Destination Maternity Corp (Form: 8-K, Received: 12/05/2014 16:26:56)

Date: December 5, 2014

DESTINATION MATERNITY CORPORATION

/s/ Judd P. Tirnauer

Judd P. Tirnauer

Executive Vice President & Chief Financial Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 1, 2014

DESTINATION MATERNITY CORPORATION

(Exact name of Registrant as specified in Charter)

Delaware

0-21196

13-3045573

(State or Other Jurisdiction of

Incorporation or Organization)

Commission

File number

(I.R.S. Employer

Identification Number)

456 North 5th Street

Philadelphia, PA 19123

(Address of Principal Executive Offices)

(215) 873-2200

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02.

Results of Operations and Financial Condition

On December 4, 2014, Destination Maternity Corporation (the “ Company ”) issued a press release and held a broadly accessible conference call to discuss its financial results for its fourth fiscal quarter and fiscal year ended September 30, 2014. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of the script read by management during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The press release contained non-GAAP financial measures within the meaning of the Securities and Exchange Commission’s Regulation G, including: (a) Adjusted EBITDA (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 (gain) on disposal of assets; and (iv) stock-based compensation expense), together with the percentage of net sales represented by this measure; (b) Adjusted EBITDA before other charges, together with the percentage of net sales represented by this measure; and (c) Adjusted net income (net income before certain charges or credits), together with the per share-diluted amount represented by this measure.

The Company believes that each of these non-GAAP financial measures provides useful information about the Company’s results of operations and/or financial position to both investors and management. Each non-GAAP financial measure is provided because management believes it is an important measure of financial performance used in the retail industry to measure operating results, to determine the value of companies within the industry and to define standards for borrowing from institutional lenders. The Company uses each of these non-GAAP financial measures as a measure of the performance of the Company. The Company provides these measures to investors to assist them in performing their analysis of its historical operating results. Each of these non-GAAP financial measures, except net cash, reflects a measure of the Company’s operating results before consideration of certain charges and consequently, none of these measures should be construed as an alternative to net income or operating income as an indicator of the Company’s operating performance, or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity, as determined in accordance with generally accepted accounting principles. The Company may calculate each of these non-GAAP financial measures differently than other companies.

With respect to the non-GAAP financial measures discussed in the press release, the Company has provided, as an attachment to such press release, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

The disclosure in this Current Report, including in the Exhibits attached hereto, of any financial information shall not constitute an admission that such information is material.

Item 5.02.

Compensatory Arrangements of Certain Officers.

On December 1, 2014, the Compensation Committee of the Board (the “ Committee ”) approved an amendment to the Company’s 2013 Management Incentive Program (the “ MIP ”) to reflect the change in the Company’s fiscal year (described below in Item 8.01). The amended MIP is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

On December 1, 2014, in recognition of their contributions to the Company and in lieu of any bonus opportunity under the MIP for the period between October 1, 2014 and January 31, 2015, each of Christopher F. Daniel, the Company’s President, Ronald J. Masciantonio, the Company’s Executive Vice President & Chief Administrative Officer, and Judd P. Tirnauer, the Company’s Executive Vice President & Chief Financial Officer, were granted a special bonus opportunity of $100,000 (each a “ Special Bonus ”) pursuant to the terms of letter agreements with the Company. Each Special Bonus will be paid as a cash lump-sum (less applicable withholding) on the first regularly scheduled payroll date that occurs at least 10 days after November 1, 2015 (the “ Payment Date ”), provided the executive remains

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continuously employed by the Company through the Payment Date. If the executive’s employment ceases prior to the Payment Date due to a termination by the Company without “Cause” or due to a resignation for “Good Reason,” then subject to the execution of a release of claims, the executive will be paid the Special Bonus within 45 days of the applicable cessation date. If the executive’s employment by the Company ceases prior to the Payment Date for any reason other than as described in the preceding sentence, the executive will not receive the Special Bonus. The letter agreements also include some other clarifying changes to each executive’s employment agreement which provide the Committee with flexibility in the administration of the Company’s cash bonus program and which reflect the change in the Company’s fiscal year. Finally, Mr. Daniel’s letter agreement provides that, with respect to fiscal years beginning on or after February 1, 2015, his annual target bonus opportunity will increase from 60% to 70% of his annual base salary.

Similarly, on December 1, 2014, the Committee approved a letter agreement that amends the Company’s employment agreement with Anthony M. Romano, the Company’s Chief Executive Officer. This letter agreement provides that, in lieu of any bonus opportunity for the period between October 1, 2014 and January 31, 2015, Mr. Romano’s bonus opportunity for the 12 month period beginning February 1, 2015 will be 133% of the otherwise applicable annual amount. As a result of the change in the Company’s fiscal year, there will be a four month extension in the interval between annual equity awards. To compensate for this 16 (rather than 12) month interval between annual awards, the letter agreement also provides that the grant date fair value of Mr. Romano’s next annual equity award will be 133% of the otherwise applicable annual amount. The letter agreement also revises the composition of Mr. Romano’s next annual equity award to be as follows: 50% stock options, 25% restricted stock and 25% performance-based restricted stock units (“ PRSUs ”). Finally, the letter agreement makes certain clarifying changes to Mr. Romano’s employment agreement to give the Committee flexibility in the administration of the Company’s cash bonus program and to reflect the change in the Company’s fiscal year.

The letter agreements amending the Company’s employment agreements with Messrs. Daniel, Masciantonio, Tirnauer and Romano are attached hereto as Exhibits 10.2, 10.3, 10.4 and 10.5 , respectively, and are incorporated herein by this reference.

On December 3, 2014, the Committee also approved annual equity awards for the Company’s named executive officers. The awards include a mix of stock options, restricted stock and PRSUs, all on terms substantially consistent with the Company’s past practice. In the ordinary course, the Committee would have set the aggregate grant date fair value of awards to named executive officers other than Mr. Romano at the median peer group benchmark value by position, as determined by The Hay Group. However, due to the change in the Company’s fiscal year, the Committee does not again intend to make annual equity grants to named executive officers until April 2016. To compensate for this 16 (rather than 12) month interval between annual awards, the Committee set the grant date fair values of these awards at 133% of the amounts it would have otherwise granted in the ordinary course. The grant date fair value of Mr. Romano’s award was set at the amount specified in his amended employment agreement (133% of the otherwise applicable annual amount), as described above. The awards are summarized below:


Named Executive Officer	Shares subject to Stock Options		Number of shares of Restricted Stock		Shares subject to PRSUs (at target)		Aggregate Grant Date Fair Value
Anthony M. Romano		177,618		19,183		19,183	$	1,097,250
Christopher F. Daniel		102,265		11,045		11,045	$	631,750
Ronald J. Masciantonio		75,353		8,138		8,138	$	465,500
Judd P. Tirnauer		75,353		8,138		8,138	$	465,500

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Item 8.01.

Other Events.

On December 3, 2014, the Board of Directors of the Company (the “ Board ”) approved a change in the fiscal year of the Company to a 52/53 week retail calendar beginning February 1, 2015 with the fiscal year ending on the Saturday closest to January 31 ^st in each succeeding year. Prior to the change the Company’s fiscal year began on October 1 ^st and ended on September 30 ^th . The Company will have a transition period from October 1, 2014 through January 31, 2015 and will file a Transition Report on Form 10-Q on or before March 12, 2015 for such transition period. The Company’s 2015 fiscal year will cover the calendar year beginning February 1, 2015 and ending January 30, 2016.

Item 9.01.

Financial Statements and Exhibits

The following exhibits are filed or furnished with this Form 8-K:


Exhibit No.		Description

99.1		Press Release of the Company issued December 4, 2014.

99.2		Script for December 4, 2014 Earnings Release Conference Call.

10.1		Destination Maternity Corporation 2013 Management Incentive Program, as amended effective December 3, 2014.

10.2		Letter Agreement between the Company and Christopher F. Daniel dated December 3, 2014.

10.3		Letter Agreement between the Company and Ronald J. Masciantonio dated December 3, 2014.

10.4		Letter Agreement between the Company and Judd P. Tirnauer dated December 3, 2014.

10.5		Letter Agreement between the Company and Anthony M. Romano dated December 3, 2014.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

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Exhibit Index


Exhibit No.		Description

99.1		Press Release of the Company issued December 4, 2014.

99.2		Script for December 4, 2014 Earnings Release Conference Call.

10.1		Destination Maternity Corporation 2013 Management Incentive Program (as amended effective December 3, 2014).

10.2		Letter Agreement between the Company and Christopher F. Daniel dated December 3, 2014.

10.3		Letter Agreement between the Company and Ronald J. Masciantonio dated December 3, 2014.

10.4		Letter Agreement between the Company and Judd P. Tirnauer dated December 3, 2014.

10.5		Letter Agreement between the Company and Anthony M. Romano dated December 3, 2014.

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Exhibit 10.1

DESTINATION MATERNITY CORPORATION

2013 MANAGEMENT INCENTIVE PROGRAM

SECTION 1. Purpose; Definitions . The purpose of the Destination Maternity Corporation 2013 Management Incentive Program (the “ Program ”) is to enable Destination Maternity Corporation (the “ Company ”) and its affiliated companies to motivate and reward favorable performance by providing cash bonus payments based upon the achievement of pre-established and objective performance goals for each fiscal year.

For purposes of the Program, the following terms will have the meanings defined below, unless the context clearly requires a different meaning:

(a) “ Affiliate ” means, with respect to any Person, any other person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, the term “control,” including its correlative terms “controlled by” and “under common control with,” mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

(b) “ Award ” means a cash bonus under the Program.

