Destination Maternity Corp (Form: 8-K, Received: 04/13/2017 10:05:12)

Date: April 13, 2017

DESTINATION MATERNITY CORPORATION

/s/ David Stern

David Stern

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): April 7, 2017

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)

232 Strawbridge Drive

Moorestown, NJ 08057

(Address of Principal Executive Offices)

(856) 291-9700

(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 1.01.

Entry Into a Material Definitive Agreement.

The information included under “Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant” below is incorporated herein by reference.

Item 2.02.

Results of Operations and Financial Condition.

On April 13, 2017, Destination Maternity Corporation (the “Company”) issued a press release and held a broadly accessible conference call to discuss its financial results for the quarter ended January 28, 2017. 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 (loss) 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 (loss) (net income (loss) 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. In addition, certain of the Company’s cash and equity incentive compensation plans are based on the Company’s level of achievement of Adjusted EBITDA before other charges.

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 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 loss or operating loss as an indicator of the Company’s operating performance, 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, within the financial tables attached 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 2.03.

Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

On April 7, 2017, the Company entered into (i) Amendment No. 2 to Amended and Restated Credit Agreement, relating to the Company’s $70,000,000 senior secured revolving credit facility (the “Credit Facility”), (ii) Amendment No. 2 to Term Loan Credit Agreement, relating to the Company’s $32,000,000 term loan agreement (the “Term Loan Agreement”), and (iii) a Second Amendment to Intercreditor Agreement relating to the intercreditor agreement (the “Intercreditor Agreement”) between the agent under the Credit Facility and the agent under the Term Loan Credit Agreement (collectively, the “Financing Amendments”).

The Financing Amendments allow the Company to enter into certain equipment financing arrangements, on the condition that a portion of the proceeds of such financing be applied as a prepayment of the Term Loan, and make certain adjustments to the reserves imposed in connection with determining the amount that can be borrowed under the Credit Facility. In the Financing Amendment to the Term Loan Agreement, the parties also agreed to delete the covenant requiring maintenance of a minimum level of Consolidated EBITDA.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Financing Amendments, copies of which are filed as Exhibits 10.1, 10.2 and 10.3 hereto, respectively, and incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits.


Exhibit No.		Description

10.1		Amendment No. 2 to Amended and Restated Credit Agreement, dated as of April 7, 2017, by and among Wells Fargo Bank, National Association, Destination Maternity Corporation, Cave Springs, Inc., Mothers Work Canada, Inc. and DM Urban Renewal, LLC.

10.2		Amendment No. 2 to Term Loan Credit Agreement, dated as of April 7, 2017, by and among Wells Fargo Bank, National Association, TPG Specialty Lending, Inc., Destination Maternity Corporation, Cave Springs, Inc., Mothers Work Canada, Inc., and DM Urban Renewal, LLC.

10.3		Second Amendment to Intercreditor Agreement, dated as of April 7, 2017, by and among Wells Fargo Bank, National Association, Destination Maternity Corporation, Cave Springs, Inc., Mothers Work Canada, Inc. and DM Urban Renewal, LLC.

99.1		Press Release of the Company issued April 13, 2017.

99.2		Script for April 13, 2017 Earnings Release Conference Call.

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.

EXHIBIT INDEX


Exhibit No.		Description

10.1		Amendment No. 2 to Amended and Restated Credit Agreement, dated as of April 7, 2017, by and among Wells Fargo Bank, National Association, Destination Maternity Corporation, Cave Springs, Inc., Mothers Work Canada, Inc. and DM Urban Renewal, LLC.

10.2		Amendment No. 2 to Term Loan Credit Agreement, dated as of April 7, 2017, by and among Wells Fargo Bank, National Association, TPG Specialty Lending, Inc., Destination Maternity Corporation, Cave Springs, Inc., Mothers Work Canada, Inc., and DM Urban Renewal, LLC.

10.3		Second Amendment to Intercreditor Agreement, dated as of April 7, 2017, by and among Wells Fargo Bank, National Association, Destination Maternity Corporation, Cave Springs, Inc., Mothers Work Canada, Inc. and DM Urban Renewal, LLC.

