Destination Maternity Reports Q4 Earnings Higher Than Prior
Guidance And Significantly Higher Than Last Year
PHILADELPHIA, Nov. 15, 2012 /PRNewswire/ -- Destination
Maternity Corporation (Nasdaq: DEST), the world's leading maternity
apparel retailer, today announced operating results for the fourth
quarter and full year fiscal 2012, which ended September 30, 2012. The Company's diluted
earnings per share for its fourth quarter and full year fiscal 2012
were higher than the top end of its July 26,
2012 earnings guidance. On November 14, 2012 the Company announced that its
Board of Directors declared a regular quarterly cash dividend of
$0.175 per share payable December 28, 2012.
Fourth Quarter Fiscal 2012 Financial Results
- GAAP net income for the fourth quarter of fiscal 2012 was
$5.2 million, an increase of 93%
compared to GAAP net income of $2.7
million for the fourth quarter of fiscal 2011. GAAP
diluted earnings per share for the fourth quarter of fiscal 2012
was $0.39, an increase of 95%
compared to $0.20 for the fourth
quarter of fiscal 2011. This fourth quarter fiscal 2012 GAAP
diluted earnings per share performance was higher than the top end
of the Company's prior guidance of $0.17-$0.28 provided in its July 26, 2012 press release.
- Adjusted EBITDA was $12.7 million
for the fourth quarter of fiscal 2012, a 42% increase compared to
the $8.9 million of Adjusted EBITDA
for the fourth quarter of fiscal 2011. Adjusted EBITDA is
defined in the financial tables at the end of this press
release.
- Net sales for the fourth quarter of fiscal 2012 decreased 0.7%
to $128.5 million from $129.4 million for the fourth quarter of fiscal
2011. The decrease in sales for the fourth quarter of fiscal
2012 compared to fiscal 2011 resulted primarily from decreased
sales related to the Company's continued efforts to close
underperforming stores and decreased sales from the Company's
licensed relationship, largely offset by an increase in comparable
sales. The net sales of $128.5
million for the fourth quarter were toward the high end of
the Company's guidance range of $125.5 to
$130.0 million provided in July
2012.
- Comparable sales (which include Internet sales) for the fourth
quarter of fiscal 2012 increased 2.7% versus a comparable sales
decrease of 1.7% for the fourth quarter of fiscal 2011. The
comparable sales increase of 2.7% during the fourth quarter of
fiscal 2012 was near the high end of the Company's guidance range
for fourth quarter comparable sales of between a decrease of 1% and
an increase of 3%.
Full Year Fiscal 2012 Financial Results
- GAAP net income for fiscal 2012 was $19.4 million, a decrease compared to GAAP net
income of $23.0 million for fiscal
2011. GAAP diluted earnings per share for fiscal 2012 was
$1.46, a decrease compared to
$1.75 for fiscal 2011.
- GAAP net income for fiscal 2011 included a reduction of state
income tax expense, net of federal tax benefit, of $0.9 million, or $0.07 per share (diluted), related to settlements
of uncertain income tax positions.
- Adjusted EBITDA was $49.9 million
for fiscal 2012, an 8% decrease compared to $54.4 million of Adjusted EBITDA for fiscal
2011.
- Net sales for fiscal 2012 decreased 0.7% to $541.5 million from $545.4
million for fiscal 2011. Comparable sales for fiscal
2012 decreased 0.3% versus a comparable sales increase of 0.1% for
fiscal 2011. The Company estimates that the cannibalization
impact of the Macy's® leased department expansion in February 2011 hurt both its fiscal 2011 and
fiscal 2012 comparable sales by approximately 1 percentage
point.
- Free cash flow (defined as net cash provided by operating
activities minus capital expenditures) for fiscal 2012 was
$33.4 million, a significant increase
from Fiscal 2011 free cash flow of $9.2
million.
Financing and Related Activities
- On November 1, 2012, the Company
announced that it entered into a new $61
million revolving credit facility with Wells Fargo Bank,
N.A., which will mature on November
1, 2017. The new credit facility replaced the
Company's $55 million revolving
credit facility with Bank of America, N.A., which was due to mature
on January 13, 2013.
- On November 1, 2012, the Company
repaid the remaining $13.4 million
principal amount of its senior secured Term Loan, which was due to
mature on March 13, 2013.
