Company Also Announces $7 Million Stock Repurchase Program PHILADELPHIA, July 29
PHILADELPHIA, July 29 /PRNewswire-FirstCall/ -- Mothers Work, Inc.
(Nasdaq: MWRK), the world's leading maternity apparel retailer, today
announced operating results for the third quarter of fiscal 2008 ended June
30, 2008, and announced that its Board of Directors approved a program to
repurchase up to $7 million of the Company's outstanding common stock.
Net income for the third quarter of fiscal 2008 was $4.1 million, or $0.68
per common share (diluted), compared to net income for the third quarter of
fiscal 2007 of $1.0 million, or $0.17 per common share (diluted). The
Company's earnings per share were in line with the Company's updated diluted
earnings per share guidance, provided in its July 10, 2008 press release, of
between $0.66 and $0.70 per share. During June 2008, the Company prepaid $8
million principal amount of its senior secured Term Loan due March, 2013,
which resulted in an after-tax charge of $0.01 per share in the third quarter
of fiscal 2008. During April 2007, the Company redeemed the remaining $90
million principal amount of its outstanding 11-1/4% Senior Notes, which
resulted in an after-tax charge of $0.73 per share in the third quarter of
fiscal 2007. Net income before the debt repurchase charge for the third
quarter of fiscal 2008 was $4.2 million, or $0.69 per common share (diluted),
compared to the net income before the debt repurchase charge for the third
quarter of fiscal 2007 of $5.5 million, or $0.90 per common share (diluted).
Net income for the first nine months of fiscal 2008 was $3.4 million, or
$0.56 per common share (diluted), compared to net income for the first nine
months of fiscal 2007 of $5.0 million, or $0.81 per common share (diluted).
Net income before debt repurchase charges for the first nine months of fiscal
2008 was $3.5 million, or $0.57 per common share (diluted), compared to net
income before debt repurchase charges for the first nine months of fiscal 2007
of $10.7 million, or $1.74 per common share (diluted). The debt repurchase
charge for the first nine months of fiscal 2008, of $0.01 per share after tax,
resulted from the Company's prepayment of $5 million of its outstanding Term
Loan in March 2008 and the prepayment of $8 million of its outstanding Term
Loan in June 2008. The debt repurchase charge for the first nine months of
fiscal 2007, of $0.94 per share after tax, resulted from the Company's
redemption of $25 million of its Senior Notes in December 2006 and the
redemption of the remaining $90 million of its Senior Notes in April 2007.
Net sales for the third quarter of fiscal 2008 decreased 0.7% to $152.2
million from $153.2 million for the third quarter of fiscal 2007. The
decrease in sales versus last year resulted primarily from a decrease in sales
from our leased department and licensed relationships, largely due to a
decrease in Sears leased department sales, as well as reduced sales volume
from the ongoing closure of certain underperforming stores, substantially
offset by an increase in comparable store sales and increased internet sales.
Comparable store sales increased 2.4% during the third quarter of fiscal 2008
(based on 989 locations) versus a comparable store sales decrease of 8.2%
during the third quarter of fiscal 2007 (based on 1,393 locations). For the
quarter ended June 30, 2008, the Company opened seven stores, including three
Destination Maternity(R) Superstores, and closed 12 stores, including seven
store closings related to multi-brand store openings. As of the end of June
2008, the Company operates 761 stores, 294 leased department locations and
1,055 total retail locations, compared to 787 stores, 812 leased department
locations and 1,599 total retail locations operated at the end of June 2007.
The decrease in leased department locations at the end of June 2008 versus the
end of June 2007 reflects the closure of the remaining leased departments
within Sears stores during the month of June 2008, as compared to the 516
Sears leased departments operated by the Company at the end of June 2007.
Adjusted EBITDA was $14.1 million for the third quarter of fiscal 2008, a
12.6% decrease from the $16.1 million of Adjusted EBITDA for the third quarter
of fiscal 2007. Adjusted EBITDA is defined in the financial tables at the end
of this press release.