99.1		Press Release of the Company issued April 13, 2017.

99.2		Script for April 13, 2017 Earnings Release Conference Call.

Exhibit 10.1

EXECUTION

AMENDMENT NO.2 TO AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 7, 2017 (this “ Amendment No. 2 ”), is entered into by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent (in such capacity, together with its successors and assigns, “ Administrative Agent ”) pursuant to the Credit Agreement (as defined below) for the Lenders (as defined below), the parties to the Credit Agreement as lenders (individually, each a “ Lender ” and collectively, “ Lenders ”) party hereto (who constitute Required Lenders), DESTINATION MATERNITY CORPORATION, a Delaware corporation (“ Lead Borrower ”), CAVE SPRINGS, INC., a Delaware corporation (“ Cave ”, and together with Lead Borrower, each a “ Borrower ” and collectively, “ Borrowers ”), MOTHERS WORK CANADA, INC., a Delaware corporation (“ Mothers Work ”), DM URBAN RENEWAL, LLC, a New Jersey limited liability company (“ DM Urban ”, and together with Mothers Work, each a “ Guarantor ” and collectively, “ Guarantors ”).

W I T N E S S E T H :

WHEREAS, Administrative Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Amended and Restated Credit Agreement, dated March 25, 2016, by and among Administrative Agent, Borrowers, the Lenders parties thereto and the Guarantors (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “ Credit Agreement ”) and the other Loan Documents;

WHEREAS, Lead Borrower has requested that Administrative Agent and Lender modify certain provisions of the Credit Agreement and Administrative Agent and Required Lenders are willing to agree to such modifications on the terms and subject to the conditions set forth herein;

WHEREAS, by this Amendment No. 2, Administrative Agent, Required Lenders, and Borrowers desire and intend to make certain amendments to the Credit Agreement;

NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions . For purposes of this Amendment No. 2, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Credit Agreement.

2. Amendments to Credit Agreement .

(a) Upon the Amendment No. 2 Effective Date, the Credit Agreement is hereby amended as follows:

(i) Additional Definitions . The following definitions are hereby added to the Credit Agreement:

(A) “ Amendment No. 2 ” means Amendment No. 2 to Amended and Restated Credit Agreement, dated April 7, 2017, by and among the Administrative Agent, Borrowers, Required Lenders, and Guarantors.

(B) “ Amendment No. 2 Effective Date ” means the date that all of the conditions set forth in Section 4 below are satisfied.

(C) “ Combined Loan Caps ” means, on any date of determination, the sum of (a) the Loan Cap, and (b) the lesser of the (i) the outstanding aggregate principal amount of the Term Loans, and (ii) Term Loan Borrowing Base.

(D) “ Incremental Equipment Reserve ” means a Reserve established on the Amendment No.2 Effective Date, initially in the amount of $5,000,000 (reducing dollar for dollar for prepayments of the Term Loan in accordance with clause (x) of the definition of “Permitted Indebtedness” but not less than $0), which Reserve may only be released or reduced by the Agent, upon the receipt of notice from the Term Loan Agent with the prior written consent of the Required Lenders (as such term is defined in the Term Loan Credit Agreement).

(E) “ Permitted FFE Financing ” means Indebtedness secured by Liens on the Permitted Financed FFE, and which is otherwise on terms and conditions reasonably satisfactory to Administrative Agent.

(F) “ Permitted Financed FFE ” means the furniture, fixtures and Equipment listed on Schedule 1.01(c) .

(G) “ Permitted FFE Financing Proceeds ” has the meaning set forth in clause (x) of the “Permitted Indebtedness” definition.

(ii) Amendments to Definitions :

(A) The definition of “ Availability Reserves ” as set forth in Section 1.01 of the Credit Agreement is hereby amended by replacing the phrase “(xvi) the Term Loan Reserve, and (xvii) the EBITDA Reserve.” with a the following: “(xvi) the Term Loan Reserve, (xvii) the EBITDA Reserve and (xviii) Incremental Equipment Reserve”.