- On November 14, 2012, the Company
announced that its Board of Directors declared a regular quarterly
cash dividend of $0.175 per share,
payable December 28, 2012 to
stockholders of record at the close of business on December 7, 2012.
Retail Locations
The table below summarizes store opening and closing activity
for the fourth quarter and full year of fiscal 2012 and 2011, as
well as the Company's store, total retail location and total
international franchised location count at the end of each fiscal
period. The decrease in leased department locations at the
end of September 2012 versus
September 2011 predominantly reflects
the closure of the Company's 291 remaining leased departments
within Kmart® locations in October 2011. Kmart represented
only a small portion of the overall sales generated by the
Company's leased department relationship with Sears® and Kmart
through the Company's agreement with Sears Holdings
Corporation. The Company continues to operate leased
departments in Sears stores throughout the United States. As
of September 30, 2012, the Company
operated 515 leased department locations in Sears stores.
|
Fourth
Quarter Ended
|
|
Year
Ended
|
|
September
30,
|
|
September
30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Store
Openings (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
4
|
|
|
4
|
|
|
|
8
|
|
|
12
|
|
Multi-Brand Store Openings
|
|
3
|
|
|
1
|
|
|
|
6
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store
Closings (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
15
|
|
|
9
|
|
|
|
41
|
|
|
52
|
|
Closings
Related to Multi-Brand Store Openings
|
|
5
|
|
|
2
|
|
|
|
12
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End
Retail Location Count (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores
|
|
625
|
|
|
658
|
|
|
|
625
|
|
|
658
|
|
Leased
Department Locations
|
|
1,383
|
|
|
1,694
|
|
|
|
1,383
|
|
|
1,694
|
|
Total
Retail Locations (1)
|
|
2,008
|
|
|
2,352
|
|
|
|
2,008
|
|
|
2,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes international franchised locations.
|
Fourth
Quarter Ended
|
|
Year
Ended
|
|
September
30,
|
|
September
30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
International Franchised Location Openings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores
|
|
-
|
|
|
3
|
|
|
|
2
|
|
|
7
|
|
Shop-in-Shop Locations
|
|
18
|
|
|
6
|
|
|
|
54
|
|
|
29
|
|
Total
International Franchised Location Openings
|
|
18
|
|
|
9
|
|
|
|
56
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Franchised Location Closings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores
|
|
-
|
|
|
-
|
|
|
|
1
|
|
|
-
|
|
Shop-in-Shop Locations
|
|
-
|
|
|
-
|
|
|
|
2
|
|
|
1
|
|
Total
International Franchised Location Closings
|
|
-
|
|
|
-
|
|
|
|
3
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End
International Franchised Location Count
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores
|
|
16
|
|
|
15
|
|
|
|
16
|
|
|
15
|
|
Shop-in-Shop Locations
|
|
103
|
|
|
51
|
|
|
|
103
|
|
|
51
|
|
Total
International Franchised Locations
|
|
119
|
|
|
66
|
|
|
|
119
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In connection with the Company's new broad-based partnership
with Bed Bath & Beyond Inc. and its subsidiary, Buy Buy Baby,
Inc. (which was announced in May
2012), beginning in late October
2012 the Company has begun to open leased departments in
select buybuy BABY® stores, and the Company discontinued operation
of its 124 remaining leased departments in Babies"R"Us in late
October 2012.
Commentary
Ed Krell, Chief Executive Officer
of Destination Maternity Corporation, noted, "Fiscal 2012 was a
year filled with significant challenges and achievements for
Destination Maternity. While we continued to face a
challenging sales environment and a continued reduction of births
in the United States, we generated
strong positive earnings (second in Company history only to our
record earnings results of fiscal 2011) and generated significant
free cash flow, while increasing our investment and talent in our
key areas of focus and growth: merchandising, marketing, web
and international. In addition, we continued to strengthen
our partnership businesses, completing the first year of our
significant nationwide expansion with Macy's, and entering into an
exciting and broad-based partnership with Bed Bath & Beyond
Inc. and its subsidiary, Buy Buy Baby, Inc. We used our
strong free cash flow to generate shareholder value, both through
continued significant debt repayment and continuing to return funds
to our stockholders via a meaningful regular quarterly cash
dividend. However, we are disappointed that we did not fully
achieve our sales and earnings goals for fiscal 2012, and that we
generated lower earnings than our record earnings of a year
ago.