Net sales for the first nine months of fiscal 2008 decreased 2.6% to
$434.1 million from $445.6 million for the same nine months of the preceding
year. The decrease in sales versus last year resulted primarily from a
decrease in sales from our leased department and licensed relationships,
largely due to a decrease in Sears leased department sales, as well as reduced
sales volume from the ongoing closure of certain underperforming stores and a
decrease in comparable store sales, partially offset by increased internet
sales. Comparable store sales decreased 0.6% during the first nine months of
fiscal 2008 (based on 842 locations) versus a comparable store sales decrease
of 4.1% during the first nine months of fiscal 2007 (based on 1,365
locations). During the nine months ended June 30, 2008, the Company opened 24
stores, including five multi-brand stores, and closed 44 stores, with 16 of
these store closings related to multi-brand store openings. During the nine
months ended June 30, 2008, the Company also closed the 501 leased department
locations within Sears(R) stores, pursuant to mutual agreement with Sears. As
we have previously disclosed, our relationship with Sears ended in June, 2008,
resulting in the closure of our leased departments within Sears stores.
Adjusted EBITDA was $27.1 million for the first nine months of fiscal 2008, a
31.7% decrease from the $39.6 million of Adjusted EBITDA for the first nine
months of fiscal 2007.
Since March 19, 2008, the Company has prepaid $13 million of its
outstanding Term Loan, including $8 million prepaid on June 19, 2008. At June
30, 2008, the Company's indebtedness under the Term Loan Agreement was $75.9
million, there were no outstanding borrowings under the credit facility and
the Company had approximately $49 million of availability under the credit
facility.
On July 29, 2008 the Company announced that its Board of Directors
approved a program to repurchase up to $7 million of the Company's outstanding
common stock. Under the program, the Company may repurchase shares from time
to time through solicited or unsolicited transactions in the open market or in
negotiated or other transactions. The program will be in effect until the end
of July 2010.
Rebecca Matthias, President and Chief Creative Officer of Mothers Work,
noted, "We are pleased with our strong sales performance for June and for the
third quarter, despite the continued weak overall economic and retail
environment, as we continue to anniversary weaker sales results from a year
ago and continue to refine our merchandise assortments and our in-store
merchandise presentation. Our sales for the third quarter of $152.2 million
were within our guidance range of $150.0 million to $153.5 million provided in
our April 23, 2008 press release, with our comparable store sales increase of
2.4% for the quarter within our guidance range of an increase of 1.0% to 3.5%
for the quarter.
"As we announced in our July 1, 2008 strategic restructuring press
release, we are streamlining our merchandise brands and store nameplates and
have implemented cost reductions in order to simplify our business model,
reduce our overhead costs and improve and tighten our merchandise assortments
to drive the best possible results during this difficult economic period and
for the long term. We expect to realize approximately $5 million of
annualized expense savings from these actions, beginning in the fourth quarter
of fiscal 2008, and expect to incur pre-tax expense of approximately $0.9
million from these actions, with approximately $0.7 million of this expense
expected to be recorded in the fourth quarter of fiscal 2008 and approximately
$0.2 million expected to be recorded in the first quarter of fiscal 2009.
Pursuant to our strategic restructuring, we will re-brand our Mimi
Maternity(R) merchandise brand under our A Pea in the Pod(R) brand beginning
with the Spring 2009 collection, which will debut beginning in November 2008.
We also plan to streamline our store nameplates by January 2009, by renaming
our single-brand Mimi Maternity stores as A Pea in the Pod, and by renaming
our multi-brand Mimi Maternity stores as Destination Maternity. We feel
strongly that the strategic restructuring and streamlining of our merchandise
brands and store nameplates will help improve our long-term profitability by
simplifying our brand structure, reducing our cost structure, and leveraging
both our renowned A Pea in the Pod luxury brand and our growing multi-brand
Destination Maternity store brand.
"As of June 30, 2008, we have 41 two-brand Mimi combo stores, 3 triplex
stores, and 18 Destination Maternity Superstores. The Mimi combo and triplex
stores will be renamed as Destination Maternity by January 2009, as part of
our restructuring. We believe there is a significant opportunity to expand
our multi-brand Destination Maternity store concepts, which we believe will
generate higher sales per store and improved store operating profit margins by
reducing store expense percentages through the efficiency of operating one
larger store rather than multiple smaller stores in a single market. In
addition, in certain cases, we believe our Destination Maternity store
concepts will increase overall sales in the geographical markets they serve.