(d) “ Code ” means the Internal Revenue Code of 1986, as amended, and any successor thereto.

(e) “ Committee ” means the Compensation Committee of the Board, and shall consist of members of the Board who are not employees of the Company or any affiliate thereof and who qualify as “outside directors” under Section 162(m) of the Code.

(f) “ Fiscal Year ” means the fiscal year of the Company.

(g) “ Participant ” means the executive officers of the Company and any other key employee of the Company or any Affiliate with the title of “manager” or above selected by the Committee to participate in the Program.

(h) “ Person ” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization.

(i) “ Performance Period ” means each Fiscal Year or another period as designated by the Committee, so long as such period does not exceed one year.

SECTION 2. Administration of Program . The Committee shall administer and interpret the Program, provided, that , the Program will not be interpreted in a manner that causes an Award intended to qualify as “qualified performance-based compensation” under Section 162(m)

of the Code to fail to so qualify. The Committee shall have the power, from time to time, to: (i) select Participants; (ii) determine the amount of cash to be paid pursuant to each Participant; (iii) determine the terms and conditions of each Award; (iv) establish the performance objectives for any Performance Period in accordance with Section 3 and certify whether such performance objectives have been obtained; (v) establish and amend rules and regulations relating to the Program, and to make all other determinations necessary and advisable for the administration of the Program; and (vi) correct any defect, supply any omission or reconcile any inconsistency in the Program or any Award.

Nothing in the Program shall be deemed to limit the ability of the Committee to grant Awards to Participants under the Program which are not intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code and which are not exempt from the limitations thereof.

All decisions made by the Committee pursuant to the Program shall be made in the Committee’s sole and absolute discretion and shall be final and binding on the Participants, and the Company. No member or former member of the Board or the Committee shall be liable for any act, omission, interpretation, construction or determination made in connection with the Program other than as a result of such individual’s willful misconduct.

SECTION 3. Awards .

(a) Performance Criteria . Within 90 days after each Performance Period begins (or such other date as may be required or permitted under Section 162(m)), the Committee shall establish the performance objective or objectives that must be satisfied in order for a Participant to receive an Award for that Performance Period. In addition, at that time the Committee will also specify the portion of Awards that will be payable upon the full, partial or over-achievement of specified performance objectives for that Performance Period. Except with respect to an Award that is not intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code, such performance objectives will be based upon the following criteria, as determined by the Committee for the applicable Performance Period (subject to adjustment in accordance with Section 3(b), below):

(i) the attainment of certain target levels of, or a specified percentage increase in, (1) revenues (including, without limitation, specified subsets or measures of revenue, such as “net sales” or “comparable sales”), (2) income before taxes and extraordinary items, (3) net income, (4) operating income, (5) earnings before income tax, (6) earnings before interest, taxes, depreciation and amortization, (7) after-tax or pre-tax profits, (8) operational cash flow, (9) return on capital employed or returned on invested capital, (10) after-tax or pre-tax return on stockholders’ equity, (11) the price of our common stock or (12) a combination of the foregoing;

(ii) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, our bank debt or other public or private debt or financial obligations;

(iii) earnings per share or the attainment of a specified percentage increase in earnings per share or earnings per share from continuing operations;

(iv) the attainment of certain target levels of, or a specified increase in, economic value added targets based on a cash flow return on investment formula;

(v) the growth in the value of an investment in our common stock assuming the reinvestment of dividends;

(vi) the attainment of a certain level of, reduction of, or other specified objectives with regard to limiting the level in or increase in all or a portion of controllable expenses or costs or other expenses or costs; and/or

(vii) any other objective business criteria that would not cause an Award to fail to constitute “qualified performance-based compensation” under Section 162(m) of the Code.

Performance goals may be established on a Company-wide basis or with respect to one or more business units, divisions, Affiliates, or products; and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies. The performance objectives for a particular Performance Period need not be the same for all Participants.

(b) Adjustments to Performance Criteria . The Committee may provide, at the time the performance goals are established in accordance with Section 3(a), that adjustments will be made to the applicable performance goals to take into account, in any objective manner specified by the Committee, the impact of one or more of the following: (i) gain or loss from all or certain claims and/or litigation and insurance recoveries, (ii) the impairment of tangible or intangible assets, (iii) stock-based compensation expense, (iv) extraordinary, unusual or infrequently occurring events reported in the Company’s public filings, (v) restructuring activities reported in the Company’s public filings, (vi) investments, dispositions or acquisitions, (vii) gain or loss from the disposal of certain assets, (viii) gain or loss from the early extinguishment, redemption, or repurchase of debt, (ix) cash or non-cash charges related to store closing expenses, (x) changes in accounting principles that become effective during the performance period, or (xi) any other item, event or circumstance that would not cause an Award to fail to constitute “qualified performance-based compensation” under Section 162(m) of the Code.

Any adjustment described in this Section 3(b) may relate to the Company or to any subsidiary, division or other operational unit of the Company or its Affiliates, as determined by the Committee at the time the performance goals are established. Any adjustment shall be determined in accordance with generally accepted accounting principles and standards, unless such other objective method of measurement is designated by the Committee at the time performance goals are established. Notwithstanding the foregoing, adjustments will be made as necessary to any performance criteria related to the Company’s stock to reflect changes in corporate capitalization, including a recapitalization, stock split or combination, stock dividend, spin-off, merger, reorganization or other similar event or transaction affecting the Company’s stock.

(c) Maximum Award Amount Payable . The maximum amount payable hereunder to any single Participant with respect to any particular Performance Period will not exceed $1,950,000.

(d) Payment Conditioned on Continued Employment . No Participant will be entitled to any payment hereunder with respect to any particular Performance Period unless he or she has remained continuously employed by the Company or its Affiliates through the last day of that Performance Period (or such other date as is specified by the Committee at the time that performance objectives are established).

(e) Negative Discretion . Notwithstanding anything else contained in Section 3(b) to the contrary, the Committee shall have the right, in its absolute discretion, (i) to reduce or eliminate the amount otherwise payable to any Participant under Section 3(b) based on individual performance or any other factors that the Committee, in its discretion, shall deem appropriate and (ii) to establish rules or procedures that have the effect of limiting the amount payable to each Participant to an amount that is less than the maximum amount otherwise authorized under Section 3(b).

SECTION 4. PAYMENT . To the extent that the Committee determines at the time of grant to qualify an Award as performance-based compensation under Section 162(m) of the Code, no Award shall be payable except upon written certification by the Committee that the performance goals have been satisfied to a particular extent and that any other material terms and conditions precedent to payment of an Award have been satisfied. Payment hereunder will be made as soon as practicable after the Committee certification referenced above is completed, but in no event later than 2 ¹ ⁄ ₂ months following the end of the Fiscal Year that includes the last day of the Performance Period to which the Award relates.

SECTION 5. GENERAL PROVISIONS

(a) Amendment and Termination . The Board or the Committee may at any time amend, suspend, discontinue or terminate the Program; provided; however , that no such action shall be effective without approval by the shareholders of the Company to the extent necessary to continue to qualify the amounts payable hereunder to Participants as “qualified performance-based compensation” under Section 162(m) of the Code.

(b) Unsecured Creditor Status . A Participant entitled to payment hereunder shall rely solely upon the unsecured promise of the Company and nothing herein contained shall be construed to give to or vest in a Participant or any other person now or at any time in the future, any right, title, interest, or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract, or other property of any kind whatever owned by the Company, or in which the Company may have any right, title, or interest, nor or at any time in the future.

(c) Non-Assignment of Awards . The Participant shall not be permitted to sell, transfer, pledge or assign any amount payable pursuant to the Program or an Award, provided that the right to payment of an Award earned hereunder may pass by will or the laws of descent and distribution.

(d) Separability . If any term or condition of the Program shall be invalid or unenforceable to any extent or in any application, then the remainder of the Program, with the exception of such invalid or unenforceable provision, shall not be affected thereby, and shall continue in effect and application to its fullest extent.

(e) Continued Employment . Neither the adoption of the Program nor the execution of any document in connection with the Program will: (i) confer upon any employee of the Company or an Affiliate any right to continued employment with the Company or such Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment of any of its employees at any time.

(f) Incapacity . If the Committee determines that a Participant is unable to care for his affairs because of illness or accident, any amount due such Participant under the Program may be paid to his spouse, child, parent, or any other person deemed by the Committee to have incurred expense for such Participant (including a duly appointed guardian, committee, or other legal representative), and any such payment shall be a complete discharge of the Company’s obligation hereunder.

(g) Withholding . The Company shall withhold the amount of any federal, state, local or other tax, charge or assessment attributable to the payment of any Award as it may deem necessary or appropriate, in its sole discretion.

(h) Governing Law . The Program and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the Commonwealth of Pennsylvania, without regard to the application of the principles of conflicts of laws.

Revised effective 12/03/2014

Exhibit 10.2

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December 3, 2014

VIA HAND DELIVERY

Mr. Christopher F. Daniel

c/o Destination Maternity Corporation

456 North Fifth Street

Philadelphia, PA 19123

Re:

Special Bonus Award; Amendment to Employment Agreement

Dear Christopher:

Reference is hereby made to the Employment Agreement dated as of April 11, 2011 (as amended December 7, 2013, the “ Agreemen t”) by and between Destination Maternity Corporation (the “ Company ”) and Christopher F. Daniel (“ Executive ” or “ you ”).