"While we are disappointed with our comparable sales decrease of
0.3% for the full year fiscal 2012, which was hurt by approximately
1 percentage point by cannibalization from our Macy's leased
department expansion, we are pleased with the strong improvement of
our sales performance for the fourth quarter of fiscal 2012, which
was driven by strong sales of our Fall 2012 merchandise
assortments. Our fourth quarter comparable sales increased
2.7%, near the high end of our guidance range for comparable sales
of between a decrease of 1% and an increase of 3%.
"Our strong fourth quarter sales performance, combined with our
increased gross margin and continued tight management of expenses,
enabled us to deliver very strong earnings performance for the
fourth quarter. Our GAAP diluted earnings of $0.39 per share for the fourth quarter were
nearly double last year's fourth quarter earnings of $0.20 per share, and exceeded the top end of our
prior earnings guidance range of $0.17 to
$0.28 per share that we provided in our July 26, 2012 press release.
"Our key focus continues to be improving our sales performance
through initiatives to enhance our merchandise assortments,
merchandise presentation, store environment and customer
experience. While we recognize the challenging macroeconomic
environment, we remain focused on the things that we can control,
not on external factors that we cannot control. During fiscal
2012, we made many changes to drive improvements in our merchandise
assortments and the way these assortments are presented in store,
and we are pleased with the improved sales trend we have seen in
the Fall product selling season. We are cautiously optimistic
that we will continue to see the results of our efforts in an
improved sales trend during the coming year and beyond."
Financing and Related Activities
"During fiscal 2012 we made $15.0
million in prepayments on our Term Loan and continued to
return funds to our stockholders with our $0.70 per share annualized dividend rate
($0.175 per share quarterly cash
dividend), after having initiated this quarterly cash dividend in
the second quarter of fiscal 2011. On November 1, 2012, we entered into a new
five-year $61 million revolving credit facility to replace our
$55 million revolving credit
facility, which was due to mature on January
13, 2013. In addition, simultaneous with entering into
the new credit facility, we repaid the remaining $13.4 million principal amount of our senior
secured Term Loan, which was due to mature on March 13, 2013.
"The repayment of our Term Loan completes a dramatic decrease in
our financial leverage over the past several years. Giving
effect to this Term Loan repayment, over the past six years, our
total debt has decreased from $118
million to $2 million, and our
annual interest expense has decreased from $15 million to less than $1 million. In addition, our new credit
facility provides us with continued significant financial and
operating flexibility as we continue to execute on our strategic
plan."
Guidance for Fiscal 2013
"Looking forward, we are confident that we can continue to
improve our sales performance and position our Company for
continued future growth, by continuing to enhance our merchandise
assortments, merchandise presentation, store environment and
customer experience, and continuing to focus on our strategic plan
as summarized in our five key goals and strategic objectives
discussed later under 'Company Strategy.'
"Our financial guidance for the full year fiscal 2013 is as
follows:
- Net sales in the $536 to $549
million range, representing a projected sales change of
between a decrease of 1.0% and an increase of 1.4% versus fiscal
2012 net sales of $541.5
million. This sales guidance range is based on a
projected comparable sales increase of between 1.0% and 3.5%.
- Gross margin for fiscal 2013 is expected to increase between 50
and 90 basis points versus fiscal 2012, with greater improved
year-over-year gross margin projected for the first half of the
fiscal year.
- Total selling, general and administrative expenses (SG&A)
are planned to be flat to modestly higher than fiscal 2012 in
dollar terms and slightly higher than fiscal 2012 as a percentage
of net sales. The projected SG&A expense for the full
year reflects increased marketing expenses, additions of talent to
drive sales, and increased variable incentive compensation expense,
as well as inflationary expense increases, partially offset by
continued tight expense controls and additional cost
reductions.
- Operating income in the $34.5 to $38.5
million range, a projected increase of between 4% and 16%
compared to fiscal 2012 operating income of $33.1 million.
- GAAP diluted earnings per share of between $1.56 and $1.74 per share for fiscal 2013, a
projected increase of between 7% and 19% compared to earnings of
$1.46 per share (diluted) for fiscal
2012.
- Adjusted EBITDA in the $51.5 to $55.5
million range, a projected increase of between 3% and 11%
compared to the fiscal 2012 Adjusted EBITDA of $49.9 million.