Opening our Destination Maternity Superstores will typically involve closing
two or more smaller stores and may frequently result in one-time store closing
costs resulting primarily from early lease terminations. We opened four
Destination Maternity Superstores in fiscal 2008, and are targeting to open
one additional Superstore in fiscal 2008. We are the only national retailer
that is solely focused on maternity, and we are further differentiating
ourselves as the ultimate maternity destination with these large, well-
assorted, "must visit" multi-brand Destination Maternity store concepts.
"Over the past several years, we have increased the sales we generate from
our leased department and licensed relationships, and we are committed to
continuing this important part of our business and seeking ways to profitably
expand it over the long term. We are the exclusive maternity apparel provider
to Kohl's(R) through a licensed relationship, and have leased department
relationships with Macy's(R), Babies "R" Us(R), Boscov's(R), and Gordmans(R).
As we announced in September 2007, our relationship with Sears ended in June
2008. While we are disappointed about the end of our relationship with Sears,
we feel the decision not to proceed with a renewal was in the best interest of
our stockholders since we were unable to reach terms on a renewal which would
be favorable for Mothers Work and our stockholders. As we have previously
stated, we are focused on generating sales that also generate an adequate
return on investment and help us to increase shareholder value-we are not
interested in generating sales that do not help deliver shareholder value. We
believe that we continue to have the opportunity to profitably increase the
sales we generate from our leased department and licensed relationships over
time. We believe these growth opportunities include additional maternity
apparel department locations with our current partners as well as developing
relationships with new partners. Our continued commitment to this strategy of
expanding our leased department and licensed relationships is also
demonstrated by our new leased department relationships rolled out during
fiscal 2007 with Boscov's and Gordmans, two regional department store chains.
"In addition, although we currently do not have any international sales
other than in Canada, we do believe there is a significant opportunity to
develop international sales beyond Canada, and we are actively analyzing and
evaluating some of these opportunities. We feel confident that the strength
of our brands and product offerings and our unmatched overall expertise in
maternity apparel will enable us to build significant international sales
volume over time. We anticipate that our initial international strategy will
include licensing or similar arrangements with foreign partners.
"We believe our customers, particularly first-time parents, are entering a
new life stage that drives widespread changes in purchasing needs and
behavior, thus making our maternity customer a highly-valued demographic for a
range of consumer products and services companies. We have been able to
leverage the relationship we have with our customers to earn incremental
revenues, and we aim to expand these revenues over time through a variety of
marketing partnership programs utilizing our extensive opt-in customer
database and various in-store marketing initiatives, which help introduce our
customers to various baby and parent-related products and services offered by
leading third-party consumer products and services companies.
"Also, we continue to expand futuretrust(R), our MasterCard(R)-based
college savings program that we market through our stores and our internet
sites. The futuretrust program enables members to help save for their child's
(or grandchild's or any other relative's or friend's) college education when
they link their futuretrust MasterCard to a tax-advantaged 529 College Savings
account. Members earn rebates on all purchases with their futuretrust
MasterCard that are automatically contributed to their 529 College Savings
account and can also earn additional college savings at merchants in the
futuretrust Preferred Merchant Network. We have entered into relationships
with select providers of 529 savings programs, tax preparation services, home
mortgages and real estate services for our futuretrust members and, in the
future, we anticipate further developing our futuretrust program into a full
service financial services and information resource for our members known as
the Futuretrust Family Financial Center(TM). We anticipate that additional
potential services offered through the Futuretrust Family Financial Center may
include online banking, life insurance and other financial services needed by
families with children. We plan to offer such services through relationships
with high-quality third-party providers of these services.
"As for our outlook for the rest of fiscal 2008, we are optimistic about
seeing continued improvement in our sales trend as we anniversary weaker sales
results from a year ago, and continue to refine our merchandise assortments
and our in-store merchandise presentation. We have seen a strong improvement
in our sales trend in the third quarter compared to our sales performance in
the first six months of fiscal 2008, as we have seen more seasonal
temperatures compared to a year ago and we began to anniversary much weaker
sales results from a year ago. Based on our sales results thus far in July,
we expect our comparable store sales for the full month of July to be in the
range of up 2.0% to 3.5%.
