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 oGAAP 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. oAdjusted 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. oNet 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. oComparable 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 oGAAP 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. oGAAP 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. oAdjusted EBITDA was $49.9 million for fiscal 2012, an 8% decrease compared to $54.4 million of Adjusted EBITDA for fiscal 2011. oNet 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. oFree 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 oOn 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. oOn 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. oOn 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: oNet 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%. oGross 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. oTotal 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. oOperating 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. oGAAP 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. oAdjusted 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. oOpen 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. oCapital 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. oInventory at fiscal 2013 year end planned to be approximately 4% to 8% lower than fiscal 2012 year end. oGiven 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: oNet sales in the $132.5 to $136.5 million range. oA 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. oGAAP 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, September30, 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
Destination Maternity Reports Q4 Earnings Higher Than Prior Guidance And Significantly Higher Than Last Year
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