526			128,366		371,309			360,165
Other operating expense (income), net	508			169		(476		)	(415		)
Total operating expenses	127,034			128,535		370,833			359,750

OPERATING INCOME	30,524			36,730		60,123			128,839

INTEREST EXPENSE, NET	6,042			4,876		17,880			14,457
OTHER EXPENSE, NET	160			153		157			958
INCOME BEFORE INCOME TAXES	24,322			31,701		42,086			113,424
INCOME TAX EXPENSE	9,737			12,434		15,551			44,811
NET INCOME	$	14,585		$	19,267	$	26,535		$	68,613

OTHER COMPREHENSIVE INCOME:
Foreign currency translation (loss) gain	(600		)	26		(116		)	242
COMPREHENSIVE INCOME	$	13,985		$	19,293	$	26,419		$	68,855

EARNINGS PER SHARE:
Basic	$	0.17		$	0.23	$	0.32		$	0.81
Diluted	$	0.17		$	0.23	$	0.31		$	0.81

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	84,189			83,929		84,122			84,675
Diluted	84,605			84,603		84,490			85,221

See notes to unaudited consolidated financial statements.

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EXPRESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(Unaudited)



	Thirty-Nine Weeks Ended
	November 1, 2014			November 2, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	26,535		$	68,613
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	57,965			52,000
Loss on disposal of property and equipment	741			636
Impairment charge	5,087			—
Excess tax benefit from share-based compensation	(47		)	(201		)
Share-based compensation	14,306			16,016
Deferred taxes	668			307
Landlord allowance amortization	(8,637		)	(6,573		)
Changes in operating assets and liabilities:
Receivables, net	(3,101		)	(6,420		)
Inventories	(137,746		)	(128,334		)
Accounts payable, deferred revenue, and accrued expenses	33,431			25,969
Other assets and liabilities	8,805			15,627
Net cash (used in) provided by operating activities	(1,993		)	37,640

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(86,571		)	(78,772		)
Purchase of intangible assets	(1,010		)	(69		)
Net cash used in investing activities	(87,581		)	(78,841		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lease financing obligations	(1,105		)	(45		)
Excess tax benefit from share-based compensation	47			201
Proceeds from exercise of stock options	—			4,426
Repurchase of common stock	(3,481		)	(37,905		)
Net cash used in financing activities	(4,539		)	(33,323		)

EFFECT OF EXCHANGE RATE ON CASH	43			(220		)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(94,070		)	(74,744		)
CASH AND CASH EQUIVALENTS, Beginning of period	311,884			256,297
CASH AND CASH EQUIVALENTS, End of period	$	217,814		$	181,553

See notes to unaudited consolidated financial statements.

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Notes to Unaudited Consolidated Financial Statements

(unaudited)

1. Description of Business and Basis of Presentation

Business Description

Express, Inc., together with its subsidiaries ("Express" or the "Company"), is a specialty apparel and accessories retailer of women's and men's merchandise, targeting the 20 to 30 year old customer. Express merchandise is sold through retail and factory outlet stores and the Company's website, www.express.com. As of November 1, 2014, Express operated 609 primarily mall-based retail stores in the United States, Canada, and Puerto Rico as well as 29 factory outlet stores. Additionally, the Company earned revenue from 30 franchise stores in the Middle East, Latin America, and South Africa. These franchise stores are operated by franchisees pursuant to franchise agreements. Under the franchise agreements, the franchisees operate stores that sell Express-branded apparel and accessories purchased directly from the Company.

Fiscal Year

The Company's fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to "2014" and "2013" represent the 52-week periods ended January 31, 2015 and February 1, 2014, respectively. All references herein to “the third quarter of 2014” and “the third quarter of 2013” represent the thirteen weeks ended November 1, 2014 and November 2, 2013, respectively.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2014. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 1, 2014, included in the Company's Annual Report on Form 10-K, filed with the SEC on April 1, 2014.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.

Reclassifications and Revisions

Certain prior period amounts have been reclassified or revised to conform to the current period presentation. This includes a revision to reclassify sell-off revenue from "Cost of Goods Sold, Buying and Occupancy Costs" to "Net Sales" in the amount of$0.8 million and $5.6 million for the thirteen and thirty-nine weeks ended November 2, 2013, respectively. This revision did not impact the Company's reported gross profit, net earnings, earnings per share, or cash flows for the prior periods. The Company has assessed the related error and concluded that it was was not material to the Company's previously issued interim consolidated financial statements.