(B) Clause (f) of the definition of “ Borrowing Base ” as set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting such clause and replacing it with the following:

“(f) the sum of (i) the then amount of the Term Loan Reserve, (ii) the then amount of all Availability Reserves (other than the Term Loan Reserve, EBITDA Reserve, and Incremental Equipment Reserve), (iii) the EBITDA Reserve and (iv) the Incremental Equipment Reserve.”

(C) The definition of “ Permitted Encumbrances ” as set forth in Section 1.01 of the Credit Agreement is hereby amended by adding the following clause (ff):

“(ff) Liens on Permitted Financed FFE in connection with any Permitted FFE Financing permitted under clause (x) of the definition of “Permitted Indebtedness; provided, that (i) the Indebtedness secured thereby does not exceed the fair market value (in place) of the Permitted Financed FFE, and (ii) such Liens shall not extend to any property or assets of the Loan Parties other than the Permitted Financed FFE and proceeds thereof””.

(D) The definition of “ Permitted Indebtedness ” as set forth in Section 1.01 of the Credit Agreement is hereby amended by adding the following clause (x):

“(x) Permitted FFE Financing, provided, however, that in connection with any Permitted FFE Financing (or all such financings in the aggregate), Borrowers shall prepay the Term Loans in an aggregate amount that is the lesser of (i) $5,000,000 and (ii) the net proceeds to the Borrower of the Permitted FFE Financing after paying all amounts due under the Wells Equipment Financing Documents in order to terminate the financing thereunder and secure the release of the equipment financed thereunder, and deducting the fees, costs and expenses of the Permitted FFE Financings (the “ Permitted FFE Financing Proceeds ”).

(E) The definition of “ Reserves ” as set forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“ Reserves ” means all Inventory Reserves, Availability Reserves, Receivables Reserves, the Term Loan Reserve, the EBITDA Reserve, and the Incremental Equipment Loan Reserve.”

(iii) Financial Covenants . Section 7.15 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“7.15 Financial Covenant . Permit Excess Availability at any time to be less than the greater of (a) ten percent (10%) of the Combined Loan Caps (calculated without giving effect to the Term Loan Reserve) and (b) $10,000,000.”

(iv) Permitted Financed FFE Schedule . The Credit Agreement is hereby amended by adding a new Schedule 1.01(c) in the form of Exhibit A hereto.

3. Representations and Warranties . Borrowers each represent and warrant with and to the Administrative Agent and each Lender on the Consent Effective Date as follows:

(a) no Default or Event of Default exists or has occurred and is continuing as of the date of this Amendment No. 2;

(b) this Amendment No. 2 and the amendment of even date herewith to the Intercreditor Agreement have been duly authorized, executed and delivered by all necessary action on the part of Borrowers and the other Loan Parties and, if necessary, its equity holders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of Borrowers and the other Loan Parties contained herein and therein constitute legal, valid and binding obligations of Borrowers and the other Loan Parties, enforceable against Borrowers and the other Loan Parties in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought;

amendment of even date herewith to the Intercreditor Agreement (i) are within each Borrower’s and Guarantor’s corporate or limited liability company powers and (ii) are not in contravention of law or the terms of any Borrower’s or Guarantor’s certificate or articles of incorporation or formation, operating agreement, by laws, or other organizational documentation, or any indenture, agreement or undertaking (including, without limitation, the Term Loan Documents) to which any Borrower or other Loan Party is a party or by which any Borrower or other Loan Party or its property are bound; and

(d) all of the representations and warranties set forth in the Credit Agreement and the other Loan Documents, each as amended hereby, are true and correct in all material respects on and as of the date hereof, as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

4. Amendment No. 2 Effective Date . This Amendment No. 2 shall become effective as of the date on which each of the following conditions has been satisfied, as determined by Administrative Agent in its sole discretion:

(a) this Amendment No. 2 shall have been duly executed by each party hereto;

(b) the Administrative Agent shall have received a copy of Amendment No. 2 to Term Loan Credit Agreement, duly executed by the Term Loan Agent, the requisite lenders parties thereto, Borrowers and Guarantors; and

(c) the Administrative Agent shall have received a copy of the Second Amendment to the Term Loan Intercreditor Agreement, duly executed by Administrative Agent, Term Loan Agent, Borrowers and Guarantors.