As you are aware, the Company has elected to change its fiscal year such that the Company’s fiscal year will now begin on or about February 1st each year. Additionally, as you are aware, the Compensation Committee of the Company’s Board of Directors (the “ Committee ”) has determined that bonuses will not be awarded to management employees with respect to the period from October 1, 2014 until January 31, 2015 (the “ Transition Period ”). You agree and acknowledge that the absence of a bonus opportunity for the Transition Period will not constitute “Good Reason” for purposes of Section 5.6.4 of the Agreement and you expressly waive any right you might otherwise have to resign for “Good Reason” with respect to such absence of a bonus opportunity.

In consideration of the waiver described above and in recognition of your contributions to the Company, you will be eligible to earn a special bonus of $100,000 on the terms and conditions specified below (the “ Special Bonus ”). The Special Bonus will be paid to you as a cash lump-sum (less applicable withholding) on the first regularly scheduled payroll date that occurs at least 10 days after November 1, 2015 (the “ Payment Date ”), provided you remain continuously employed by the Company through the Payment Date. If your employment by the Company ceases prior to the Payment Date due to a termination by the Company without “Cause” (as defined in the Agreement) or due to your resignation for “Good Reason” (as defined in the Agreement, taking into account the waiver in the preceding paragraph), you will be paid the Special Bonus within 45 days of the applicable cessation date, provided you execute and deliver to the Company a release in the form described in Section 5.1 of the Agreement and provided such release becomes irrevocable within 30 days of the applicable cessation date. If your employment by the Company ceases prior to the Payment Date for any reason other than as described in the preceding sentence, you will not receive the Special Bonus.

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Further, effective as of the date hereof, each of the Company and you agree to the following modifications to the Agreement:

(1)	Section 4.2.1 of the Agreement is hereby amended and restated in its entirety as follows:

“4.2.1. Commencing with the fiscal year beginning on February 1, 2015 and for each fiscal year thereafter ending during his employment, Executive will be eligible to earn a performance bonus. The target amount of that bonus will be 70% percent of Executive’s Base Salary for the applicable fiscal year (the “Target Bonus”). The performance period for this bonus opportunity may be segmented into such shorter periods as the Compensation Committee of the Board (the “Committee”) may determine in its reasonable discretion, provided the aggregate bonus opportunities (at target) for the applicable fiscal year are at least equal to the Target Bonus. The actual bonus payable with respect to any performance period will be determined by the Committee, based on the achievement of corporate and individual performance objectives established for the applicable period. Any bonus payable under this paragraph will be paid as soon as administratively practicable following the end of the applicable performance period, but in no event later than 2 1/2 months after the end of the fiscal year that includes the last day of the applicable performance period, and except as otherwise provided in Section 5.1.2 , will only be paid if Executive remains continuously employed by the Company through the actual bonus payment date.”

(2)	Section 4.2.3 of the Agreement is hereby amended and restated in its entirety to provide as follows:

“4.2.3. The Committee may choose to provide Executive’s performance bonus opportunity through the Company’s Management Incentive Program, in which case such bonus opportunity will be subject to the additional terms and conditions therein contained.”

(3)	Section 5.1.2 of the Agreement is hereby amended and restated in its entirety as follows:

“5.1.2. payment of any performance bonus otherwise payable (but for the cessation of Executive’s employment) with respect to a performance period ended prior to the cessation of Executive’s employment;”

(4)	Section 5.1.3 of the Agreement is hereby amended and restated in its entirety as follows:

“5.1.3. for such terminations occurring after February 1, 2015, payment of a pro-rata performance bonus for the bonus performance period in which termination occurs, determined and paid in the same manner and at the same time as the Executive’s performance bonus would otherwise have been determined and paid for the applicable performance period, but for the termination. Such performance bonus will be pro-rated based on the number of days of the applicable performance period transpired prior to the date of termination relative to the total number of days contained in the applicable performance period;”

All terms of the Agreement, as modified by this letter agreement, are hereby acknowledged and ratified.

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If you are in agreement with the terms of this letter agreement, please execute and return a fully executed copy of this letter agreement to me.


Sincerely,

DESTINATION MATERNITY CORPORATION

By:		/s/ Anthony M. Romano
Title:		Chief Executive Officer

Agreed on this 3rd day of December, 2014:

/s/ Christopher F. Daniel

Christopher F. Daniel

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Exhibit 10.3

LOGO

December 3, 2014

VIA HAND DELIVERY

Mr. Ronald J. Masciantonio

c/o Destination Maternity Corporation

456 North Fifth Street

Philadelphia, PA 19123

Re:

Special Bonus Award; Amendment to Employment Agreement

Dear Ron:

Reference is hereby made to the Executive Employment Agreement dated as of July 16, 2009 (as amended April 27, 2010, August 10, 2011, November 22, 2011, November 15, 2012, December 7, 2013 and August 10, 2014, the “ Agreemen t”) by and between Destination Maternity Corporation (the “ Company ”) and Ronald J. Masciantonio (“ Executive ” or “ you ”).

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Further, effective as of the date hereof, each of the Company and you agree to the following modifications to the Agreement:

(1)	Section 4.2.1 of the Agreement is hereby amended and restated in its entirety as follows:

“4.2.1. Commencing with the fiscal year beginning on February 1, 2015 and for each fiscal year thereafter ending during his employment, Executive will be eligible to earn a performance bonus. The target amount of that bonus will be 60% percent of Executive’s Base Salary for the applicable fiscal year (the “Target Bonus”). The performance period for this bonus opportunity may be segmented into such shorter periods as the Compensation Committee of the Board (the “Committee”) may determine in its reasonable discretion, provided the aggregate bonus opportunities (at target) for the applicable fiscal year are at least equal to the Target Bonus. The actual bonus payable with respect to any performance period will be determined by the Committee, based on the achievement of corporate and individual performance objectives established for the applicable period. Any bonus payable under this paragraph will be paid as soon as administratively practicable following the end of the applicable performance period, but in no event later than 2 1/2 months after the end of the fiscal year that includes the last day of the applicable performance period, and except as otherwise provided in Section 5.1.2 , will only be paid if Executive remains continuously employed by the Company through the actual bonus payment date.”

(2)	Section 4.2.3 of the Agreement is hereby amended and restated in its entirety to provide as follows:

(3)	Section 5.1.2 of the Agreement is hereby amended and restated in its entirety as follows:

(4)	Section 5.1.3 of the Agreement is hereby amended and restated in its entirety as follows:

All terms of the Agreement, as modified by this letter agreement, are hereby acknowledged and ratified.

LOGO

If you are in agreement with the terms of this letter agreement, please execute and return a fully executed copy of this letter agreement to me.


Sincerely,

DESTINATION MATERNITY CORPORATION

By:		/s/ Anthony M. Romano
Title:		Chief Executive Officer

Agreed on this 3rd day of December, 2014:

/s/ Ronald J. Masciantonio

Ronald J. Masciantonio

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Exhibit 10.4

LOGO

December 3, 2014

VIA HAND DELIVERY

Mr. Judd P. Tirnauer

c/o Destination Maternity Corporation

456 North Fifth Street

Philadelphia, PA 19123

Re:

Special Bonus Award; Amendment to Employment Agreement

Dear Judd:

Reference is hereby made to the Employment Agreement dated as of July 23, 2008 (as amended August 10, 2011 and November 22, 2011 and December 7, 2013, the “ Agreemen t”) by and between Destination Maternity Corporation (the “ Company ”) and Judd P. Tirnauer (“ Executive ” or “ you ”).

LOGO

Further, effective as of the date hereof, each of the Company and you agree to the following modifications to the Agreement:

(1)	Section 4.2.1 of the Agreement is hereby amended and restated in its entirety as follows:

“4.2.1. Commencing with the fiscal year beginning on February 1, 2015 and for each fiscal year thereafter ending during his employment, Executive will be eligible to earn a performance bonus. The target amount of that bonus will be 60% percent of Executive’s Base Salary for the applicable fiscal year (the “Target Bonus”). The performance period for this bonus opportunity may be segmented into such shorter periods as the Compensation Committee of the Board (the “Committee”) may determine in its reasonable discretion, provided the aggregate bonus opportunities (at target) for the applicable fiscal year are at least equal to the Target Bonus. The actual bonus payable with respect to any performance period will be determined by the Committee, based on the achievement of corporate and individual performance objectives established for the applicable period. Any bonus payable under this paragraph will be paid as soon as administratively practicable following the end of the applicable performance period, but in no event later than 2 1/2 months after the end of the fiscal year that includes the last day of the applicable performance period, and except as otherwise provided in Section 5.1.2 , will only be paid if Executive remains continuously employed by the Company through the actual bonus payment date.”

(2)	Section 4.2.3 of the Agreement is hereby amended and restated in its entirety to provide as follows:

(3)	Section 5.1.2 of the Agreement is hereby amended and restated in its entirety as follows:

(4)	Section 5.1.3 of the Agreement is hereby amended and restated in its entirety as follows:

All terms of the Agreement, as modified by this letter agreement, are hereby acknowledged and ratified.

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If you are in agreement with the terms of this letter agreement, please execute and return a fully executed copy of this letter agreement to me.


Sincerely,

DESTINATION MATERNITY CORPORATION

By:		/s/ Anthony M. Romano
Title:		Chief Executive Officer

Agreed on this 3rd day of December, 2014:

/s/ Judd P.Tirnauer

Judd P.Tirnauer

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Exhibit 10.5

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December 3, 2014

VIA HAND DELIVERY

Mr. Anthony M. Romano

c/o Destination Maternity Corporation

456 North Fifth Street

Philadelphia, PA 19123

Re:

Change to Fiscal Year; Amendment to Employment Agreement

Dear Anthony:

Reference is hereby made to the Employment Agreement dated as of August 10, 2014 (the “ Agreemen t”) by and between Destination Maternity Corporation (the “ Company ”) and Anthony M. Romano (“ Executive ” or “ you ”).