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Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09. ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that accounts for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and is to be applied retrospectively, with early application not permitted. The Company is evaluating the new standard, but does not, at this time, anticipate a material impact to the financial statements once implemented.

2. Segment Reporting

The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer, President, and Chief Operating Officer are the Chief Operating Decision Maker and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.

The following is information regarding the Company's major product categories and sales channels:



	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
	(in thousands)				(in thousands)
Apparel	$	438,552	$	442,196	$	1,259,465	$	1,313,175
Accessories and other	50,936		52,699		152,227		162,059
Other revenue	8,120		8,913		27,988		28,011
Total net sales	$	497,608	$	503,808	$	1,439,680	$	1,503,245



	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
	(in thousands)				(in thousands)
Stores	$	410,355	$	423,720	$	1,201,748	$	1,273,452
E-commerce	79,133		71,175		209,944		201,782
Other revenue	8,120		8,913		27,988		28,011
Total net sales	$	497,608	$	503,808	$	1,439,680	$	1,503,245

Other revenue consists primarily of sell-off revenue, shipping and handling revenue related to e-commerce activity, gift card breakage, and revenue from franchise agreements.

Revenue and long-lived assets relating to the Company's international operations for the thirteen and thirty-nine weeks ended November 1, 2014 and November 2, 2013, respectively, were not material for any period presented and, therefore, are not reported separately from domestic revenue or long-lived assets.

3. Earnings Per Share

The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:



	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	November 1, 2014	November 2, 2013	November 1, 2014	November 2, 2013
	(in thousands)
Weighted-average shares - basic	84,189	83,929	84,122	84,675
Dilutive effect of stock options, restricted stock units, and restricted stock	416	674	368	546
Weighted-average shares - diluted	84,605	84,603	84,490	85,221

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Equity awards representing 4.3 million and 4.1 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 1, 2014, respectively, as the inclusion of these awards would have been anti-dilutive. Equity awards representing 2.0 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 2, 2013, as the inclusion of these awards would have been anti-dilutive.

Additionally, for the thirteen and thirty-nine weeks ended November 1, 2014, there were 0.5 million shares excluded from the computation of diluted weighted average shares because the number of shares that will ultimately be issued is contingent on the Company's performance compared to pre-established performance goals which have not been achieved as of November 1, 2014.

4. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.

Level 1-Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2-Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3-Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

Financial Assets

The following table presents the Company's financial assets measured at fair value on a recurring basis as of November 1, 2014 and February 1, 2014, aggregated by the level in the fair value hierarchy within which those measurements fall.



	November 1, 2014
	Level 1		Level 2		Level 3
	(in thousands)
U.S. treasury securities money market funds	$	178,886	$	—	$	—

	February 1, 2014
	Level 1		Level 2		Level 3
	(in thousands)
U.S. treasury securities money market funds	$	290,361	$	—	$	—

The carrying amounts reflected on the unaudited Consolidated Balance Sheets for cash, cash equivalents, receivables, prepaid expenses, and payables as of November 1, 2014 and February 1, 2014 approximated their fair values.

Non-Financial Assets

The Company's non-financial assets, which include fixtures, equipment, improvements, and intangible assets, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be recoverable, or annually in the case of indefinite lived intangibles, an impairment test is required. The impairment test requires the Company to estimate the fair value of the assets and compare this to the carrying value of the assets. If the fair value of the asset is less than the carrying value, then an impairment charge is recognized and the non-financial assets are recorded at fair value. The Company estimates the fair value using a discounted cash flow model. Factors used in the evaluation include, but are not limited to, management's plans for future operations, recent operating results, and projected cash flows. During the thirteen and thirty-nine weeks ended November 1, 2014, the Company recognized impairment charges of approximately $2.3 million and $5.1 million, respectively. These charges were related to three stores for the thirteen weeks ended November 1, 2014, and nine stores for the thirty-nine weeks ended November 1, 2014. There were no impairment charges recognized during the thirteen or thirty-nine weeks ended November 2, 2013.

