Destination Maternity Reports Q4 Earnings Higher Than Prior Guidance And Significantly Higher Than Last Year
Destination Maternity Reports Q4 Earnings Higher Than Prior Guidance And
Significantly Higher Than Last Year
- Q4 Fiscal 2012 GAAP Diluted EPS of $0.39, higher than prior guidance of
$0.17-$0.28 provided on July 26, 2012, and an increase of 95% over last year's
Q4 GAAP Diluted EPS of $0.20. On October 9, 2012, the Company had announced
that it expected its Q4 earnings to exceed the top end of its prior guidance
range.
- Full year Fiscal 2012 GAAP Diluted EPS of $1.46, an increase compared to
prior EPS guidance of $1.24-$1.35 from July 26, 2012, and a decrease from
Fiscal 2011 full year GAAP Diluted EPS of $1.75
- Full year Fiscal 2012 free cash flow (defined as net cash provided by
operating activities minus capital expenditures) of $33.4 million, a
significant increase from Fiscal 2011 free cash flow of $9.2 million
- Projected full year Fiscal 2013 GAAP Diluted EPS of $1.56-$1.74, a projected
increase of between 7% and 19% over Fiscal 2012 full year GAAP Diluted EPS of
$1.46
- Projected full year Fiscal 2013 free cash flow of between $20 and $31
million
PR Newswire
PHILADELPHIA, Nov. 15, 2012
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
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o Adjusted EBITDA was $49.9 million for fiscal 2012, an 8% decrease compared
to $54.4 million of Adjusted EBITDA for fiscal 2011.
o 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.
o 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
o 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.
o 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.
o 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 5 2 12 11
Openings
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 18 9 56 36
Openings
International Franchised Location
Closings
Stores - - 1 -
Shop-in-Shop Locations - - 2 1
Total International Franchised Location - - 3 1
Closings
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:
o 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%.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o Inventory at fiscal 2013 year end planned to be approximately 4% to 8%
lower than fiscal 2012 year end.
o 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:
o Net sales in the $132.5 to $136.5 million range.
o 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.
o 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:
1. Be a profitable global leader in the maternity apparel business, treating
all our partners and stakeholders with respect and fairness.
2. Increase the profitability of our U.S. business, focusing on the
following:
a. 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.
b. Reduce our expenditures and continue to be more efficient in
operating our business—streamline, simplify and focus.
c. 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
d. Continue to close underperforming stores.
3. 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:
a. International expansion.
b. Potential growth of our leased department and licensed relationships.
c. Increased utilization of the Internet to drive sales, targeting both
increased direct Internet sales and enhanced web marketing
initiatives to drive store sales.
d. Selective new store openings and relocations in the U.S. and Canada;
and
e. Continued focus on enhancing our overall customer relationship,
including our marketing partnership programs.
4. Focus on generating free cash flow to drive increased shareholder value.
5. 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 Year Ended
September 30, 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 48.8 % 49.3 % 47.2 % 47.2 %
net sales
Store closing, asset
impairment and asset
disposal expenses 333 217 1,983 1,039
Restructuring and other — — — 193
charges
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 8,438 4,369 31,868 35,974
taxes
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 – 13,153 13,014 13,096 12,820
basic
Net income per share – diluted $ 0.39 $ 0.20 $ 1.46 $ 1.75
Average shares outstanding – 13,294 13,179 13,267 13,120
diluted
Supplemental information:
Net income, as reported $ 5,189 $ 2,687 $ 19,372 $ 22,988
Add: stock-based compensation 365 367 1,472 1,467
expense, net of tax
Add: restructuring and other — — — 120
charges, net of tax
Add: loss on extinguishment of — — 14 23
debt, net of tax
Adjusted net income, before
stock-based
compensation expense, $ 5,554 $ 3,054 $ 20,858 $ 24,598
restructuring and other
charges, and loss on
extinguishment of debt
Adjusted net income per share
– diluted, before
stock-based compensation
expense, restructuring $ 0.42 $ 0.23 $ 1.57 $ 1.87
and other charges, and
loss on extinguishment of
debt
DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, September 30,
2012 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 6,201 (5,525)
liabilities
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 (597) (2,786)
with repurchase of common stock
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 289 2,695
vesting
Net cash used in financing activities (26,073) (19,699)
Effect of exchange rate changes on cash and cash (12) (13)
equivalents
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 Year Ended
September 30, September 30,
2012 2011 2012 2011
Net income $ 5,189 $ 2,687 $ 19,372 $ 22,988
Add: income tax 3,249 1,682 12,496 12,986
provision
Add: interest 161 461 1,215 2,233
expense, net
Add: loss on
extinguishment of — — 22 37
debt
Operating income 8,599 4,830 33,105 38,244
Add: depreciation
and amortization 3,106 3,214 12,445 12,769
expense
Add: loss on
impairment of 307 238 1,876 768
long-lived assets
Add: loss on 50 24 115 270
disposal of assets
Add: stock-based 588 577 2,357 2,344
compensation expense
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
6.7% 3.7% 6.1% 7.0%
as a
percentage of net
sales)
Adjusted EBITDA
margin (adjusted
9.8% 6.9% 9.2% 10.0%
EBITDA as a
percentage of net
sales)
(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 – $ 1.56 to $ 1.46
diluted (1) 1.74
Add: per share effect of
stock-based compensation 0.13 0.11
expense
Add: per share effect of
loss on extinguishment of 0.00 0.00
debt
Adjusted net income per
share - diluted, before
stock-based
1.69 to
compensation expense $ 1.87 $ 1.57
and loss on extinguishment
of
debt (1)
(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 – $ 0.25 to 0.32 $ 0.17
diluted (1)
Add: per share effect of
stock-based compensation 0.03 0.03
expense
Add: per share effect of
loss on extinguishment of 0.00 0.00
debt
Adjusted net income per
share - diluted, before
stock-based
compensation expense $ 0.28 to 0.35 $ 0.20
and loss on extinguishment
of
debt (1)
(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 0.0 0.0
extinguishment of debt
Operating income 34.5 to 38.5 33.1
Add: depreciation and 13.0 12.4
amortization expense
Add: loss on impairment of
long-lived assets and loss
on 1.2 2.0
disposal of assets
Add: stock-based 2.8 2.4
compensation expense
Adjusted EBITDA $ 51.5 to 55.5 $ 49.9
SOURCE Destination Maternity Corporation
Website: http://www.destinationmaternity.com
Contact: Judd P. Tirnauer, Executive Vice President & Chief Financial Officer,
+1-215-873-2278
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