"For the fourth quarter of fiscal 2008, we are projecting net sales in the
$130.5 million to $134.4 million range, based on an assumed comparable store
sales increase of 1.0% to 4.0% for the quarter. Based on this targeted net
sales, we are projecting fourth quarter earnings per common share (diluted) of
between a loss of $(0.30) and $(0.46) per share, significantly better than
last year's fourth quarter diluted loss of $(0.92) per share. Before debt
repurchase and restructuring charges, we are projecting fourth quarter
earnings per share (diluted) of between a loss of $(0.23) and $(0.39) per
share.
"We are projecting net sales for fiscal 2008 in the $564.5 million to
$568.5 million range, representing a sales decrease of approximately down 2.2%
to 2.9% versus fiscal 2007, based on an assumed comparable store sales change
of between down 0.3% and up 0.5% for the full fiscal year, as well as
decreased sales from our leased department and licensed relationships,
including the negative sales impact of the discontinuation of our Sears
relationship during the third quarter of fiscal 2008.
"Our projected sales for fiscal 2008 reflect our plan to open
approximately 28 to 29 new stores during the year, including approximately 6
to 7 new multi-brand stores, and our plan to close approximately 53 to 55
stores, with approximately 18 to 19 of these planned store closings related to
openings of new multi-brand stores, including our Destination Maternity
Superstores. Excluding the closure of all of the 501 Sears leased department
locations that we operated on September 30, 2007, we plan to modestly increase
the number of our leased department locations with our existing leased
department partners during fiscal 2008. In addition, we distribute our Oh
Baby by Motherhood(TM) collection through a licensed arrangement at Kohl's
stores throughout the United States and on Kohls.com. Kohl's currently
operates 957 stores in 47 states, compared to 834 stores in 46 states a year
ago.
"We project that our gross margin for fiscal 2008 will be approximately
50.3% of net sales, a decrease from our 51.6% gross margin in fiscal 2007, due
to increased markdowns to help manage our inventory level, product cost
inflation pressures, which are being felt throughout the apparel industry, as
well as from spreading product overhead costs over a smaller sales volume. We
continue to aggressively control our expenses, including the $5 million
annualized reduction of our overhead costs expected to result from our July 1,
2008 strategic restructuring. We expect our operating expenses for fiscal
2008 to be several million dollars lower than fiscal 2007. However, with our
lower planned sales volume for fiscal 2008 versus fiscal 2007, we expect our
operating expenses as a percentage of net sales for fiscal 2008 to be flat to
slightly higher versus fiscal 2007.
"Based on these assumptions, we are projecting operating income for fiscal
2008 in the $8.3 million to $10.0 million range, compared to our fiscal 2007
operating income of $18.7 million, and we are projecting Adjusted EBITDA in
the $28.9 million to $30.6 million range, compared to our fiscal 2007 Adjusted
EBITDA of $38.6 million. Also, based on these assumptions, we are projecting
diluted earnings per common share of between $0.10 and $0.27 per share for
fiscal 2008, compared to our $0.87 diluted earnings per share before debt
repurchase charges for fiscal 2007 and our reported loss per share of $(0.07)
per share for fiscal 2007. This earnings guidance range is consistent with
our previous guidance range for fiscal 2008 diluted earnings per share of
between $0.05 and $0.36 per share provided in our April 23, 2008 press
release. Before debt repurchase and restructuring charges, we are targeting
diluted earnings per share of between $0.18 and $0.35 per share for fiscal
2008. Of course, our ability to achieve these targeted results will depend,
among other factors, on the overall retail, economic, political and
competitive environment.
"We are planning our fiscal 2008 capital expenditures to be between $16
and $17 million. Our fiscal 2008 capital expenditures are primarily for new
store openings, expanding and relocating selected stores, store remodelings,
and some continued investment in our management information systems and for
continued distribution center automation. We expect our inventory at fiscal
2008 year end to be less than fiscal 2007 year end, despite generating
significantly less sales than originally planned, as we continue to tightly
plan our inventory levels relative to sales and recognize the impact of the
sell-off of the inventory related to the Sears business due to the non-renewal
of the Sears relationship. Based on these targets and plans, we expect to
generate positive free cash flow during fiscal 2008.