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5. Intangible Assets

The following table provides the significant components of intangible assets:



	November 1, 2014
	Cost		Accumulated Amortization		Ending Net Balance
	(in thousands)
Tradename	$	196,144	$	—	$	196,144
Internet domain names/trademarks	1,678		—		1,678
Net favorable lease obligations/other	21,146		19,664		1,482
	$	218,968	$	19,664	$	199,304



	February 1, 2014
	Cost		Accumulated Amortization		Ending Net Balance
	(in thousands)
Tradename	$	196,144	$	—	$	196,144
Internet domain names/trademarks	1,668		—		1,668
Net favorable lease obligations/other	20,175		19,106		1,069
	$	217,987	$	19,106	$	198,881

The Company's tradename, internet domain names, and trademarks have indefinite lives. Net favorable lease obligations and other intangibles are amortized over a period between five and ten years and are included in other assets on the unaudited Consolidated Balance Sheets. Amortization expense totaled approximately $0.2 million and $0.6 million during the thirteen and thirty-nine weeks ended November 1, 2014, respectively, and $0.3 million and $1.0 million during the thirteen and thirty-nine weeks ended November 2, 2013.

6. Income Taxes

The provision for income taxes is based on a current estimate of the annual effective tax rate adjusted to reflect the impact of discrete items. The Company's effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in the Company's assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items, and the mix of earnings.

During the second quarter of 2014, the Internal Revenue Service (IRS) completed its examination of the Company’s 2012, 2011, and 2010 income tax returns. The Company released net uncertain tax positions of $1.7 million and the related accrued interest of $0.1 million as a result of the conclusion of this examination.

The Company's effective tax rate was 40.0% and 39.2% for the thirteen weeks ended November 1, 2014 and November 2, 2013, respectively. The Company's effective tax rate was 37.0% and 39.5% for the thirty-nine weeks ended November 1, 2014 and November 2, 2013, respectively. The reduction of the rate for the thirty-nine weeks ended November 1, 2014 primarily related to the net $1.7 million tax benefit from the release of uncertain tax positions following the conclusion of the IRS examination discussed above.

7. Lease Financing Obligations

In certain lease arrangements, the Company is involved in the construction of the building. To the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease, it is deemed the owner of the project for accounting purposes. Accordingly, the Company records an asset in property and equipment on the unaudited Consolidated Balance Sheets, including any capitalized interest costs. The Company also records related liabilities in accrued interest and lease financing obligations included in other long-term liabilities on the unaudited Consolidated Balance Sheets, for the replacement cost of the Company's portion of the pre-existing building plus the amount of construction costs incurred by the landlord as of the balance sheet date. Once construction is complete, the Company considers the requirements for sale-leaseback treatment, including the transfer of all risks of ownership back to the landlord, and whether the Company has any continuing involvement in the leased property. If the arrangement does not qualify for sale-leaseback

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treatment, the building assets subject to these obligations remain on the Company's unaudited Consolidated Balance Sheets at their historical cost, and such assets are depreciated over their remaining useful lives. The replacement cost of the pre-existing building, as well as the costs of construction paid by the landlord, are recorded as lease financing obligations, and a portion of the lease payments are applied as payments of principal and interest. The interest rate selected for lease financing obligations is evaluated at lease inception based on the Company's incremental borrowing rate. At the end of the initial lease term, should the Company decide not to renew the lease, the Company would reverse equal amounts of the remaining net book value of the assets and the corresponding lease financing obligations. The initial lease terms related to these lease arrangements are expected to expire in 2023 and 2030. As of November 1, 2014 and February 1, 2014 there was $71.9 million and $63.2 million, respectively, of net landlord funded construction, replacement cost of pre-existing property, and capitalized interest in property and equipment on the unaudited Consolidated Balance Sheets. There were also $73.8 million and $63.0 million of lease financing obligations as of November 1, 2014 and February 1, 2014, respectively, in other long-term liabilities on the unaudited Consolidated Balance Sheets. The transactions involving the initial recording of these assets and liabilities are classified as non-cash items for purposes of the unaudited Consolidated Statements of Cash Flows.

Rent expense relating to the land is recognized on a straight-line basis once construction begins. The Company does not report rent expense for the portion of the rent payment determined to be related to the lease obligations which are owned for accounting purposes. Rather, this portion of the rent payment under the lease is recognized as a reduction of the lease financing obligations and as interest expense.