5. Release of Permitted Financed FFE . In connection with any Permitted FFE Financing which is subject to a lien on furniture, fixtures or equipment in favor of the Lenders (as identified on Schedule 1.01(c)) or with respect to any other furniture, fixtures or equipment (as identified on Schedule 1.01(c)), upon the receipt by the Term Loan Agent of the Permitted FFE Financing Proceeds in connection with such financing for payment of the Term Loans pursuant to the Term Loan Credit Agreement, the Administrative Agent hereby agrees to terminate all security interests in the Permitted Financed FFE and agrees to file the required UCC-3 statement and other termination filings and releases and to take all reasonable additional steps as may be necessary to release the Administrative Agent’s security interests and liens in the Permitted Financed FFE.

6. Effect of this Amendment No. 2 . Except as expressly set forth herein, no other consents, amendments, changes or modifications to the Loan Documents are intended or implied hereby, and in all other respects the Loan Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof and Borrowers and the other Loan Parties shall not be entitled to any other or further consent by virtue of the provisions of this Amendment No. 2 or with respect to the subject matter of this Amendment No. 2. To the extent of conflict between the terms of this Amendment No. 2 and the other Loan Documents, the terms of this Amendment No. 2 shall control. The Credit Agreement and this Amendment No. 2 shall be read and construed as one agreement.

7. Governing Law . The validity, interpretation and enforcement of this Amendment No. 2 and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

8. Binding Effect . This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

9. Further Assurances . Borrowers and other Loan Parties shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Administrative Agent to effectuate the provisions and purposes of this Amendment No. 2.

10. Entire Agreement . This Amendment No. 2 and the other Loan Documents represent the entire agreement and understanding concerning the subject matter hereof and thereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof and thereof, whether oral or written.

11. Headings . The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 2.

12. Counterparts . This Amendment No. 2 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 2 by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 2. Any party delivering an executed counterpart of this Amendment No. 2 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 2, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 2.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed and delivered by their authorized officers as of the day and year first above written.


AGENT AND LENDERS:		BORROWERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION,		DESTINATION MATERNITY CORPORATION
as Administrative Agent, Issuing Bank,		By:	/s/ Anthony M. Romano
as a Lender and Swing Line Lender		Name:	Anthony M. Romano
		Title:	Chief Executive Officer and President
By:	/s/ Michele L. Riccobono
Name:	Michele L. Riccobono
Its Authorized Signatory		CAVE SPRINGS, INC.

		By:	/s/ Ronald J. Masciantonio
		Name:	Ronald J. Masciantonio
		Title:	Assistant Secretary

		GUARANTORS:

		MOTHERS WORK CANADA, INC.

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

		DM URBAN RENEWAL, LLC

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

Exhibit 10.2

AMENDMENT NO. 2

TO TERM LOAN CREDIT AGREEMENT

This AMENDMENT NO. 2 TO TERM LOAN CREDIT AGREEMENT, dated as of April 7, 2017 (this “ Amendment No. 2 ”), is entered into by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent (in such capacity, together with its successors and assigns, “ Administrative Agent ”) pursuant to the Credit Agreement (as defined below) for the Lenders (as defined below), TPG SPECIALTY LENDING, INC., as Joint Lead Arranger and Documentation Agent pursuant to the Credit Agreement (in such capacity, together with its successors and assigns, “ Documentation Agent ”) and the lenders from time to time party to the Credit Agreement as lenders (individually, each a “ Lender ” and collectively, “ Lenders ”) party hereto (who constitute Required Lenders), DESTINATION MATERNITY CORPORATION, a Delaware corporation (“ Lead Borrower ”), CAVE SPRINGS, INC., a Delaware corporation (“ Cave ”, and together with Lead Borrower, each a “ Borrower ” and collectively, “ Borrowers ”), MOTHERS WORK CANADA, INC., a Delaware corporation (“ Mothers Work ”), DM URBAN RENEWAL, LLC, a New Jersey limited liability company (“ DM Urban ”, and together with Mothers Work, each a “ Guarantor ” and collectively, “ Guarantors ”).