As you are aware, the Company has elected to change its fiscal year such that the Company’s fiscal year will now begin on or about February 1 ^st of each year. Additionally, as you are aware, the Compensation Committee of the Company’s Board of Directors (the “ Committee ”) has determined that management employees will not be awarded bonuses with respect to the period from October 1, 2014 until January 31, 2015 (the “ Transition Period ”). Intending to be legally bound hereby, you agree that the absence of a bonus opportunity pursuant for the Transition Period will not constitute “Good Reason” for purposes of Section 4.G(3) of the Agreement and you expressly waive any right you might otherwise have to resign for “Good Reason” with respect to such absence of a bonus opportunity.

Further, effective as of the date hereof, the Company and you agree to the following modifications to the Agreement:

(1)	Section 3.B of the Agreement is hereby amended and restated in its entirety as follows:

B. Performance Bonus . Commencing with the fiscal year beginning on February 1, 2015 and except as otherwise provided in Section 4 below, Employee will be eligible to earn a performance bonus (the “Performance Bonus”) for each fiscal year ending during Employee’s employment hereunder. The target amount of the Performance Bonus will be 100% percent of Employee’s Base Salary for the applicable fiscal year (the “Target Bonus”), with a maximum Performance Bonus opportunity of 200% of Employee’s Base Salary and a threshold Performance Bonus opportunity of 50% of Base Salary, provided that the actual amount of any Performance Bonus payable in respect of the fiscal year beginning on February 1, 2015 will be 133% percent of any Performance Bonus amount otherwise determined pursuant to this Section 3.B. The performance period for this bonus opportunity may be segmented into such shorter periods as the Committee may determine in its reasonable discretion, provided the aggregate bonus opportunities (at target) for the applicable fiscal year are at least equal to the Target Bonus, with the relevant aggregate

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threshold and maximum bonus opportunities at least equal to the annual levels set forth in the preceding sentence. The actual amount of any Performance Bonus payable under this Section will be determined and paid in accordance with the Destination Maternity Corporation Management Incentive Plan or any successor arrangement, based on the achievement of corporate and/or individual performance goals established by the Committee after consultation with Employee.

(2)	Section 3.F of the Agreement is hereby amended and restated in its entirety as follows:

F. Annual Equity Grants . Commencing with the period beginning October 1, 2014 and subject to Employee’s continued employment with the Company through the applicable grant date, Employee will be eligible to receive a periodic equity grant (the “Equity”) with an aggregate grant date fair value (as valued by the Committee, consistent with Company practices) equal to (i) 133% of Base Salary, with respect to the period beginning October 1, 2014 and ending on January 30, 2016, and (ii) 100% of Base Salary, with respect to the fiscal year beginning January 31, 2016 and subsequent fiscal years. For the period beginning October 1, 2014 and ending January 30, 2016, the Equity will be a mixture of 50% stock options, 25% time-vested restricted stock (or restricted stock units, if so determined by the Committee) and 25% performance-based restricted stock units. For the fiscal year beginning January 31, 2016 and subsequent fiscal years, the Equity will be in such proportions as determined by the Committee. The grant of the Equity will be made at the same time or times as such grants are made to other senior executives of the Company. All Equity will be issued under and subject to the Plan (or any successor plan) and will be subject to the Company’s applicable award agreements.

(3)	Section 4.A of the Agreement is hereby amended and restated in its entirety as follows:

A. Termination without Cause or for Good Reason . If Employee’s employment by the Company ceases due to a termination by the Company without Cause (as defined below) or a resignation by Employee for Good Reason (as defined below), Employee will be entitled to: (i) payment of all accrued and unpaid Base Salary through the date of such cessation and payment of any Performance Bonus otherwise payable (but for the cessation of Employee’s employment) with respect to a performance period ended prior to the cessation of Employee’s employment; (ii) Base Salary continuation for 12 months following the termination date (the “Severance Period”); (iii) an amount equal to the sum of the Performance Bonuses earned by Employee for all bonus periods occurring in the preceding two fiscal years, divided by two (or, if such termination occurs prior to the January 29, 2017: (x) the sum of all Performance Bonuses earned by Employee during his employment, divided by (y) the quotient of (I) the total number of months contained in the performance periods with respect to which such bonuses were earned, and (II) 12), which amount shall be paid in equal installments over the 12 month period following Employee’s termination pursuant to the Company’s normal payroll practices; (iv) payment of a pro-rata Performance Bonus for the applicable performance period in which termination occurs, determined and paid in the same manner and at the same time as Employee’s Performance Bonus would otherwise have been had Employee remained employed by the Company; (v) continued

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coverage under the Company’s medical plan during the Severance Period (or tax equivalent payment if continued coverage would result in adverse tax consequences); (vi) with respect to each outstanding grant of time-based restricted stock, time-based restricted stock units or stock options, the vesting on the tranche that was next scheduled to vest pursuant to each such grant shall be accelerated; and (vii) a pro-rata portion (based on the full number of completed days of Employee’s employment with the Company in the applicable performance period divided by the total number of days in the applicable performance period) of any outstanding performance-based restricted stock units will remain outstanding and will vest to the extent earned based on the actual performance of the Company through the end of the applicable performance period and will be settled (x) within 2 ¹ ⁄ ₂ months of the end of the applicable performance period for any award that is exempt from Section 409A or (y) on the date otherwise specified in the award agreement for any award that is subject to Section 409A; provided however, if a Change in Control occurs during the performance period of any still outstanding performance-based restricted stock units, the applicable pro-rata portion of such units, as determined under this Section, will then vest at the target level and be immediately settled.

(4)	Section 4.C of the Agreement is hereby amended and restated in its entirety as follows:

C. Other Terminations . If Employee’s employment with the Company ceases for any reason other than as described in Section 4.A or Section 4.B, above (including but not limited to termination (i) by the Company for Cause, (ii) as a result of Employee’s death, (iii) as a result of Employee’s Disability or (d) by Employee without Good Reason), then the Company’s obligation to Employee will be limited solely to the payment of accrued and unpaid Base Salary through the date of such cessation, any earned but unpaid Performance Bonus for the most recently completed performance period and vested benefits earned and accrued through such termination date. In addition, if Employee’s employment is terminated due to death or Disability, Employee shall also receive a pro-rata Performance Bonus for the applicable performance period in which such termination occurs, determined and paid in the same manner and at the same time as his Performance Bonus would otherwise have been.

(5)	Section 4.G(3) of the Agreement is hereby amended by the replacement of the term “Annual Bonus” with the term “Performance Bonus.”

All terms of the Agreement, as modified by this letter agreement, are hereby acknowledged and ratified.

< signature page follows >

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If you are in agreement with the terms of this letter agreement, please execute and return a fully executed copy of this letter agreement to me.


Sincerely,

DESTINATION MATERNITY CORPORATION

By:		/s/ Ronald J. Masciantonio
Title:		Chief Executive Officer

Agreed on this 3rd day of December, 2014:

/s/ Anthony M. Romano

Anthony M. Romano

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Exhibit 99.1


DESTINATION MATERNITY CORPORATION

CONTACT:		Judd P. Tirnauer
		Executive Vice President & Chief Financial Officer
		(215) 873-2278

For Immediate Release

DESTINATION MATERNITY REPORTS FOURTH QUARTER

AND FULL YEAR FISCAL 2014 RESULTS

Company Announces a Change to its Fiscal Year End

Philadelphia, PA, December 4, 2014 – Destination Maternity Corporation (NASDAQ: DEST), the world’s leading maternity apparel retailer, today announced results for the fourth quarter and full year fiscal 2014, ended September 30, 2014. The Company also announced that its Board of Directors has approved a prospective fiscal year-end change from September 30 to the Saturday nearest January 31 of each year. On November 19, 2014 the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.20 per share payable December 26, 2014.

For the fiscal year ended September 30, 2014, the Company reported earnings per diluted share of $0.77 on a GAAP basis, or $0.79 per diluted share excluding other charges associated with management and organizational changes, relocation of the Company’s headquarters and distribution operations, and a proposed business combination, offset by the gain on the sale of the Company’s current headquarters/distribution facility and a reduction of state income tax expense, an approximate $0.02 per diluted share net gain. This compares to adjusted earnings per diluted share (non-GAAP) of $1.69 for fiscal 2013. For a reconciliation of GAAP to non-GAAP financial information, refer to the financial tables at the end of this press release.

For the fourth quarter of fiscal 2014, the Company reported a loss per diluted share of $0.18, or an adjusted loss per diluted share of $0.14 excluding approximately $0.05 per diluted share of other charges offset by the gain on the facility sale. This compares to earnings per diluted share of $0.33 in the fourth quarter of fiscal 2013.

Anthony M. Romano, Chief Executive Officer of Destination Maternity Corporation, said, “We are disappointed in our performance for both the quarter and full year. Like most of retail during our fourth quarter, we struggled with the macro-economic environment and traffic was challenging. Although several categories performed well, we believe our product offering did not consistently match what our customers wanted, particularly the millennial moms-to-be, who represent a growing share of today’s market. Therefore, we are working to aggressively manage our inventory and become more customer-focused and product-centric. It is our goal to provide a shopping experience, not available anywhere else, with fashion-right products to help our customer celebrate this amazing time in her life. I am optimistic about the long-term value of, and opportunities for, Destination Maternity Corporation.”