8. Debt

Borrowings outstanding consisted of the following:



	November 1, 2014			February 1, 2014
	(in thousands)
8³/4% Senior Notes	$	200,850		$	200,850
Debt discount on Senior Notes	(1,415		)	(1,680		)
Total long-term debt	$	199,435		$	199,170

Revolving Credit Facility

On July 29, 2011, Express Holding, LLC, a wholly-owned subsidiary ("Express Holding"), and its subsidiaries entered into an Amended and Restated $200.0 million secured Asset-Based Credit Facility ("Revolving Credit Facility"). As of November 1, 2014, there were no borrowings outstanding and approximately $197.6 million available under the Revolving Credit Facility.

The Revolving Credit Facility requires Express Holding and its subsidiaries to maintain a fixed charge coverage ratio of at least 1.0:1.0 if excess availability plus eligible cash collateral is less than 10% of the borrowing base for 15 consecutive days. In addition, the Revolving Credit Facility contains customary covenants and restrictions on Express Holding and its subsidiaries' activities, including, but not limited to, limitations on the incurrence of additional indebtedness; liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, and prepayment of other debt; distributions, dividends, and the repurchase of capital stock; transactions with affiliates; and the ability to change the nature of its business or its fiscal year. All obligations under the Revolving Credit Facility are guaranteed by Express Holding and its domestic subsidiaries (that are not borrowers) and secured by a lien on substantially all of the assets of Express Holding and its domestic subsidiaries.

Senior Notes

On March 5, 2010, Express, LLC and Express Finance Corp. ("Express Finance"), wholly-owned subsidiaries of the Company, co-issued, in a private placement, $250.0 million of 8³/4% Senior Notes due in 2018 (the "Senior Notes") at an offering price of 98.6% of the face value.

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.

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,

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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's 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 would be reinstated.

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 November 1, 2014, the estimated fair value of the Senior Notes was $207.9 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 three weeks after the merchandise shipment date. As of November 1, 2014 and February 1, 2014, there were no outstanding trade LCs. Additionally, the Company enters into stand-by letters of credit ("stand-by LCs") on an as-needed basis to secure merchandise and fund other general and administrative costs. As of November 1, 2014 and February 1, 2014, outstanding stand-by LCs totaled $2.4 million and $2.0 million, respectively.

9. Share-Based Compensation

The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period.

Share-Based Compensation Plans

The following summarizes our share-based compensation expense:



	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
	(in thousands)
Restricted stock units and restricted stock	$	2,670	$	3,044	$	8,017	$	9,353
Stock options	1,369		2,135		6,289		6,662
Restricted shares (equity issued pre-IPO)	—		—		—		1
Total share-based compensation	$	4,039	$	5,179	$	14,306	$	16,016

The stock compensation related income tax benefit recognized by the Company during the thirteen and thirty-nine weeks ended November 1, 2014 was $0.2 million and $3.6 million, respectively. The stock compensation related income tax benefit recognized by the Company during the thirteen and thirty-nine weeks ended November 2, 2013 was $1.2 million and $3.4 million, respectively.

Stock Options

During the thirty-nine weeks ended November 1, 2014, the Company granted stock options under the Amended and Restated Express, Inc. 2010 Incentive Compensation Plan (the "2010 Plan"). The fair value of the stock options is determined using the Black-Scholes-Merton option-pricing model as described later in this note. Stock options granted in 2014 under the 2010 Plan vest 25% per year over four years or upon reaching retirement eligibility, defined as providing 10 years of service and being at least 55 years old. These options have a 10 year contractual life. Options granted to the Chief Executive Officer in prior years vest ratably over three years. The expense for stock options is recognized using the straight-line attribution method.

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The Company's activity with respect to stock options during the thirty-nine weeks ended November 1, 2014 was as follows:



	Number of Shares		Grant Date Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts and years)
Outstanding, February 1, 2014	3,234		$	18.85
Granted	378		$	15.86
Exercised	—		$	—
Forfeited or expired	(78	)	$	19.64
Outstanding, November 1, 2014	3,534		$	18.51	7.0	$	203
Expected to vest at November 1, 2014	1,180		$	18.45	8.3	$	95
Exercisable at November 1, 2014	2,306		$	18.56	6.3	$	103

The following provides additional information regarding the Company's stock options:



	Thirty-Nine Weeks Ended
	November 1, 2014		November 2, 2013
	(in thousands, except per share amounts)
Weighted average grant date fair value of options granted (per share)	$	8.51	$	9.49
Total intrinsic value of options exercised	$	—	$	904

As of November 1, 2014, there was approximately $6.6 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of approximately 1.5 years.