W I T N E S S E T H :

WHEREAS, Administrative Agent, Documentation Agent, Lenders, Borrowers and Guarantors have entered into a financing arrangement pursuant to which Lenders have made a term loan to Borrowers in the original principal amount of $32,000,000.00, as set forth in the Term Loan Credit Agreement, dated March 25, 2016, by and among Administrative Agent, Documentation Agent, Borrowers, the Lenders parties thereto and the Guarantors (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “ Credit Agreement ”) and the other Loan Documents;

WHEREAS, Lead Borrower has requested that Administrative Agent and Lenders modify certain provisions of the Credit Agreement and Administrative Agent and Required Lenders are willing to agree to such modifications on the terms and subject to the conditions set forth herein; and

WHEREAS, by this Amendment No. 2, Administrative Agent, Required Lenders, and Borrowers desire and intend to evidence such agreement and to make certain related amendments to the Credit Agreement.

(a) Definitions . For purposes of this Amendment No. 2, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Credit Agreement.

2. Amendment No. 2 Effective Date . This Amendment No. 2 shall become effective as of the date on which each of the following conditions has been satisfied, as determined by Administrative Agent in its sole discretion (the “ Amendment No. 2 Effective Date ”):

(i) this Amendment No. 2 shall have been duly executed by each party hereto;

(ii) the Administrative Agent and the Documentation Agent shall have received a copy of an amendment to the ABL Loan Agreement, duly executed by the ABL Agent, requisite ABL Lenders, Borrowers and Guarantors;

(iii) the Administrative Agent and the Documentation Agent shall have received a copy of an amendment to the Intercreditor Agreement, duly executed by the ABL Agent, Administrative Agent, Borrowers and Guarantors;

(iv) no Event of Default exists or has occurred and is continuing; and

(v) Borrowers shall have delivered to Administrative Agent and the Documentation Agent such other documents, information, certificates, records, and filings as the each may reasonably request.

3. Amendments to Credit Agreement . Upon the Amendment No. 2 Effective Date:

(a) The following definition is hereby added to the Credit Agreement:

“ Combined Loan Caps ” means, at any time, the sum of (i) Loan Cap, and (ii) the lesser of the (x) the outstanding aggregate principal amount of the Term Loans, and (y) Borrowing Base.

“ Permitted FFE Financing ” means Indebtedness secured by Liens on the Permitted Financed FFE, which Indebtedness is on terms which are reasonably satisfactory to the Administrative Agent and the Documentation Agent.

“ Permitted Financed FFE ” means the furniture, fixtures and Equipment listed on Schedule 1.01(c) .

“ Permitted FFE Financing Proceeds ” has the meaning set forth in clause (x) of the “Permitted Indebtedness” definition.

(b) Section 2.09(b)(i) is hereby amended by deleting “Closing Date” therein and replacing it with “Amendment No. 2 Effective Date”.

(c) Section 7.15 of the Credit Agreement is hereby amended by deleting clauses (a) and (b) in their entirety and replacing them with the following:.

“(a) Excess Availability . Permit Excess Availability at any time to be less than the greater of (i) ten percent (10%) of the Combined Loan Caps (calculated without giving effect to the Term Loan Reserve) and (ii) $10,000,000.

(b) [Reserved].”

(d) The definition of “ Permitted Encumbrances ” as set forth in Section 1.01 of the Credit Agreement is hereby amended by adding the following clause (ff):

“(ff) Liens on Permitted Financed FFE in connection with any Permitted FFE Financing permitted under clause (x) of the definition of “Permitted Indebtedness”; provided, that (i) the Indebtedness secured thereby does not exceed the fair market value (in place) of the Permitted Financed FFE, and (ii) such Liens shall not extend to any property or assets of the Loan Parties other than the Permitted Financed FFE and proceeds thereof”.

(e) The definition of “ Permitted Indebtedness ” as set forth in Section 1.01 of the Credit Agreement is hereby amended by adding the following clause (x):

(f) Permitted Financed FFE Schedule . The Credit Agreement is hereby amended by adding a new Schedule 1.01(c) in the form of Exhibit A hereto.