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 2

The Company is changing its fiscal year end from September 30 to the Saturday nearest January 31 of each year. The fiscal year end change will align the Company’s reporting cycle with the National Retail Federation fiscal calendar. The change will be effective with the Company’s fiscal year 2015, which will begin February 1, 2015 and end January 30, 2016, and will result in a four-month transition period beginning October 1, 2014 and ending January 31, 2015.

Mr. Romano noted, “We are changing our fiscal year to align with the traditional 4-5-4 retail calendar ending with January. Making this change will help us make smarter, more consistent product decisions, plan more thoughtfully our marketing and promotional activities, and reduce the learning curve for new experienced retail hires. Shifting to the retail calendar will impact almost every facet of our business positively.”

Fourth Quarter Fiscal 2014 Financial Results

Net sales for the fourth quarter of fiscal 2014 were $122.0 million compared with $128.3 million for the fourth quarter of fiscal 2013. The decrease in total reported sales resulted primarily from a decrease in comparable sales and decreased sales related to the Company’s continued efforts to close underperforming stores.

Comparable sales for the fourth quarter of fiscal 2014 decreased 5.0%, compared to a 1.4% increase for the fourth quarter of fiscal 2013. Adjusting for the calendar shift, the Company’s calendar-adjusted comparable sales decreased 4.8% for the fiscal 2014 quarter and increased 1.2% for the fiscal 2013 quarter.

Gross margin for the fourth quarter of fiscal 2014 decreased to 49.3% from 54.2% for the fourth quarter of fiscal 2013. The decrease in gross margin reflects more price promotional and markdown activity than planned to spur sales and more aggressively manage inventory, including $1.3 million of inventory write-downs at September 30, 2014 for the planned disposal of certain out of season merchandise.

Selling, general and administrative expenses (“SG&A”) for the fourth quarter of fiscal 2014 increased 1.4% to $62.6 million from $61.8 million for the fourth quarter of fiscal 2013. As a percentage of net sales, SG&A increased to 51.3% for the fiscal 2014 quarter compared to 48.1% for the fiscal 2013 quarter. The increase in expense and expense percentage reflects spending to drive increased sales, including corporate payroll, advertising and marketing, and the year over year increase in expense as a result of a non-recurring reduction to selling, general and administrative expenses of $0.9 million during the fourth quarter of fiscal 2013, for the sale of our rights to a portion of a Visa ^® /MasterCard ^® class action settlement fund, partially offset by cost reductions resulting from the Company’s continued closure of underperforming stores.

Adjusted EBITDA was $(2.7) million for the fourth quarter of fiscal 2014, compared to $11.7 million for the fourth quarter of fiscal 2013. Adjusted EBITDA before other charges was $2.2 million for the fiscal 2014 quarter, compared to $11.7 million for the fiscal 2013 quarter. Adjusted EBITDA is defined in the financial tables at the end of this press release.

Net loss for the fourth quarter of fiscal 2014 was $2.5 million, compared to net income of $5.6 million for the fourth quarter of fiscal 2013. Adjusted net loss for the fourth quarter of fiscal 2014, which is presented in the financial tables at the end of this press release, was $1.8 million, and excludes total other charges of $0.7 million, net of tax, comprised of: 1) $0.4 million, net of tax, or


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 3

$0.03 per diluted share, related to the Company’s planned relocations of its headquarters and distribution operations, 2) $0.2 million, net of tax, or $0.01 per diluted share, related to the Company’s proposed business combination with Mothercare plc, which was withdrawn on July 25, 2014, 3) $2.6 million, net of tax, or $0.20 per diluted share, related to management and organizational changes initiated by the Company during the fourth quarter of fiscal 2014, and 4) a gain of $2.5 million, net of tax, or $0.19 per diluted share, from the sale of the Company’s current headquarters/distribution facility. Adjusted net income for fourth quarter of fiscal 2013 was $4.4 million and excluded a reduction of state income tax expense, net of federal expense, of $1.2 million, or $0.09 per diluted share, for the recognition of tax benefits in the fourth quarter of fiscal 2013 resulting from changes in certain state income tax regulations.

Full Year Fiscal 2014 Financial Results

Net sales for fiscal 2014 were $517.0 million, compared to $540.3 million for fiscal 2013. The decrease in total reported sales resulted primarily from a decrease in comparable sales and decreased sales related to the Company’s continued efforts to close underperforming stores.

Comparable sales for fiscal 2014 decreased 3.7% compared to an increase of 2.6% for fiscal 2013. Adjusting for the calendar shift, the Company’s calendar-adjusted comparable sales decreased 3.7% for fiscal 2014 and increased 3.2% for fiscal 2013.

Gross margin for fiscal 2014 decreased to 52.1% from 53.9% for fiscal 2013. The decrease in gross margin reflects more price promotional and markdown activity than planned to spur sales and more aggressively manage inventory, including $1.3 million of inventory write-downs at September 30, 2014 for the planned disposal of certain out of season merchandise.

SG&A for fiscal 2014 decreased by 0.7% to $250.3 million from $252.0 million for fiscal 2013. As a percentage of net sales, SG&A increased to 48.4% for fiscal 2014 compared to 46.6% for fiscal 2013. The decrease in expense reflects cost reductions resulting from the Company’s continued closure of underperforming stores, and lower variable incentive compensation expense, partially offset by spending to drive increased sales, including corporate payroll, advertising and marketing, and depreciation from capital expenditures for store facilities. The increase in expense percentage reflects the unfavorable leverage from decreased sales due to the relatively fixed nature of most of the Company’s expenses.

Adjusted EBITDA was $30.6 million for fiscal 2014, compared to $54.0 million for fiscal 2013. Adjusted EBITDA before other charges was $36.8 million for fiscal 2014, compared to $54.0 million for fiscal 2013.

Net income for fiscal 2014 was $10.5 million, compared to net income of $23.9 million for fiscal 2013. Adjusted net income for fiscal 2014 was $10.7 million and excludes total other charges of $2.0 million, net of tax, or $0.15 per diluted share, comprised of: 1) $1.3 million, net of tax, or $0.09 per diluted share, related to the Company’s planned relocations of its headquarters and distribution operations, 2) $0.6 million, net of tax, or $0.05 per diluted share, related to the Company’s proposed business combination with Mothercare plc, which was withdrawn on July 25, 2014, 3) $2.6 million, net of tax, or $0.20 per diluted share, related to management and organizational changes initiated by the Company during the fourth quarter of fiscal 2014, and 4) a gain of $2.5 million, net of tax, or $0.19 per diluted share, from the sale of the Company’s current headquarters/distribution facility. Adjusted net income for fiscal 2014 also excludes reductions of


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 4

state income tax expense, net of federal expense, of $1.8 million, or $0.13 per diluted share, related to settlements of uncertain income tax positions. Adjusted net income for fiscal 2013 was $22.7 million and excluded a reduction of state income tax expense, net of federal expense, of $1.2 million, or $0.09 per diluted share, for the recognition of tax benefits in fiscal 2013 resulting from changes in certain state income tax regulations.

Transition Period (October 1, 2014 to January 31, 2015)

The Company’s fiscal year end change creates a four-month transition period from October 1, 2014 to January 31, 2015. For the transition period, the Company expects:

•

A reduction in the recent rate of decline in its comparable sales;

•

Gross margins lower than the year-ago comparable four-month period, with the decline being similar to the year-over-year decline experienced in the fourth quarter of fiscal 2014, reflecting the Company’s aggressive inventory management strategy;

•

Other charges of approximately $5.8 million pretax, comprised of approximately $3.1 million of severance and other charges related to the Company’s management and organizational changes, approximately $1.5 million related to the fiscal year change, and approximately $1.2 million related to the relocations of the Company’s corporate headquarters and distribution operations; and

•

Approximately $22 million in capital expenditures, including $14 million related to the relocation and $8 million of additional capital expenditures related to stores relocations, remodels and new stores, as well as continued investment in information systems and technology. During the transition period, the Company expects to receive cash of approximately $15 million from capital equipment financing for its new distribution facility and another $4 million in tenant allowance for its new corporate headquarters, to offset the cash requirements for capital expenditures.

Relocations of Corporate Headquarters and Distribution Operations

The Company’s plans to relocate its corporate headquarters and distribution operations from Philadelphia, Pennsylvania to southern New Jersey are progressing on schedule. The Company is nearing completion of the interior renovations to the office building in Moorestown, New Jersey that will house its new corporate headquarters, and which will provide a more modern, spacious, bright and open office environment for its headquarters team members. In March 2014 the Company had the groundbreaking ceremony for its new, build-to-suit, state-of-the-art distribution facility in Florence, New Jersey and construction is proceeding as planned. The Company plans to relocate its corporate headquarters on January 5, 2015 and its distribution operations during mid-calendar 2015.

In connection with the planned relocations, the Company completed the sale of its current headquarters/distribution facility in September 2014 in a sale and leaseback arrangement. The Company received $12.5 million cash proceeds and realized a pretax gain of $4.1 million from the sale. Under the leaseback agreement the Company may continue to occupy the premises and operate its business through June 30, 2015, with an option to extend the leaseback for up to six additional months. The Company incurred some, predominantly non-cash, charges to earnings in


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 5

fiscal 2014 and expects to incur some charges to earnings through mid-calendar 2015 related to the closure of its existing facilities and the preparation for occupancy of its new facilities. For fiscal 2014 the Company’s charges, predominantly non-cash, associated with the facilities relocations, were $2.0 million pretax, or $1.3 million after tax ($0.09 per diluted share), offset by the gain of $4.1 million pretax, or $2.5 million after tax ($0.19 per diluted share), from the sale of the Company’s current headquarters/distribution facility. The Company projects additional, predominantly non-cash, charges of approximately $2.7 million pretax, or approximately $1.7 million after tax ($0.12 per diluted share) through completion of the relocations in mid-calendar 2015. The Company projects that, once it is fully operating in both its new headquarters and new distribution center facilities, which the Company expects to begin during the middle of calendar 2015, its ongoing annualized after-tax earnings benefit from the relocations will be approximately $0.10 per diluted share, and its ongoing annualized after-tax cash benefit from the relocations will be approximately $4 million.