"We are very pleased with the reduction of our debt and ongoing interest
expense over the past two years. During fiscal 2007, we reduced the Company's
debt balance by approximately $25 million and completed the redemption of the
remaining $90 million principal amount of our Senior Notes through a new,
lower interest Term Loan financing. We have prepaid $13 million of our Term
Loan since March 2008 and we have repaid nearly $50 million of total debt in
the last 24 months. We have $75.9 million of outstanding Term Loan principal
at June 30, 2008. Although we have had and expect to have modest credit line
borrowings from our $65 million credit facility at times during fiscal 2008,
reflecting seasonal and other timing variations in cash flow as well as our
use of funds for the $13 million Term Loan prepayments, we did not have any
outstanding credit line borrowings at the end of the third quarter of fiscal
2008 and expect to have none at the end of fiscal 2008. We had approximately
$49 million of availability under our credit facility at June 30, 2008. Our
average level of borrowings under our credit facility was $5.3 million during
the first nine months of fiscal 2008.
"We are also pleased to announce that our Board has authorized a share
repurchase program of up to $7 million. Over the past two years, we have been
very focused on deleveraging our balance sheet through debt prepayment.
However, we also believe that, at current market prices, our shares represent
an attractive investment opportunity, and we believe that an investment in our
own stock is a very appropriate one. While our priority remains continued
deleveraging through additional potential prepayments of our Term Loan, this
authorized share repurchase program gives us excellent flexibility, indicates
our continued commitment to increase shareholder value, and reflects our
continued confidence in our generation of free cash flow despite a challenging
overall economic environment.
"As we look forward to fiscal 2009, we recognize it is very difficult to
project sales in this relatively volatile economic and retail environment.
Nonetheless, based on reasonable sales assumptions, we expect to generate
significantly higher earnings in fiscal 2009 than in fiscal 2008, while
generating strong free cash flow. If our comparable store sales change for
fiscal 2009 were in the range of down 1% to up 1%, we project that our fiscal
2009 net sales would be approximately $556 to $566 million and our reported
fiscal 2009 diluted earnings per share would be between $0.60 and $1.00, a
significant increase from our projected earnings range for fiscal 2008.
Before debt repurchase and restructuring charges, diluted earnings per share
would be between $0.63 and $1.03 per share for fiscal 2009. Based on this
assumed comparable store sales range, operating income for fiscal 2009 would
be in the $11.8 to $15.8 million range, and Adjusted EBITDA (representing
operating income before certain non-cash charges) would be in the $30.6 to
$34.6 million range. Of course, our ability to achieve these targeted results
will depend, among other factors, on the overall retail, economic, political
and competitive environment.
"In fiscal 2009, we plan to open approximately 15 to 25 new stores,
including 5 to 10 new multi-brand Destination Maternity stores (both
Destination Maternity Superstores and smaller Destination Maternity combo
stores), and we plan to close approximately 45 to 55 stores, with
approximately 10 to 15 of these planned store closings related to openings of
new multi-brand Destination Maternity stores. We are planning our fiscal 2009
capital expenditures to be between $13 million and $15 million, primarily for
new store openings, expanding and relocating selected stores, store
remodelings, and continued investment in our management information systems
and for continued distribution center automation. After deducting projected
tenant construction allowance payments to us from store landlords, we expect
our net cash outlay for capital projects to be between $10 million and $11
million. With respect to inventory, we are planning to decrease overall
inventory levels from our projected inventory at the end of fiscal 2008.
Based on these targets and plans, we expect to generate strong free cash flow
during fiscal 2009, which would enable us, first and foremost, to continue to
deleverage through additional potential debt prepayments, while also enabling
us to make potential stock repurchases."
As announced previously, the Company will hold a conference call today at
9:00 a.m. Eastern Time, regarding the Company's third quarter fiscal 2008
earnings, future financial guidance, and certain business initiatives. You
can participate in this conference call by calling (210) 234-0026. Please
call ten minutes prior to 9:00 a.m. Eastern Time. The passcode for the
conference call is "Mothers Work." In the event that you are unable to
participate in the call, a replay will be available through Tuesday,
August 12, 2008 by calling (800) 839-1334.