4. Release of Permitted Financed FFE; Waiver of Prepayment Fee . In connection with any Permitted FFE Financing which is subject to a lien on furniture, fixtures or equipment in favor of the Lenders (as identified on Schedule 1.01(c)) or with respect to any other furniture, fixtures or equipment (as identified on Schedule 1.01(c)), upon the receipt by the Term Loan Agent of the Permitted FFE Financing Proceeds in connection with such financing for payment of the Term Loans pursuant to the Term Loan Credit Agreement (for the avoidance of doubt any such payment of the Permitted FFE Financing Proceeds shall be deemed a mandatory prepayment under Section 2.05(g)), the Administrative Agent hereby agrees to terminate all security interests in the Permitted Financed FFE and agrees to file the required UCC-3 statement and other termination filings and releases and to take all reasonable additional steps as may be necessary to release the Administrative Agent’s security interests and liens in the Permitted Financed FFE. Notwithstanding anything contained in the Credit Agreement to the contrary, Wells Fargo Bank, National Association, as a Lender hereby waives the required payment of any applicable Prepayment Premium in connection with the prepayment with Permitted FFE Financing Proceeds in connection with the Permitted FFE Financing, provided , that such waiver shall only be applicable to the extent such Permitted FFE Financing occurs within one hundred twenty (120) days of the Amendment No. 2 Effective Date and for the avoidance of doubt, shall only be applicable to a payment in connection with the Permitted FFE Financing within such time period and not any other voluntary or mandatory payment under the Credit Agreement or to any other Lender.

5. Representations and Warranties . Borrowers each represent and warrant with and to the Administrative Agent, the Documentation Agent and each Lender on the Amendment No. 2 Effective Date as follows:

(a) no Default or Event of Default exists or has occurred and is continuing as of the date of this Amendment No. 2;

(c) the execution, delivery and performance of this Amendment No. 2 and the amendment of even date herewith to the Intercreditor Agreement (i) are within each Borrower’s and Guarantor’s corporate or limited liability company powers and (ii) are not in contravention of law or the terms of any Borrower’s or Guarantor’s certificate or articles of incorporation or formation, operating agreement, by laws, or other organizational documentation, or any indenture, agreement or undertaking (including, without limitation, the Term Loan Documents) to which any Borrower or other Loan Party is a party or by which any Borrower or other Loan Party or its property are bound; and

8. Binding Effect . This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

9. Further Assurances . Borrowers and other Loan Parties shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Administrative Agent and/or the Documentation Agent to effectuate the provisions and purposes of this Amendment No. 2.

11. Headings . The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 2.

electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 2. Any party delivering an executed counterpart of this Amendment No. 2 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 2, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 2.

13. RELEASE . ON AND PRIOR TO THE AMENDMENT NO. 2 EFFECTIVE DATE, LOAN PARTIES, TOGETHER WITH THEIR SUCCESSORS AND ASSIGNS, HEREBY ACKNOWLEDGE THAT THEY HAVE NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THEIR LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM ADMINISTRATIVE AGENT, DOCUMENTATION AGENT OR ANY LENDER IN RESPECT OF OR RELATED TO ANY LOAN DOCUMENT. LOAN PARTIES HEREBY VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE ADMINISTRATIVE AGENT, DOCUMENTATION AGENT AND EACH LENDER, ITS PREDECESSORS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, IN EACH CASE SOLELY TO THE EXTENT ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT NO. 2 IS EXECUTED, WHICH ANY LOAN PARTY MAY NOW OR HEREAFTER (WHETHER OR NOT PRESENTLY SUSPECTED, CONTEMPLATED OR ANTICIPATED) HAVE (ON OR PRIOR TO THE DATE OF THIS AMENDMENT NO. 2) IN RESPECT OF OR RELATED TO ANY LOAN DOCUMENT AGAINST ADMINISTRATIVE AGENT, DOCUMENTATION AGENT, ANY LENDER, THEIR PREDECESSORS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY LOAN OR ADVANCE, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE MAXIMUM RATE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE CREDIT AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT NO. 2.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed and delivered by their authorized officers as of the day and year first above written.