- Open 14 to 20 new stores during the year, including 7 to 10 new
multi-brand Destination Maternity stores, and close approximately
34 to 51 stores, with 14 to 20 of these planned store closings
related to openings of new Destination Maternity stores.
- Capital expenditures planned at between $15 and $20 million compared to fiscal 2012
capital expenditures of $9.3
million. After deducting projected tenant construction
allowance payments to us from store landlords, the Company expects
net cash outlay for capital projects to be between $12 million and $17 million, compared to
$6.1 million in fiscal 2012.
Our planned capital expenditures include significant investments
for store enhancements, as well as continued investments in
systems, distribution center efficiency projects, and new
stores.
- Inventory at fiscal 2013 year end planned to be approximately
4% to 8% lower than fiscal 2012 year end.
- Given these assumptions, the Company plans to generate free
cash flow (defined as net cash provided by operating activities
minus capital expenditures) of between $20
and $31 million for the full year fiscal 2013, a projected
decrease from fiscal 2012 free cash flow of $33.4 million due to higher planned capital
expenditures. Based on the Company's current quarterly
dividend rate of $0.175 per share,
the dividend will use approximately $9.4
million of cash flow for fiscal 2012.
"Our financial guidance for the first quarter of fiscal 2013 is
as follows:
- Net sales in the $132.5 to $136.5
million range.
- A projected comparable sales change of between flat and an
increase of 3.0% on a reported basis. We estimate that our
reported comparable sales for the first quarter of fiscal 2013 will
be hurt by approximately 1 percentage point due to having one less
Saturday in the first quarter of fiscal 2013 compared to the first
quarter of fiscal 2012.
- GAAP diluted earnings per common share of between $0.25 and $0.32 per share, a significant increase
versus the GAAP diluted earnings per share of $0.17 for the first quarter of fiscal 2012."
Company Strategy
Mr. Krell added, "As we plan and execute our business for both
this year and beyond, we continue to be guided by our five key
goals and strategic objectives:
- Be a profitable global leader in the maternity apparel
business, treating all our partners and stakeholders with respect
and fairness.
- Increase the profitability of our U.S. business, focusing on
the following:
- Increase comparable sales, through continued improvement of
merchandise assortments, merchandise presentation and customer
experience, providing a more shoppable store environment for our
customers, and through enhanced marketing and
advertising.
- Reduce our expenditures and continue to be more efficient in
operating our business—streamline, simplify and focus.
- Continue to expand our multi-brand Destination Maternity store
chain where ROI hurdles are met, with the goal of operating fewer
but larger stores over time; and
- Continue to close underperforming stores.
- In addition to achieving increased comparable sales, we aim to
grow our sales where we can do so profitably, including the
following areas of focus:
- International expansion.
- Potential growth of our leased department and licensed
relationships.
- Increased utilization of the Internet to drive sales, targeting
both increased direct Internet sales and enhanced web marketing
initiatives to drive store sales.
- Selective new store openings and relocations in the U.S. and
Canada; and
- Continued focus on enhancing our overall customer relationship,
including our marketing partnership programs.
- Focus on generating free cash flow to drive increased
shareholder value.
- Maintain and intensify our primary focus on delivering great
maternity apparel product and service in each of our brands and
store formats, to serve the maternity apparel customer like no one
else can."
Mr. Krell concluded, "Although we are proud of what we have
accomplished in the past four years to significantly improve our
Company's profitability and financial position, even in the face of
a challenging sales environment, we have not been satisfied with
our sales results or our current year earnings results. While
we recognize that over the past four years we have faced the dual
challenges of a deep recession followed by a weak recovery, as well
as a 9% decrease in annual births in the
United States since 2007, we remain focused on driving
improvement in our sales performance through initiatives to enhance
our merchandise assortments, merchandise presentation, store
environment and customer experience. We are confident in our
ability to continue to manage our business through this uncertain
consumer environment, to continue to improve our sales performance,
and to continue to make progress towards our key corporate
goals."