The Company uses the Black-Scholes-Merton option-pricing model to value stock options granted to employees and directors. The Company's determination of the fair value of stock options is affected by the Company's stock price as well as a number of subjective and complex assumptions. These assumptions include the risk-free interest rate, the Company's expected stock price volatility over the term of the award, expected term of the award, and dividend yield.

The following assumptions were used in estimating the fair value of the stock options on the date of the grant:



	Thirty-Nine Weeks Ended
	November 1, 2014		November 2, 2013
Risk-free interest rate ⁽¹⁾	1.90	%	1.13	%
Price Volatility ⁽²⁾	54.7	%	55.9	%
Expected term (years) ⁽³⁾	6.25		6.20
Dividend yield ⁽⁴⁾	—		—


(1)	Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.


(2)	Beginning in May 2012, the Company began using its own volatility in addition to the historical volatility of selected comparable companies to estimate expected volatility. Comparable companies were selected primarily based on industry, stage of life cycle, and size. The historical lookback period is consistent with the expected term of the stock options.


(3)	Calculated utilizing the “simplified” methodology prescribed by Staff Accounting Bulletin No. 107 due to the lack of historical exercise data necessary to provide a reasonable basis upon which to estimate the term.


(4)	The Company does not currently plan on paying regular dividends.

Restricted Stock Units and Restricted Stock

During the thirty-nine weeks ended November 1, 2014, the Company granted restricted stock units (“RSUs”) under the 2010 Plan, including 0.5 million RSUs with performance conditions. The fair value of RSUs is determined based on the Company's stock price on the grant date. The expense for RSUs without performance conditions is recognized using the straight-line attribution method. The expense for RSUs with performance conditions is recognized using the graded vesting method based on the expected achievement of the performance conditions. The RSUs with performance conditions are also subject to time-

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based vesting. One-half of these RSUs that are earned based on the achievement of performance criteria will vest on the second anniversary of the date of the grant and the remainder will vest on the third anniversary of the date of the grant. RSUs without performance conditions vest ratably over four years.

The Company's activity with respect to RSUs and restricted stock for the thirty-nine weeks ended November 1, 2014 was as follows:



	Number of Shares		Grant Date Weighted Average Fair Value Per Share
	(in thousands, except per share amounts)
Unvested, February 1, 2014	1,487		$	19.29
Granted*	756		$	15.72
Vested	(568	)	$	19.20
Forfeited	(58	)	$	18.11
Unvested, November 1, 2014	1,617		$	17.70

*There were approximately 0.5 million RSUs with two-year performance conditions granted in the first quarter of 2014. None of these RSUs are currently included as granted in the table above. The number of performance based RSUs that are ultimately earned may vary from 0% to 125% of target depending on the achievement of predefined financial performance targets.

The total fair value/intrinsic value of RSUs and restricted stock that vested during the thirty-nine weeks ended November 1, 2014 was $10.9 million. As of November 1, 2014, there was approximately $17.3 million of total unrecognized compensation expense related to unvested RSUs and restricted stock that is expected to be recognized over a weighted-average period of approximately 1.7 years.

10. Commitments and Contingencies

During 2013 and 2014, the Company received letters from two individuals claiming that the Company unlawfully collected their zip codes in connection with a retail purchase made at a Massachusetts Express store and thereafter used that information to send them unwanted marketing materials. These letters indicate that the individuals may file suit on behalf of a class of customers whose zip codes were collected and recorded at Company stores in Massachusetts in connection with credit card purchases, and claims that the Company used the collected zip code data to obtain customers’ addresses for purposes of mailing them unwanted advertising material. These letters further seek monetary damages pursuant to a claim under Chapter 93A of the General Laws of Massachusetts. In the first quarter of 2014, after providing the claimants with information about the Company's collection practices, the Company received notice that one of the claimants will not pursue the claims previously alleged against the Company. The other claimant has not yet responded. The Company believes the allegations in the letters are without merit and intends to vigorously defend against any claims that are filed in court. Due to the uncertainties of litigation, it is reasonably possible that the Company may incur a loss related to these potential suits. However, the amount of such loss, if any, cannot be estimated as of the date these financial statements are issued.