Mothers Work is the world's largest designer and retailer of maternity
apparel, using its custom TrendTrack(TM) merchandise analysis and planning
system as well as its quick response replenishment process to "give the
customer what she wants, when she wants it." As of June 30, 2008, Mothers
Work operates 1,055 maternity locations, including 761 stores, predominantly
under the tradenames Motherhood Maternity(R), A Pea in the Pod(R), Mimi
Maternity(R), and Destination Maternity(R), and sells on the web through its
DestinationMaternity.com and brand-specific websites. In addition, Mothers
Work distributes its Oh Baby by Motherhood(TM) collection through a licensed
arrangement at Kohl's(R) stores throughout the United States and on Kohls.com.
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 expected net sales, comparable store sales, free
cash flow or other results of operations, liquidity and financial condition,
expense savings, potential debt prepayments, potential stock repurchases, 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: our ability to successfully manage our various
business initiatives, our ability to successfully manage and retain our leased
department and licensed relationships and marketing partnerships, future sales
trends in our existing store base, unusual weather patterns, changes in
consumer preferences and spending patterns, demographics and other
macroeconomic factors that may impact the level of spending for maternity
apparel, overall economic conditions and other factors affecting consumer
confidence, 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, ability to hire and develop senior management and sales
associates, ability to develop and source merchandise, ability to receive
production from foreign sources on a timely basis, potential stock
repurchases, potential debt prepayments, changes in market interest rates, war
or acts of terrorism, unusual weather patterns and other factors set forth in
the Company's periodic filings with the Securities and Exchange Commission, or
in materials incorporated therein by reference.
MOTHERS WORK, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Third Quarter Ended Nine Months Ended
---------------------------------------
6/30/08 6/30/07 6/30/086/30/07
------------------------ --------
Net sales $152,224$153,227$434,105 $445,568
Cost of goods sold74,022 72,105 214,255211,336
------------------------ --------
Gross profit78,202 81,122 219,850234,232
Selling, general and
administrative
expenses 69,557 70,055 208,474208,668
------------------------ --------
Operating income 8,645 11,067 11,376 25,564
Interest expense, net 1,711 2,043 5,435 7,965
Loss on extinguishment of
debt 59 7,330 97 9,423
------------------------ --------
Income before income
taxes 6,875 1,694 5,844 8,176
Income tax provision 2,738 661 2,449 3,189
------------------------ --------
Net income $4,137 $1,033 $3,395 $4,987
======================== ========
Net income per share -
basic $0.69 $0.18 $0.57 $0.86
======================== ========
Average shares outstanding
- basic 5,956 5,838 5,915 5,789
======================== ========
Net income per share -
diluted $0.68 $0.17 $0.56 $0.81
======================== ========
Average shares outstanding
- diluted 6,049 6,140 6,039 6,168
======================== ========
Supplemental information:
Net income, as reported $4,137 $1,033 $3,395 $4,987
Add: loss on
extinguishment of debt,
net of tax 36 4,471 59 5,748
------------------------ --------
Adjusted net income,
before loss on
extinguishment of
debt 4,173 5,504 3,454 10,735
Add: stock compensation
expense, net of tax 399 333 1,086936
------------------------ --------
Adjusted net income,
before loss on
extinguishment of
debt and stock
compensation expense $4,572 $5,837 $4,540$11,671
======================== ========
Adjusted net income per
share - diluted, before
loss on extinguishment
of debt $0.69 $0.90 $0.57 $1.74
======================== ========
Adjusted net income per
share - diluted, before
loss on extinguishment
of debt and stock
compensation expense $0.76 $0.95 $0.75 $1.89
======================== ========
Selected Consolidated Balance Sheet Data
(in thousands)
(unaudited)
June 30, September 30,June 30,
2008 2007 2007
------- ----------- -------
Cash and cash equivalents $8,522$10,130 $7,393
Inventories 95,209100,485 97,998
Property, plant and
equipment, net 66,589 68,651 71,237
Line of credit borrowings- - -
Long-term debt 77,838 91,646 92,064
Stockholders' equity93,255 88,523 94,097
Supplemental Financial Information
Reconciliation of Operating Income to Adjusted EBITDA(1)
and Operating Income Margin to Adjusted EBITDA Margin
(in thousands, except percentages)
(unaudited)
Third Quarter Ended Nine Months Ended
-------------------- --------------------
6/30/08 6/30/07 6/30/08 6/30/07
---------------- ----------------
Operating income $8,645 $11,067 $11,376 $25,564
Add: depreciation &
amortization expense 3,922 4,05611,879 11,868
Add: loss on impairment of
long-lived assets393 559 1,339 949
Add: loss (gain) on disposal
of assets457(129) 695(292)
Add: stock compensation
expense 654 544 1,780 1,534
---------------- ----------------
Adjusted EBITDA(1)$14,071 $16,097 $27,069 $39,623
================ ================
Net sales$152,224$153,227 $434,105$445,568
================ ================
Operating income margin
(operating income as a
percentage of net sales) 5.7%7.2% 2.6%5.7%
Adjusted EBITDA margin
(Adjusted EBITDA as a
percentage of net sales) 9.2% 10.5% 6.2%8.9%
(1) Adjusted EBITDA represents operating income before deduction for the
following non-cash charges: (i) depreciation & amortization expense;
(ii) loss on impairment of long-lived assets; (iii) (gain) loss on
disposal of assets; and (iv) stock compensation expense.