The Company had capital expenditures associated with these relocations of $17 million in fiscal 2014 and projects additional capital expenditures of $21 to $23 million through completion of the relocations in mid-calendar 2015, with nearly $4 million of this amount expected to be offset by construction allowance contributions from the landlord for its new headquarters building. In October 2014 the Company completed arrangements for $15 million of capital equipment financing through the bank that provides the Company’s Credit Facility.

Retail Locations

The tables below summarize store opening and closing activity for the fourth quarter and full year fiscal 2014 and 2013, as well as the Company’s store, total retail location and total international franchised location count at the end of each fiscal period.


	Fourth Quarter Ended September 30,				Year Ended September 30,
	2014		2013		2014		2013
Store Openings (1)
Total		6		4		22		15
Multi-Brand Store Openings		2		2		8		9

Store Closings (1)
Total		13		14		50		44
Closings Related to Multi-Brand Store Openings		5		5		9		14

Period End Retail Location Count (1)
Stores		568		596		568		596
Leased Department Locations		1,326		1,311		1,326		1,311

Total Retail Locations (1)		1,894		1,907		1,894		1,907

(1)	Excludes international franchised locations.


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 6


	Fourth Quarter Ended September 30,				Year Ended September 30,
	2014		2013		2014		2013
International Franchised Location Openings
Stores		1		2		2		5
Shop-in-Shop Locations		—		3		56		30

Total International Franchised Location Openings		1		5		58		35


International Franchised Location Closings (1)
Stores		—		—		3		1
Shop-in-Shop Locations		—		3		120		10

Total International Franchised Location Closings		—		3		123		11


Period End International Franchised Location Count
Stores		19		20		19		20
Shop-in-Shop Locations		59		123		59		123

Total International Franchised Locations		78		143		78		143

(1)

As previously announced, the Company’s franchise relationship with its India franchisee ended in March 2014 as a result of the Company being unable to reach mutual agreement on acceptable renewal terms with its India franchisee. International franchised location closings for the year ended September 30, 2014 include one store and 116 shop-in-shop locations that were operated by the Company’s India franchisee.

In November 2013, the Company announced its planned expansion into Mexico through an international franchise agreement with El Puerto de Liverpool, S.A.B. de C.V. (“Liverpool”), the largest department store company in Mexico. During the third quarter of fiscal 2014 the Company initially made its merchandise available for sale in 47 shop-in-shops located in Liverpool’s department stores, with plans to open freestanding franchise stores in Mexico in the future. As of September 30, 2014 the Company’s merchandise is offered in 47 shop-in-shops and two franchise stores in Mexico.

Comparable Sales Data

Comparable sales data (which includes Internet sales) for the fourth quarter and full year fiscal 2014 and 2013 is presented in the table below.


	Fourth Quarter Ended September 30,						Year Ended September 30,
	2014			2013			2014			2013
	% increase (decrease)						% increase (decrease)
Comparable Sales
Reported basis		(5.0	)%		1.4	%		(3.7	)%		2.6	%
Adjusted for calendar timing shift		(4.8	)%		1.2	%		(3.7	)%		3.2	%

Days Adjustment Calendar Shift

Destination Maternity reports sales on a calendar quarter basis, rather than on a “4-5-4 retail fiscal calendar” where each fiscal week and fiscal quarter starts on a Sunday and ends on a Saturday. Thus, for each calendar quarter, there is a “days adjustment calendar shift” which may help or hurt reported calendar quarter sales and comparable sales due to different days of the week typically contributing more sales than other days of the week. In order to quantify and eliminate the effect


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 7

on reported comparable sales results of the “days adjustment calendar shift”, the Company also presents comparable sales on a calendar-adjusted basis. For the fourth quarter of fiscal 2014, calendar-adjusted comparable sales were measured for the period Tuesday July 1, 2014 through Tuesday September 30, 2014 compared to the period Tuesday July 2, 2013 through Tuesday October 1, 2013. The Company estimates the calendar shift unfavorably impacted its reported comparable sales for the fourth quarter of fiscal 2014 by approximately 0.2 percentage points. Thus, calendar-adjusted comparable sales for the fourth quarter of fiscal 2014 decreased 4.8%, compared to the reported comparable sales decrease of 5.0%. For the full year fiscal 2014, calendar-adjusted comparable sales were measured for the period Tuesday October 1, 2013 through Tuesday September 30, 2014 compared to the period Tuesday October 2, 2012 through Tuesday October 1, 2013. The Company estimates the calendar shift had negligible impact on its reported comparable sales for the full year fiscal 2014. Thus, both calendar-adjusted comparable sales and reported comparable sales for the full year fiscal 2014 decreased 3.7%. The Company estimates the calendar shift favorably impacted its reported comparable sales for the fourth quarter of fiscal 2013 by approximately 0.2 percentage points. The Company estimates the calendar shift unfavorably impacted its reported comparable sales for the full year fiscal 2013 by approximately 0.6 percentage points, primarily as a result of 1) having one less Saturday and Sunday versus the full year fiscal 2012, and 2) having one less day versus the full year fiscal 2012 due to the leap year in 2012.

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 2014 earnings. You can participate in this conference call by calling (800) 798-2864 in the United States and Canada or (617) 614-6206 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 “91620853.” In the event that you are unable to participate in the call, a replay will be available through Thursday, December 18, 2014 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 “13619128.”

About Destination Maternity

Destination Maternity Corporation is the world’s largest designer and retailer of maternity apparel. In the United States and Canada, as of September 30, 2014, Destination Maternity operates 1,894 retail locations, including 568 stores, predominantly under the trade names Motherhood Maternity ^® , A Pea in the Pod ^® , and Destination Maternity ^® , and 1,326 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 Kohl’s ^® stores throughout the United States and on Kohls.com. In addition, Destination Maternity has international store franchise and product supply relationships in the Middle East, South Korea, Mexico and Israel. As of September 30, 2014, Destination Maternity has 78 international franchised locations, including 19 Destination Maternity branded stores and 59 shop-in-shop locations. Destination Maternity expects its first franchised locations in Israel to open in Spring 2015, pursuant to its franchise agreement with H&O Fashion Ltd., one of Israel’s largest and dominant fashion-retail chains.


DESTINATION MATERNITY REPORTS FISCAL 2014 RESULTS			Page 8

Reconciliation of Non-GAAP Financial Measures

This press release and the accompanying financial tables contain non-GAAP financial measures within the meaning of the SEC’s Regulation G, including (1) Adjusted net income (loss), (2) Adjusted net income (loss) per share (diluted), (3) Adjusted EBITDA, (4) Adjusted EBITDA before other charges, (5) Adjusted EBITDA margin, and (6) Adjusted EBITDA margin before other charges. In the accompanying financial tables, we have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Our management believes that each of these non-GAAP financial measures provides useful information about the Company’s results of operations and/or financial position to both investors and management. Each non-GAAP financial measure is provided because management believes it is an important measure of financial performance used in the retail industry to measure operating results, to determine the value of companies within the industry and to define standards for borrowing from institutional lenders. We use each of these non-GAAP financial measures as a measure of the performance of the Company. We provide these measures to investors to assist them in performing their analysis of our historical operating results. Each of these non-GAAP financial measures reflects a measure of the Company’s operating results before consideration of certain charges and consequently, none of these measures should be construed as an alternative to net income or operating income as an indicator of the Company’s operating performance, or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity, as determined in accordance with generally accepted accounting principles. We may calculate each of these non-GAAP financial measures differently than other companies.

Forward-Looking Statements

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, potential acquisitions 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, our ability to successfully pursue, complete and manage any acquisitions and related matters, adverse effects on the market price of our common stock and on our operating results because of a failure to complete any proposed acquisition, failure to realize any benefits of any proposed acquisition, 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 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, our ability to continue our regular quarterly cash dividend, the trading liquidity of our common stock, changes in market interest rates, our ability to successfully manage and accomplish our planned relocations of our headquarters and distribution operations with minimal disruption to our overall operations, war or acts of terrorism and other factors set forth in the Company’s periodic filings with the U.S. Securities and Exchange Commission (the “SEC”), or in materials incorporated therein by reference. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. The Company assumes no obligation to update or revise the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law.