Conference Call Information
As announced previously, the Company will hold a conference call
today at 9:00 a.m. Eastern Time,
regarding the Company's fourth quarter and full year fiscal 2012
earnings and future financial guidance. You can participate
in this conference call by calling (888) 873-4896 in the United States and Canada or (617) 213-8850 outside of
the United States and
Canada. Please call ten minutes prior to 9:00 a.m. Eastern Time. The conference call
(listen only) will also be available on the investor section of our
website at http://investor.destinationmaternity.com. The
passcode for the conference call is "34655158." In the event
that you are unable to participate in the call, a replay will be
available through Thursday, November 29,
2012 by calling (888) 286-8010 in the United States and Canada or (617) 801-6888 outside of
the United States and
Canada. The passcode for the replay is "76080475."
Destination Maternity Corporation is the world's largest
designer and retailer of maternity apparel. In
the United States and Canada, as of September
30, 2012, Destination Maternity operates 2,008 retail
locations, including 625 stores, predominantly under the tradenames
Motherhood Maternity®, A Pea in the Pod®, and Destination
Maternity®, and 1,383 leased department locations, and sells on the
web through its DestinationMaternity.com and brand-specific
websites. Destination Maternity also distributes its Oh Baby
by Motherhood® collection through a licensed arrangement at over
1,100 Kohl's® stores throughout the
United States and on Kohls.com. In addition,
Destination Maternity is expanding internationally and has
exclusive store franchise and product supply relationships in
India, the Middle East and South Korea. As of September 30, 2012, Destination Maternity has 119
international franchised locations, including 103 shop-in-shop
locations and 16 Destination Maternity branded stores.
The Company cautions that any forward-looking statements (as
such term is defined in the Private Securities Litigation Reform
Act of 1995) contained in this press release or made from time to
time by management of the Company, including those regarding
earnings, net sales, comparable sales, other results of operations,
liquidity and financial condition, and various business
initiatives, involve risks and uncertainties, and are subject to
change based on various important factors. The following
factors, among others, in some cases have affected and in the
future could affect the Company's financial performance and actual
results and could cause actual results to differ materially from
those expressed or implied in any such forward-looking statements:
the continuation of the economic recovery of the retail industry in
general and of apparel purchases in particular, our ability to
successfully manage our various business initiatives, the success
of our international business and its expansion, our ability to
successfully manage and retain our leased department and licensed
relationships and marketing partnerships, future sales trends in
our existing retail locations and through the Internet, unusual
weather patterns, changes in consumer spending patterns, raw
material price increases, overall economic conditions and other
factors affecting consumer confidence, demographics and other
macroeconomic factors that may impact the level of spending for
maternity apparel, expense savings initiatives, our ability to
anticipate and respond to fashion trends and consumer preferences,
unanticipated fluctuations in our operating results, the impact of
competition and fluctuations in the price, availability and quality
of raw materials and contracted products, availability of suitable
store locations, continued availability of capital and financing,
our ability to hire and develop senior management and sales
associates, our ability to develop and source merchandise, our
ability to receive production from foreign sources on a timely
basis, potential stock repurchases, the continuation of the regular
quarterly cash dividend, the trading liquidity of our common stock,
changes in market interest rates, war or acts of terrorism and
other factors set forth in the Company's periodic filings with the
Securities and Exchange Commission, or in materials incorporated