From time to time the Company is subject to various other claims and contingencies arising in the normal course of business. Management believes that the ultimate liability arising from such other claims and contingencies, if any, is not likely to have a material adverse effect on the Company's results of operations, financial condition, or cash flows.

11. Guarantor Subsidiaries

On March 5, 2010, Express, LLC and Express Finance (the “Subsidiary Issuers”), both 100% owned indirect subsidiaries of Express, Inc., issued the Senior Notes. Express, Inc. (“Guarantor”) and certain of its indirect 100% owned subsidiaries (“Guarantor Subsidiaries”) have guaranteed, on a joint and several basis, the obligations under the Senior Notes. The guarantees are not full and unconditional because Guarantor Subsidiaries can be released and relieved of their obligations under certain customary circumstances contained in the indenture governing the Senior Notes. These circumstances include the following, so long as other applicable provisions of the indenture are adhered to: any sale or other disposition of all or substantially all of the assets of any Guarantor Subsidiary, any sale or other disposition of capital stock of any Guarantor Subsidiary, or the designation of any restricted subsidiary that is a Guarantor Subsidiary as an unrestricted subsidiary.

The following consolidating schedules present the condensed financial information on a combined basis.

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EXPRESS, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

(Amounts in thousands)

(Unaudited)



	November 1, 2014
	Express, Inc.		Subsidiary Issuers		Guarantor Subsidiaries		Other Subsidiaries		Consolidating Adjustments			Consolidated Total
Assets
Current assets
Cash and cash equivalents	$	1,894	$	183,048	$	20,893	$	11,979	$	—		$	217,814
Receivables, net	—		8,348		11,654		466		—			20,468
Inventories	—		23,346		321,218		5,705		—			350,269
Prepaid minimum rent	—		333		27,385		1,366		—			29,084
Intercompany receivable	—		36,604		—		5,784		(42,388		)	—
Intercompany loan receivable	—		7,102		—		—		(7,102		)	—
Other	346		34,872		7,012		500		(20,316		)	22,414
Total current assets	2,240		293,653		388,162		25,800		(69,806		)	640,049
Property and equipment, net	—		58,294		340,061		17,425		—			415,780
Tradename/domain name	—		197,822		—		—		—			197,822
Investment in subsidiary	508,879		443,155		—		503,094		(1,455,128		)	—
Deferred tax assets	660		5,772		11,002		—		—			17,434
Other assets	—		6,172		807		6		—			6,985
Total assets	$	511,779	$	1,004,868	$	740,032	$	546,325	$	(1,524,934	)	$	1,278,070
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	—	$	222,491	$	2,444	$	1,356	$	—		$	226,291
Deferred revenue	—		840		19,225		183		—			20,248
Accrued expenses	—		42,468		63,166		1,036		(20,316		)	86,354
Intercompany payable	—		5,784		36,604		—		(42,388		)	—
Intercompany loan payable	—		—		—		7,102		(7,102		)	—
Total current liabilities	—		271,583		121,439		9,677		(69,806		)	332,893
Long-term debt	—		199,435		—		—		—			199,435
Deferred lease credits	—		4,664		116,335		7,162		—			128,161
Other long-term liabilities	—		26,092		79,704		6		—			105,802
Total liabilities	—		501,774		317,478		16,845		(69,806		)	766,291
Commitments and contingencies (Note 10)
Total stockholders’ equity	511,779		503,094		422,554		529,480		(1,455,128		)	511,779
Total liabilities and stockholders’ equity	$	511,779	$	1,004,868	$	740,032	$	546,325	$	(1,524,934	)	$	1,278,070

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EXPRESS, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

(Amounts in thousands)

(Unaudited)