– Financial Tables to Follow –


			Page 9

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Loss)

(in thousands, except percentages and per share data)

(unaudited)


	Fourth Quarter Ended September 30,						Year Ended September 30,
	2014			2013			2014			2013
Net sales	$	122,048		$	128,250		$	516,959		$	540,259
Cost of goods sold		61,862			58,725			247,501			249,298

Gross profit		60,186			69,525			269,458			290,961
Gross margin		49.3	%		54.2	%		52.1	%		53.9	%
Selling, general and administrative expenses (SG&A)		62,609			61,751			250,253			252,026
SG&A as a percentage of net sales		51.3	%		48.1	%		48.4	%		46.6	%
Store closing, asset impairment and asset disposal expenses		494			492			1,469			1,441
Other charges		1,022			—			3,229			—

Operating income (loss)		(3,939	)		7,282			14,507			37,494
Interest expense, net		101			101			404			532
Loss on extinguishment of debt		—			—			—			9

Income (loss) before income taxes		(4,040	)		7,181			14,103			36,953
Income tax provision (benefit)		(1,555	)		1,548			3,606			13,010

Net income (loss)	$	(2,485	)	$	5,633		$	10,497		$	23,943

Net income (loss) per share – basic	$	(0.18	)	$	0.42		$	0.78		$	1.80

Average shares outstanding – basic		13,495			13,323			13,451			13,272

Net income (loss) per share – diluted	$	(0.18	)	$	0.42		$	0.77		$	1.78

Average shares outstanding – diluted		13,495			13,544			13,572			13,439

Supplemental information:
Net income (loss), as reported	$	(2,485	)	$	5,633		$	10,497		$	23,943
Add: other charges for relocations, net of tax		378			—			1,271			—
Add: other charges for proposed business combination, net of tax		167			—			645			—
Add: other charges for management and organizational changes, net of tax		2,651			—			2,651			—
Less: gain on sale of building, net of tax		(2,540	)		—			(2,540	)		—
Add: loss on extinguishment of debt, net of tax		—			—			—			6
Less: reductions of state income tax expense, net of federal expense, related to settlements of uncertain income tax positions		—			—			(1,824	)		—
Less: recognition of state income tax benefits resulting from regulation changes		—			(1,216	)		—			(1,216	)

Adjusted net income (loss)	$	(1,829	)	$	4,417		$	10,700		$	22,733

Adjusted net income per share – diluted	$	(0.14	)	$	0.33		$	0.79		$	1.69


			Page 10

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	September 30, 2014		September 30, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	12,580	$	24,555
Trade receivables, net		11,609		12,463
Inventories		88,411		86,546
Deferred income taxes		10,330		8,012
Prepaid expenses and other current assets		13,128		6,927

Total current assets		136,058		138,503
Property, plant and equipment, net		76,799		53,447
Other assets		17,676		16,031

Total assets	$	230,533	$	207,981

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	31,942	$	23,810
Accrued expenses and other current liabilities		47,840		39,417

Total current liabilities		79,782		63,227
Deferred rent and other non-current liabilities		25,230		22,121

Total liabilities		105,012		85,348
Stockholders’ equity		125,521		122,633

Total liabilities and stockholders’ equity	$	230,533	$	207,981


			Page 11

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Year Ended September 30,
	2014			2013
Operating Activities
Net income	$	10,497		$	23,943
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		15,197			12,424
Stock-based compensation expense		3,747			2,771
Loss on impairment of long-lived assets		1,136			786
(Gain) loss on disposal of assets		(4,031	)		528
Loss on extinguishment of debt		—			9
Deferred income tax benefit		(2,975	)		(3,007	)
Amortization of deferred financing costs		198			203
Changes in assets and liabilities:
Decrease (increase) in:
Trade receivables		855			727
Inventories		(1,865	)		2,205
Prepaid expenses and other current assets		(5,511	)		(2,708	)
Other non-current assets		(503	)		(54	)
Increase (decrease) in:
Accounts payable, accrued expenses and other current liabilities		5,081			4,058
Deferred rent and other non-current liabilities		4,019			268

Net cash provided by operating activities		25,845			42,153

Investing Activities
Capital expenditures		(40,185	)		(15,059	)
Proceeds from sale of property, plant and equipment		12,591			—
Additions to intangible assets		(1,950	)		(963	)

Net cash used in investing activities		(29,544	)		(16,022	)

Financing Activities
Increase in cash overdraft		3,081			1,278
Repayment of long-term debt		—			(15,257	)
Deferred financing costs paid		—			(927	)
Withholding taxes on stock-based compensation paid in connection with repurchase of common stock		(2,178	)		(725	)
Cash dividends paid		(10,772	)		(9,799	)
Proceeds from exercise of stock options		271			744
Excess tax benefit from exercise of stock options and restricted stock vesting		1,319			760

Net cash used in financing activities		(8,279	)		(23,926	)

Effect of exchange rate changes on cash and cash equivalents		3			(26	)

Net (Decrease) Increase in Cash and Cash Equivalents		(11,975	)		2,179
Cash and Cash Equivalents, Beginning of Period		24,555			22,376

Cash and Cash Equivalents, End of Period	$	12,580		$	24,555


			Page 12

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Supplemental Financial Information

Reconciliation of Net Income (Loss) to Adjusted EBITDA ⁽¹⁾

and Adjusted EBITDA Before Other Charges,

and Operating Income (Loss) Margin to Adjusted EBITDA Margin

and Adjusted EBITDA Margin Before Other Charges

(in thousands, except percentages)

(unaudited)


	Fourth Quarter Ended September 30,						Year Ended September 30,
	2014			2013			2014			2013
Net income (loss)	$	(2,485	)	$	5,633		$	10,497		$	23,943
Add: income tax provision (benefit)		(1,555	)		1,548			3,606			13,010
Add: interest expense, net		101			101			404			532
Add: loss on extinguishment of debt		—			—			—			9

Operating income (loss)		(3,939	)		7,282			14,507			37,494
Add: depreciation and amortization expense		3,827			3,162			15,197			12,424
Add: loss on impairment of long-lived assets		477			46			1,136			786
Add: (gain) loss on disposal of assets		(4,109	)		456			(4,031	)		528
Add: stock-based compensation expense		1,067			771			3,747			2,771

Adjusted EBITDA (1)		(2,677	)		11,717			30,556			54,003
Add: other charges for relocations (2)		317			—			911			—
Add: other charges for proposed business combination		275			—			1,045			—
Add: other charges for management and organizational changes		4,256			—			4,256			—

Adjusted EBITDA before other charges	$	2,171		$	11,717		$	36,768		$	54,003

Net sales	$	122,048		$	128,250		$	516,959		$	540,259

Operating income (loss) margin (operating income (loss) as a percentage of net sales)		(3.3	)%		5.7	%		2.8	%		6.9	%
Adjusted EBITDA margin (adjusted EBITDA as a percentage of net sales)		(2.2	)%		9.1	%		5.9	%		10.0	%
Adjusted EBITDA margin before other charges (adjusted EBITDA as a percentage of net sales)		1.8	%		9.1	%		7.1	%		10.0	%

(1)	Adjusted EBITDA represents operating income before deduction for the following non-cash charges: (i) depreciation and amortization expense; (ii) loss on impairment of tangible and intangible assets; (iii) (gain) loss on disposal of assets; and (iv) stock-based compensation expense.

(2)

Other charges, related to the Company’s planned relocations of its headquarters and distribution operations, for the fourth quarter and year ended September 30, 2014, excludes accelerated depreciation expense of $284 and $1,127, respectively, (included in depreciation and amortization expense above) and $(4.1) million representing gain on sale of the Company’s current headquarters/distribution facility (included in gain on disposal of assets above).


			Page 13

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Supplemental Financial Information (Continued)

Consolidated Statement of Income

For the Period October 1, 2013 to January 31, 2014

(in thousands, except percentages and per share data)

(unaudited)


Net sales	$	169,924
Cost of goods sold		80,244

Gross profit		89,680
Gross margin		52.8	%
Selling, general and administrative expenses (SG&A)		84,534
SG&A as a percentage of net sales		49.7	%
Store closing, asset impairment and asset disposal expenses		212
Other charges		476

Operating income		4,458
Interest expense, net		138

Income before income taxes		4,320
Income tax provision		1,493

Net income	$	2,827

Net income per share – basic	$	0.21

Average shares outstanding – basic		13,412

Net income per share – diluted	$	0.21

Average shares outstanding – diluted		13,581

Supplemental information:
Net income	$	2,827
Add: other charges for relocations, net of tax		295
Less: reductions of state income tax expense, net of federal expense, related to settlements of uncertain income tax positions		(170	)

Adjusted net income	$	2,952

Adjusted net income per share – diluted	$	0.22

# # #

Exhibit 99.2

Destination Maternity – Q4 & FY2014 Earnings Call Script (12/4/14)

Operator

[Introduction]

Judd P. Tirnauer, Executive Vice President & Chief Financial Officer

Thank you, operator. Good morning everyone and welcome to Destination Maternity’s fiscal fourth quarter and full year 2014 conference call. The earnings release that was disseminated this morning is available on the investors section of our website. The earnings release contains definitions of various financial terms as well as reconciliations of certain non-GAAP financial measures we will be discussing in today’s call.

This call will include certain forward-looking statements within the meaning of the Federal Securities laws. These statements relate to expectations, beliefs, projections, trends, and other matters that are not historical facts and are subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company’s SEC filings.

Also I would like to remind you that today’s call cannot be reproduced in any form without the expressed written consent of Destination Maternity.

Joining me on the call today are Anthony M. Romano, Chief Executive Officer; and Christopher F. Daniel, President. Tony will open with some observations, insights and plans, and I will follow with additional commentary on our financials. Tony will then provide closing remarks, after which, we will be available to take your questions.

It’s now my pleasure to turn the call over to Tony.

Page 1

Anthony M. Romano, Chief Executive Officer

Thank you, Judd, and good morning everyone. We appreciate you choosing to invest your time with us today.

Before we get started, I would like to say how honored I am to have the privilege to lead the Destination Maternity team as its recently appointed Chief Executive Officer. This organization is comprised of many talented, dedicated and passionate team members. I would like to thank the Board of Directors for their vote of confidence and I look forward to the challenges ahead.