therein by reference.
DESTINATION MATERNITY CORPORATION AND
SUBSIDIARIES
Consolidated Statements of Income
(in
thousands, except percentages and per share data)
(unaudited)
|
|
|
|
|
Fourth
Quarter Ended
September
30,
|
|
Year
Ended
September
30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
|
128,487
|
|
$
|
129,442
|
|
$
|
541,476
|
|
$
|
545,394
|
|
Cost of
goods sold
|
|
56,899
|
|
|
60,602
|
|
|
250,765
|
|
|
248,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
71,588
|
|
|
68,840
|
|
|
290,711
|
|
|
296,897
|
|
Gross margin
|
|
55.7
|
%
|
|
53.2
|
%
|
|
53.7
|
%
|
|
54.4
|
%
|
Selling,
general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
(SG&A)
|
|
62,656
|
|
|
63,793
|
|
|
255,623
|
|
|
257,421
|
|
SG&A as a percentage of
net sales
|
|
48.8
|
%
|
|
49.3
|
%
|
|
47.2
|
%
|
|
47.2
|
%
|
Store
closing, asset impairment and asset
|
|
|
|
|
|
|
|
|
|
|
|
|
disposal expenses
|
|
333
|
|
|
217
|
|
|
1,983
|
|
|
1,039
|
|
Restructuring and other charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
8,599
|
|
|
4,830
|
|
|
33,105
|
|
|
38,244
|
|
Interest
expense, net
|
|
161
|
|
|
461
|
|
|
1,215
|
|
|
2,233
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
22
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
8,438
|
|
|
4,369
|
|
|
31,868
|
|
|
35,974
|
|
Income tax
provision
|
|
3,249
|
|
|
1,682
|
|
|
12,496
|
|
|
12,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
5,189
|
|
$
|
2,687
|
|
$
|
19,372
|
|
$
|
22,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share – basic
|
$
|
0.39
|
|
$
|
0.21
|
|
$
|
1.48
|
|
$
|
1.79
|
|
Average
shares outstanding – basic
|
|
13,153
|
|
|
13,014
|
|
|
13,096
|
|
|
12,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share – diluted
|
$
|
0.39
|
|
$
|
0.20
|
|
$
|
1.46
|
|
$
|
1.75
|
|
Average
shares outstanding – diluted
|
|
13,294
|
|
|
13,179
|
|
|
13,267
|
|
|
13,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income, as reported
|
$
|
5,189
|
|
$
|
2,687
|
|
$
|
19,372
|
|
$
|
22,988
|
|
Add:
stock-based compensation expense, net of tax
|
|
365
|
|
|
367
|
|
|
1,472
|
|
|
1,467
|
|
Add:
restructuring and other charges, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120
|
|
Add: loss
on extinguishment of debt, net of tax
|
|
—
|
|
|
—
|
|
|
14
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income, before stock-based
compensation expense,
restructuring and other
charges, and loss on
extinguishment of debt
|
$
|
5,554
|
|
$
|
3,054
|
|
$
|
20,858
|
|
$
|
24,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income per share – diluted, before
stock-based compensation
expense, restructuring
and other charges, and loss
on extinguishment of
debt
|
$
|
0.42
|
|
$
|
0.23
|
|
$
|
1.57
|
|
$
|
1.87
|
|
DESTINATION MATERNITY CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(in
thousands)
(unaudited)
|
|
|
|
September
30,
2012
|
|
September 30,
2011
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
22,376
|
|
$
|
15,285
|
Trade receivables, net
|
|
|
13,197
|
|
|
11,015
|
Inventories
|
|
|
88,754
|
|
|
90,366
|
Deferred income taxes
|
|
|
7,557
|
|
|
7,572
|
Prepaid expenses and other current assets
|
|
|
4,220
|
|
|
6,797
|
Total current assets
|
|
|
136,104
|
|
|
131,035
|
Property,
plant and equipment, net
|
|
|
51,078
|
|
|
55,854
|
Other
assets
|
|
|
12,462
|
|
|
11,883
|
Total assets
|
|
$
|
199,644
|
|
$
|
198,772
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Line of credit borrowings
|
|
$
|
—
|
|
$
|
—
|
Current portion of long-term debt
|
|
|
15,257
|
|
|
2,915
|
Accounts payable
|
|
|
21,987
|
|
|
18,456
|
Accrued expenses and other current
liabilities
|
|
|
35,544
|
|
|
33,680
|
Total current liabilities
|
|
|
72,788
|
|
|
55,051
|
Long-term
debt
|
|
|
—
|
|
|
28,427
|
Deferred
rent and other non-current liabilities
|
|
|
21,884
|
|
|
22,599
|
Total liabilities
|
|
|
94,672
|
|
|
106,077
|
Stockholders' equity
|
|
|
104,972
|
|
|
92,695
|
Total liabilities and stockholders' equity
|
|
$
|
199,644
|
|
$
|
198,772
|
|
|
|
|
|
|
|
SELECTED
CONSOLIDATED BALANCE SHEET DATA
|
|
|
|
|
|
|
Total
debt
|
|
$
|
15,257
|
|
$
|
31,342
|
Net cash
(debt) (1)
|
|
$
|
7,119
|
|
$
|
(16,057)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net cash (debt) represents cash
and cash equivalents minus total debt.