	February 1, 2014
	Express, Inc.		Subsidiary Issuers		Guarantor Subsidiaries		Other Subsidiaries		Consolidating Adjustments			Consolidated Total
Assets
Current assets
Cash and cash equivalents	$	1,984	$	283,707	$	19,631	$	6,562	$	—		$	311,884
Receivables, net	—		10,410		5,880		1,094		—			17,384
Inventories	—		15,928		192,762		3,820		—			212,510
Prepaid minimum rent	—		689		26,658		1,207		—			28,554
Intercompany receivable	—		—		114,258		5,784		(120,042		)	—
Intercompany loan receivable	—		28,080		—		—		(28,080		)	—
Other	237		8,523		4,552		54		(237		)	13,129
Total current assets	2,221		347,337		363,741		18,521		(148,359		)	583,461
Property and equipment, net	—		56,922		301,684		17,516		—			376,122
Tradename/domain name	—		197,812		—		—		—			197,812
Investment in subsidiary	471,687		393,156		—		465,902		(1,330,745		)	—
Deferred tax assets	661		6,637		10,182		78		—			17,558
Other assets	—		6,295		1,416		6		—			7,717
Total assets	$	474,569	$	1,008,159	$	677,023	$	502,023	$	(1,479,104	)	$	1,182,670
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	—	$	150,420	$	2,873	$	1,443	$	—		$	154,736
Deferred revenue	—		1,004		27,264		168		—			28,436
Accrued expenses	—		40,087		75,159		1,026		(237		)	116,035
Intercompany payable	—		120,042		—		—		(120,042		)	—
Intercompany loan payable	—		—		—		28,080		(28,080		)	—
Total current liabilities	—		311,553		105,296		30,717		(148,359		)	299,207
Long-term debt	—		199,170		—		—		—			199,170
Deferred lease credits	—		4,963		103,129		6,417		—			114,509
Other long-term liabilities	—		26,571		68,644		—		—			95,215
Total liabilities	—		542,257		277,069		37,134		(148,359		)	708,101
Commitments and contingencies (Note 10)
Total stockholders’ equity	474,569		465,902		399,954		464,889		(1,330,745		)	474,569
Total liabilities and stockholders’ equity	$	474,569	$	1,008,159	$	677,023	$	502,023	$	(1,479,104	)	$	1,182,670

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EXPRESS, INC.

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)



	Thirteen Weeks Ended November 1, 2014
	Express, Inc.			Subsidiary Issuers			Guarantor Subsidiaries		Other Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	—		$	322,836		$	482,257	$	9,990		$	(317,475	)	$	497,608
Cost of goods sold, buying and occupancy costs	—			255,582			394,738		7,205			(317,475		)	340,050
Gross profit	—			67,254			87,519		2,785			—			157,558
Selling, general, and administrative expenses	139			46,338			76,685		3,364			—			126,526
Other operating income, net	—			(67		)	544		31			—			508
Operating (loss) income	(139		)	20,983			10,290		(610		)	—			30,524
Interest expense, net	—			5,150			892		—			—			6,042
(Income) loss in subsidiary	(14,665		)	(5,115		)	—		(14,665		)	34,445			—
Other expense, net	—			(1		)	—		161			—			160
Income (loss) before income taxes	14,526			20,949			9,398		13,894			(34,445		)	24,322
Income tax (benefit) expense	(59		)	6,284			3,816		(304		)	—			9,737
Net income (loss)	$	14,585		$	14,665		$	5,582	$	14,198		$	(34,445	)	$	14,585
Foreign currency translation	(600		)	(600		)	—		(1,200		)	1,800			(600		)
Comprehensive income (loss)	$	13,985		$	14,065		$	5,582	$	12,998		$	(32,645	)	$	13,985



	Thirteen Weeks Ended November 2, 2013
	Express, Inc.			Subsidiary Issuers			Guarantor Subsidiaries			Other Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	—		$	319,989		$	487,697		$	8,902		$	(312,780	)	$	503,808
Cost of goods sold, buying and occupancy costs	—			246,069			399,332			5,895			(312,753		)	338,543
Gross profit	—			73,920			88,365			3,007			(27		)	165,265
Selling, general, and administrative expenses	55			50,064			75,233			3,015			(1		)	128,366
Other operating (income) expense, net	—			(180		)	374			1			(26		)	169
Operating (loss) income	(55		)	24,036			12,758			(9		)	—			36,730
Interest expense (income), net	—			5,065			(208		)	19			—			4,876
(Income) loss in subsidiary	(19,301		)	(7,775		)	—			(19,301		)	46,377			—
Other expense, net	—			—			—			153			—			153
Income (loss) before income taxes	19,246			26,746			12,966			19,120			(46,377		)	31,701
Income tax (benefit) expense	(21		)	7,445			5,010			—			—			12,434
Net income (loss)	$	19,267		$	19,301		$	7,956		$	19,120		$	(46,377	)	$	19,267
Foreign currency translation	26			26			—			54			(80		)	26
Comprehensive income (loss)	$	19,293		$	19,327		$	7,956		$	19,174		$	(46,457	)	$	19,293

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EXPRESS, INC.