Reconciliation of Net Income (Loss) Per Share - Diluted
to Adjusted Net Income (Loss) Per Share - Diluted,
Before Loss on Extinguishment of Debt, Restructuring Expense
and Stock Compensation Expense
(unaudited)
Projected for the Actual for the
Fourth QuarterFourth Quarter
EndingEnded
9/30/08 9/30/07
---------------- --------------
Net loss per share - diluted $(0.46) to (0.30)$(0.92)
Add: per share effect of loss on
extinguishment of debt - -
Add: per share effect of restructuring
expense0.07 -
---------------- --------------
Adjusted net loss per share - diluted,
before loss on extinguishment of debt
and restructuring expense(0.39) to (0.23) (0.92)
Add: per share effect of stock
compensation expense 0.070.06
---------------- --------------
Adjusted net loss per share - diluted,
before loss on extinguishment of debt,
restructuring expense and stock
compensation expense$(0.32) to (0.16)$(0.86)
================ ==============
Projected for the Actual for the
Year Ending Year Ended
9/30/08 9/30/07
---------------- --------------
Net income (loss) per share - diluted $0.10 to 0.27 $(0.07)
Add: per share effect of loss on
extinguishment of debt0.01 0.94
Add: per share effect of restructuring
expense 0.07 -
---------------- --------------
Adjusted net loss per share - diluted,
before loss on extinguishment of debt
and restructuring expense 0.18 to 0.35 0.87
Add: per share effect of stock
compensation expense 0.24 0.21
---------------- --------------
Adjusted net income per share - diluted,
before loss on extinguishment of debt,
restructuring expense and stock
compensation expense $0.42 to 0.59$1.08
================ ==============
Projected for the
Year Ending
9/30/09
----------------
Net income per share - diluted $0.60 to 1.00
Add: per share effect of loss on
extinguishment of debt0.01
Add: per share effect of restructuring
expense 0.02
----------------
Adjusted net income per share - diluted,
before loss on extinguishment of debt
and restructuring expense 0.63 to 1.03
Add: per share effect of stock
compensation expense 0.22
----------------
Adjusted net income per share - diluted,
before loss on extinguishment of debt,
restructuring expense and stock
compensation expense $0.85 to 1.25
================
Reconciliation of Operating Income to Adjusted EBITDA
(in millions, unaudited)
Projected for the Actual for the
Year Ending Year Ended
9/30/08 9/30/07
---------------- --------------
Operating income $8.3 to 10.0$18.7
Add: depreciation & amortization expense 16.1 16.4
Add: loss on impairment of long-lived
assets and (gain) loss on disposal
of assets 2.1 1.4
Add: stock compensation expense 2.4 2.1
---------------- --------------
Adjusted EBITDA $28.9 to 30.6$38.6
================ ==============
Projected for the
Year Ending
9/30/09
----------------
Operating income $11.8 to 15.8
Add: depreciation & amortization expense 15.2
Add: loss on impairment of long-lived
assets and (gain) loss on disposal
of assets 1.3
Add: stock compensation expense 2.3
----------------
Adjusted EBITDA $30.6 to 34.6
================
SOURCE Mothers Work, Inc.