|
DESTINATION MATERNITY CORPORATION AND
SUBSIDIARIES
Consolidated Statements of Cash
Flows
(in
thousands)
(unaudited)
|
|
|
|
Year Ended
September 30,
|
|
|
2012
|
|
2011
|
Operating Activities
|
|
|
|
|
|
|
Net
income
|
|
$
|
19,372
|
|
$
|
22,988
|
Adjustments to reconcile net income to net cash
provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
12,445
|
|
|
12,769
|
Stock-based compensation expense
|
|
|
2,357
|
|
|
2,344
|
Loss on impairment of long-lived assets
|
|
|
1,876
|
|
|
768
|
Loss on disposal of assets
|
|
|
115
|
|
|
270
|
Loss on extinguishment of debt
|
|
|
22
|
|
|
37
|
Deferred income tax (benefit) provision
|
|
|
(1,378)
|
|
|
2,679
|
Amortization of deferred financing costs
|
|
|
105
|
|
|
170
|
Changes in
assets and liabilities:
|
|
|
|
|
|
|
Decrease (increase) in:
|
|
|
|
|
|
|
Trade receivables
|
|
|
(2,188)
|
|
|
(680)
|
Inventories
|
|
|
1,611
|
|
|
(9,632)
|
Prepaid expenses and other current assets
|
|
|
2,577
|
|
|
(1,634)
|
Other non-current assets
|
|
|
(12)
|
|
|
(26)
|
Increase (decrease) in:
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other current
liabilities
|
|
|
6,201
|
|
|
(5,525)
|
Deferred rent and other non-current
liabilities
|
|
|
(406)
|
|
|
(3,085)
|
Net cash provided by operating activities
|
|
|
42,697
|
|
|
21,443
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(9,256)
|
|
|
(12,270)
|
Additions
to intangible assets
|
|
|
(265)
|
|
|
(313)
|
Withdrawal
from grantor trust
|
|
|
—
|
|
|
1,504
|
Net cash used in investing activities
|
|
|
(9,521)
|
|
|
(11,079)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
Decrease
in cash overdraft
|
|
|
(401)
|
|
|
(1,147)
|
Repayment
of long-term debt
|
|
|
(16,085)
|
|
|
(13,819)
|
Deferred
financing costs paid
|
|
|
(61)
|
|
|
(26)
|
Withholding taxes on stock-based compensation paid in
connection
with repurchase of common
stock
|
|
|
(597)
|
|
|
(2,786)
|
Cash
dividends paid
|
|
|
(9,325)
|
|
|
(6,901)
|
Proceeds
from exercise of stock options
|
|
|
107
|
|
|
2,285
|
Excess tax
benefit from exercise of stock options and restricted
stock
vesting
|
|
|
289
|
|
|
2,695
|
Net cash used in financing activities
|
|
|
(26,073)
|
|
|
(19,699)
|
Effect of
exchange rate changes on cash and cash equivalents
|
|
|
(12)
|
|
|
(13)
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
|
|
7,091
|
|
|
(9,348)
|
Cash
and Cash Equivalents, Beginning of Year
|
|
|
15,285
|
|
|
24,633
|
Cash
and Cash Equivalents, End of Year
|
|
$
|
22,376
|
|
$
|
15,285
|
DESTINATION MATERNITY CORPORATION AND
SUBSIDIARIES
Supplemental Financial Information
Reconciliation of Net Income to Adjusted
EBITDA(1)
and
Operating Income Margin to Adjusted EBITDA Margin
(in
thousands, except percentages)
(unaudited)
|
|
|
|
Fourth
Quarter Ended
September
30,
|
|
Year
Ended
September
30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
5,189
|
|
$
|
2,687
|
|
$
|
19,372
|
|
$
|
22,988
|
Add:
income tax provision
|
|
|
3,249
|
|
|
1,682
|
|
|
12,496
|
|
|
12,986
|
Add:
interest expense, net
|
|
|
161
|
|
|
461
|
|
|
1,215
|
|
|
2,233
|
Add: loss
on extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
8,599
|
|
|
4,830
|
|
|
33,105
|
|
|
38,244
|
Add:
depreciation and amortization expense
|
|
|
3,106
|
|
|
3,214
|
|
|
12,445
|
|
|
12,769
|
Add: loss
on impairment of long-lived assets
|
|
|
307
|
|
|
238
|
|
|
1,876
|
|
|
768
|
Add: loss
on disposal of assets
|
|
|
50
|
|
|
24
|
|
|
115
|
|
|
270
|
Add:
stock-based compensation expense
|
|
|
588
|
|
|
577
|
|
|
2,357
|
|
|
2,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (1)
|
|
|
12,650
|
|
|
8,883
|
|
|
49,898
|
|
|
54,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
128,487
|
|
$
|
129,442
|
|
$
|
541,476
|
|
$
|
545,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income margin (operating income
as a percentage of net
sales)
|
|
|
6.7%
|
|
|
3.7%
|
|
|
6.1%
|
|
|
7.0%
|
Adjusted
EBITDA margin (adjusted
EBITDA as a percentage of
net sales)
|
|
|
9.8%
|
|
|
6.9%
|
|
|
9.2%
|
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted EBITDA represents operating income before deduction for
the following non-cash charges: (i) depreciation and amortization
expense; (ii) loss on impairment of tangible and intangible assets;
(iii) loss on disposal of assets; and (iv) stock-based compensation
expense.