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)



	Thirty-Nine Weeks Ended November 1, 2014
	Express, Inc.			Subsidiary Issuers			Guarantor Subsidiaries			Other Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	—		$	772,931		$	1,396,433		$	27,094		$	(756,778	)	$	1,439,680
Cost of goods sold, buying and occupancy costs	—			613,713			1,133,002			18,787			(756,778		)	1,008,724
Gross profit	—			159,218			263,431			8,307			—			430,956
Selling, general, and administrative expenses	648			135,564			226,438			8,659			—			371,309
Other operating expense (income), net	—			(52		)	(455		)	31			—			(476		)
Operating (loss) income	(648		)	23,706			37,448			(383		)	—			60,123
Interest expense, net	—			15,815			2,065			—			—			17,880
(Income) loss in subsidiary	(26,923		)	(20,725		)	—			(26,923		)	74,571			—
Other expense (income), net	—			3			—			154			—			157
Income (loss) before income taxes	26,275			28,613			35,383			26,386			(74,571		)	42,086
Income tax (benefit) expense	(260		)	1,690			14,360			(239		)	—			15,551
Net income (loss)	$	26,535		$	26,923		$	21,023		$	26,625		$	(74,571	)	$	26,535
Foreign currency translation	(116		)	(116		)	—			(232		)	348			(116		)
Comprehensive income (loss)	$	26,419		$	26,807		$	21,023		$	26,393		$	(74,223	)	$	26,419



	Thirty-Nine Weeks Ended November 2, 2013
	Express, Inc.		Subsidiary Issuers		Guarantor Subsidiaries		Other Subsidiaries		Consolidating Adjustments		Consolidated Total
Net sales	—		779,996		1,461,197		24,307		(762,255	)	1,503,245
Cost of goods sold, buying and occupancy costs	—		574,603		1,186,593		15,715		(762,255	)	1,014,656
Gross profit	—		205,393		274,604		8,592		—		488,589
Selling, general, and administrative expenses	286		129,825		222,070		7,984		—		360,165
Other operating (income) expense, net	—		(180	)	(250	)	15		—		(415	)
Operating (loss) income	(286	)	75,748		52,784		593		—		128,839
Interest expense (income), net	—		15,612		(1,197	)	42		—		14,457
(Income) loss in subsidiary	(68,788	)	(32,627	)	—		(68,788	)	170,203		—
Other expense, net	—		—		—		958		—		958
Income (loss) before income taxes	68,502		92,763		53,981		68,381		(170,203	)	113,424
Income tax (benefit) expense	(111	)	23,975		20,947		—		—		44,811
Net income (loss)	68,613		68,788		33,034		68,381		(170,203	)	68,613
Foreign currency translation	242		242		—		486		(728	)	242
Comprehensive income (loss)	68,855		69,030		33,034		68,867		(170,931	)	68,855

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EXPRESS, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



	Thirty-Nine Weeks Ended November 1, 2014
	Express, Inc.			Subsidiary Issuers			Guarantor Subsidiaries			Other Subsidiaries			Consolidating Adjustments			Consolidated Total
Operating Activities
Net cash (used in) provided by operating activities	$	(483	)	$	(71,241	)	$	68,271		$	1,460		$	—		$	(1,993	)
Investing Activities
Capital expenditures	—			(16,633		)	(67,014		)	(2,924		)	—			(86,571		)
Distributions received	3,874			—			—			3,874			(7,748		)	—
Purchase of intangible assets	—			(1,010		)	—			—			—			(1,010		)
Net cash provided by (used in) investing activities	3,874			(17,643		)	(67,014		)	950			(7,748		)	(87,581		)
Financing Activities
Payments on lease financing obligations	—			(1,105		)	—			—			—			(1,105		)
Excess tax benefit from share-based compensation	—			42			5			—			—			47
Repurchase of common stock	(3,481		)	—			—			—			—			(3,481		)
Repayment of intercompany loan	—			2,205			—			(2,205		)	—			—
Borrowings under intercompany loan	—			(9,043		)	—			9,043			—			—
Distributions paid	—