Today we released our results for the quarter and year-ended September 30th, 2014. We are disappointed in our performance for both the quarter and the year. Like most of retail during our fourth quarter, we struggled with the macro-economic environment and traffic was challenging, particularly in our nameplate brick and mortar locations. Additionally, there are things we could have done internally to improve our performance, which I will share a bit more about later.

Since my arrival in mid-August, I have spent a significant amount of time evaluating every aspect of the business and taking a hard look from our customer’s perspective. I’d like to share some of my observations.

During my first fifty days, I traveled to dozens of stores throughout the U.S. and Canada, and listened to all levels of the organization to hear what they had to say about our customer, about our product, and about our tools and processes. In doing so, a number of opportunities for improvement were identified:

•

We have a hard working organization, but one that is much too focused on operations rather than our customers and products;

•

Our stores are difficult to shop, with too much inventory, too many signs, and too many promotional messages;

•

Our product development life cycle is too long, and in need of greater discipline and better integration with business partners;

•

Our allocation methodology does not maximize the right product in the right place at the right time;

•

Our organization spends a significant amount of unproductive time and money converting and reconciling resources and tools to non-retail formats; and

•

Our business has been over-complicated because we do not utilize the traditional 4-5-4 retail calendar format.

Page 2

Despite all of these challenges, I also witnessed a number of positives:

•

Our two primary merchandise brands, Motherhood and A Pea in the Pod, have strong unaided brand awareness;

•

We achieve best-in-class results in Net Promoter Scores, the measurement of how likely our customers are to recommend our brands to their friends and family;

•

We have strong distribution partners that allow us to reach our customers in many ways and through many channels;

•

The Company has made a smart and significant investment in Customer Relationship Management data and is poised to leverage it;

•

The Company has invested to upgrade to a new, state-of-the-art distribution facility with greater capacity and an improved layout, and in more functional and collaborative offices for its headquarters; and

•

It is most pleasing to report that the team, both new and legacy, appear dedicated to helping reinvigorate the business by working smarter and faster, with greater precision and consistent, customer-focused logic as we move forward.

Importantly, the business model is not broken and the market we serve is still strong. U.S. births have leveled off at approximately four million per year since 2009 and are forecasted at a similar rate through 2017. Of these millions, each “mom-to-be” very much wants to maintain her sense of fashion and style. Simply stated, we are re-dedicating ourselves to providing her with fashion-right products that are both comfortable and functional, helping to keep her unique style while, at the same time, celebrating this amazing time in her life.

With this goal in mind, and based on my observations, we have developed three over-arching, high level initiatives:

•

One, to become more customer focused and product centric;

•

Two, to aggressively manage our inventory, both quantitatively and qualitatively; and

•

Three, to build a winning culture.

Each of these initiatives has a multi-step action plan. Some will provide immediate benefits, while others will take time to mature.

Page 3

First, we are changing our fiscal year to align with the traditional 4-5-4 retail calendar ending with January. Making this change will help us make smarter, more consistent product decisions; plan more thoughtfully our marketing and promotional activities; and reduce the learning curve for new experienced retail hires. Shifting to the retail calendar will impact almost every facet of our business positively. To be clear, let me emphasize, this change has absolutely nothing to do with finance or accounting requirements. It is being undertaken solely on the basis of the operational benefits.

The fiscal year change will be effective February 1, 2015, the start of our new 2015 fiscal year that will end January 30, 2016. Judd will address this change in more detail later.

Regarding product initiatives, we are now utilizing as our development backbone a new and much improved Product Life Cycle calendar reducing our product lead-time by 7 weeks. This will put us on par with other vertically integrated specialty retailers, and improve our fashion based decisions and product assortments. While our first delivery operating in this time frame will be Fall 2015, we will see smaller, incremental benefits throughout 2015 starting in late spring; for example, stores with less clutter, stronger visual presentations and clearer promotional messaging.

We are committed to placing our customer in the center of all of our decision-making: she must be in the room and have a voice in each decision we make. Looking through her eyes, we recognize an opportunity to improve our signage, simplify our promotions, and make our visual presentations more impactful. We are re-platforming our website, improving imagery and functionality, and providing greater differentiation for A Pea in the Pod from our Motherhood brand. We will seek to create a seamless experience for our millennial customer who clearly prefers social engagement from her favorite brands.

We also believe our customers will like our unique offers specific to her stage of pregnancy. This capability was launched in early November, is currently in beta testing, and will be ramped up throughout 2015.

As you have seen from the fourth quarter gross margins, we have already begun to more aggressively manage our inventory, quantitatively. We will be more disciplined with product flow and manage to appropriate quarterly and seasonal levels through timely, in-season markdowns. We anticipate the need to cycle through at least a couple of seasons until on-order inventory more appropriately reflects new SKU depth and breadth before normalizing. The ultimate goal is to drive both top line and gross margin dollar growth.

Page 4

Qualitatively, we will upgrade our offerings. We must be more wear-now every season. We will deliver assortments that provide a variety of choices that easily work together as outfits helping us to drive higher conversion rates, with increases in units per transaction and average dollar sale in her basket.

None of this is possible without our third initiative: building a winning culture. We will seek to improve each and every day, personally and professionally, individually and collectively, in an organization that is driven by respect, performance and integrity. Most importantly, we recognize that attracting and retaining key talent is the critical ingredient of all successful businesses.

Some of these initiatives will take more time to implement and generate results than others. But, through a combination of successes we will improve the shopping experience, drive sales growth and inventory productivity, and generate long-term shareholder value.

Now, I’ll turn the call over to Judd to discuss the financials and the details related to the change of our fiscal year end.

Page 5

Judd P. Tirnauer, Executive Vice President & Chief Financial Officer

Thanks, Tony.

With the change to our fiscal calendar and the initiation of various strategic initiatives just described, I will only briefly cover the fourth quarter and full year results and then discuss the fiscal calendar change.

Net sales for fiscal 2014 were $517 million compared to $540 million last year. For the quarter, net sales were $122 million compared to $128 million a year ago. The decrease in sales was due primarily to a decrease in comparable sales and the continued efforts to close underperforming stores. For the year, our calendar adjusted comparable sales decreased 3.7% compared to an increase of 3.2% in fiscal 2013. For the quarter, our calendar adjusted comparable sales decreased 4.8% compared to an increase of 1.2% in last year’s fourth quarter.

Adjusted EBITDA before other charges was $36.8 million for fiscal 2014 versus $54.0 million in fiscal 2013. For the quarter, adjusted EBITDA before other charges was $2.2 million compared to $11.7 million a year ago.

Adjusted EPS was 79 cents for the year compared to $1.69 for fiscal 2013. For the quarter, adjusted EPS was a net loss of 14 cents compared to net income of 33 cents a year ago.

Additional details about the quarter and full year financial results are included in the earnings release which can be found on the investors section of our website.

Turning to the change of our fiscal year end. As Tony stated, we are changing our fiscal year end from September 30 ^th to the Saturday nearest January 31 ^st . The fiscal year end change will align the Company’s reporting cycle with the National Retail Federation fiscal calendar and is expected to provide for more consistent quarter-to-quarter comparisons, as well as, and most importantly, those benefits outlined earlier by Tony. The change will be effective with the Company’s fiscal year 2015, which will begin February 1, 2015 and end January 30, 2016, and will result in a four-month transition, or stub period, beginning October 1, 2014 and ending January 31, 2015. We plan to announce the actual results of this stub period with an earnings release and conference call in March 2015.

With respect to guidance for the stub period, we are looking to reduce the current rate of decline in our comparable sales. In addition, as we continue to aggressively manage our inventory, we expect to see a year-over-year decline in gross margin during the stub period similar to the decline we experienced in the fourth quarter of fiscal 2014.

Page 6

Also, during the stub period, we expect to incur other charges of approximately $5.8 million, comprised of the following: (1) approximately $3.1 million of severance and other charges related to management and organizational changes; (2) approximately $1.5 million of charges related to the change in the fiscal year; and (3) approximately $1.2 million of charges related to the relocation of our headquarters and distribution facilities.

Turning to selected cash flow information for the stub period, we expect to have approximately $22 million in capital expenditures, including $14 million related to the relocations and $8 million of additional capital expenditures related to store relocations, remodels and new stores, as well as continued investment in information systems and technology. It should be noted however, that, related to the relocation, we expect to receive a total of $19 million of cash during the stub period, comprised of $15 million from capital equipment financing and an additional $4 million in tenant allowance. Further, we anticipate that once we are fully operational in our new facilities, that our ongoing annualized after-tax cash benefit from the relocations will be approximately $4 million.

In closing, we remain focused on increasing shareholder value, and as appropriate, providing returns to our shareholders, as evidenced by our Board’s recent approval of our quarterly dividend.

I’ll now turn the call back over to Tony.

Page 7

Anthony M. Romano, Chief Executive Officer

Thanks, Judd

I am optimistic about the opportunities for our Company. As we progress through the coming year, our strategic and tactical actions will take time to develop. Early successes will be foundational, and therefore, may not be easily discernable. Nonetheless, please be assured, we are moving quickly and thoughtfully to improve our business to provide our shareholders with a growing return on their investment and our customers with great experiences.

As a life-event specialty apparel retailer, we are fortunate and privileged to share in one of the most special, exciting and transformative times in our customers’ lives. We want to emotionally connect with her by providing fashion-right choices that reflect her every day style, with comfortable and functional fits that help her to look, feel and be her best.

We enthusiastically look forward to our future, together.

Thank you.

At this point, Judd, Chris and I will take your questions.

Page 8