|
Reconciliation of Net Income Per Share -
Diluted
to
Adjusted Net Income Per Share – Diluted,
Before
Stock-Based Compensation Expense and
Loss on
Extinguishment of Debt
(unaudited)
|
|
|
|
Projected
for the
|
|
|
Actual for
the
|
|
|
Year
Ending
|
|
|
Year
Ended
|
|
|
September
30, 2013
|
|
|
September
30, 2012
|
|
|
|
|
|
|
|
|
Net income
per share – diluted (1)
|
|
$
|
1.56 to
1.74
|
|
|
$
|
1.46
|
Add: per
share effect of stock-based compensation expense
|
|
|
0.13
|
|
|
|
0.11
|
Add: per
share effect of loss on extinguishment of debt
|
|
|
0.00
|
|
|
|
0.00
|
Adjusted
net income per share - diluted, before stock-based
compensation expense and
loss on extinguishment of
debt (1)
|
|
$
|
1.69 to
1.87
|
|
|
$
|
1.57
|
|
(1) Projected net income and
projected adjusted net income per share – diluted for the year
ending September 30, 2013 are based on approximately 13.4 million
projected average diluted shares outstanding.
|
Reconciliation of Net Income Per Share -
Diluted
to
Adjusted Net Income Per Share – Diluted,
Before
Stock-Based Compensation Expense
and
Loss on Extinguishment of Debt
(unaudited)
|
|
|
|
Projected
for the
|
|
|
Actual for
the
|
|
|
First
Quarter Ending
|
|
|
First
Quarter Ended
|
|
|
December
31, 2012
|
|
|
December
31, 2011
|
|
|
|
|
|
|
|
|
Net income
per share – diluted (1)
|
|
$
|
0.25 to
0.32
|
|
|
$
|
0.17
|
Add: per
share effect of stock-based compensation expense
|
|
|
0.03
|
|
|
|
0.03
|
Add: per
share effect of loss on extinguishment of debt
|
|
|
0.00
|
|
|
|
0.00
|
Adjusted
net income per share - diluted, before stock-based
compensation expense and
loss on extinguishment of
debt (1)
|
|
$
|
0.28 to
0.35
|
|
|
$
|
0.20
|
|
(1) Projected net income and projected
adjusted net income per share – diluted for the first quarter
ending December 31, 2012 are based on approximately 13.3 million
projected average diluted shares outstanding.
|
|
Reconciliation of Net Income to Adjusted
EBITDA
(in
millions, unaudited)
|
|
|
|
Projected
for the
|
|
|
Actual for
the
|
|
|
Year
Ending
|
|
|
Year
Ended
|
|
|
September
30, 2013
|
|
|
September
30, 2012
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
21.0 to
23.4
|
|
|
$
|
19.4
|
Add:
income tax provision
|
|
|
13.1 to
14.7
|
|
|
|
12.5
|
Add:
interest expense, net
|
|
|
0.4
|
|
|
|
1.2
|
Add: loss
on extinguishment of debt
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
34.5 to
38.5
|
|
|
|
33.1
|
Add:
depreciation and amortization expense
|
|
|
13.0
|
|
|
|
12.4
|
Add: loss
on impairment of long-lived assets and loss on
disposal of assets
|
|
|
1.2
|
|
|
|
2.0
|
Add:
stock-based compensation
expense
|
|
|
2.8
|
|
|
|
2.4
|
Adjusted
EBITDA
|
|
$
|
51.5 to
55.5
|
|
|
$
|
49.9
|
SOURCE Destination Maternity Corporation