AGENT AND LENDER:		BORROWERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION,		DESTINATION MATERNITY CORPORATION
as Administrative Agent and a Required Lender		By:	/s/ Anthony M. Romano
		Name:	Anthony M. Romano
By:	/s/ Wai Yin Cheng	Title:	Chief Executive Officer and President
Name:	Wai Yin Cheng
Its Authorized Signatory
		CAVE SPRINGS, INC.
LENDER:
		By:	/s/ Ronald J. Masciantonio
TPG SPECIALTY LENDING, INC. , as		Name:	Ronald J. Masciantonio
Documentation Agent and a Required Lender		Title:	Assistant Secretary

By:	/s/ Michael Fishman	GUARANTORS:
Name:	Michael Fishman
Its Authorized Signatory		MOTHERS WORK CANADA, INC.

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

		DM URBAN RENEWAL, LLC

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

Exhibit 10.3

SECOND AMENDMENT

TO INTERCREDITOR AGREEMENT

This SECOND AMENDMENT TO INTERCREDITOR AGREEMENT (this “Second Amendment ”), dated as of April 7, 2017 is entered into by and among (a) WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent and collateral agent (in such capacity, together with its successors and assigns, “ ABL Agent ”) for (i) the financial institutions party from time to time to the ABL Credit Agreement referred to below (such financial institutions, together with their respective successors and assigns and transferees, the “ ABL Lenders ”), (ii) the L/C Issuers referred to in the ABL Credit Agreement, and (iii) any ABL Bank Product Affiliates and ABL Cash Management Affiliates (each as defined below) (such ABL Bank Product Affiliates and ABL Cash Management Affiliates, together with the ABL Agent (and any co-agent or sub-agent appointed thereby), the ABL Lenders and the L/C Issuers, the “ ABL Credit Parties ”), and (b) WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent (in such capacity, together with its successors and assigns, “ Term Agent ”) for the financial institutions party from time to time to the Term Loan Agreement referred to below (such financial institutions, together with their respective successors and assigns and transferees, the “ Term Lenders ” and together with the Term Agent, the “ Term Credit Parties ”), and acknowledged by (c) DESTINATION MATERNITY CORPORATION, a Delaware corporation (“ Lead Borrower ”), CAVE SPRINGS, INC., a Delaware corporation (“ Cave ”, and together with Lead Borrower, each a “ Borrower ” and collectively, “ Borrowers ”), MOTHERS WORK CANADA, INC., a Delaware corporation (“ Mothers Work ”), DM URBAN RENEWAL, LLC, a New Jersey limited liability company (“ DM Urban ”, and together with Mothers Work, each a “ Guarantor ” and collectively, “ Guarantors ” and the Guarantors together with the Borrowers, collectively, the “ Loan Parties ”). Capitalized terms no otherwise defined herein shall have the meanings given to such terms in the Intercreditor Agreement (defined below).

W I T N E S S E T H :

WHEREAS, the ABL Agent, the Term Agent and the Loan Parties are party to that certain Intercreditor Agreement dated as of March 25, 2016 (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “ Intercreditor Agreement ”).

WHEREAS, in connection with (i) that certain Amendment No. 2 to Amended and Restated Credit Agreement (the “ ABL Second Amendment ”), and (ii) that certain Amendment No. 2 to the Term Loan Agreement (the “ Term Loan Second Amendment ”), the ABL Agent, the Term Agent and the Loan Parties desire to amend the Intercreditor Agreement as more fully set forth herein;

1. Amendments to Intercreditor Agreement upon the Effective Date . Upon the Effective Date, the Intercreditor Agreement is hereby amended as follows:

(a) Section 1.2 of the Intercreditor Agreement is hereby amended by adding the following definition thereto:

“ Incremental Equipment Reserve ” shall have the meaning set forth in the ABL Credit Agreement.

(b) The following new Section 3.12 of the Intercreditor Agreement is hereby added to read as follows:

“ Section 3.12 . Incremental Equipment Reserve . The ABL Agent shall impose and maintain the Incremental Equipment Reserve as an Availability Reserve (as defined in the ABL Credit Agreement) against the ABL Borrowing Base at all times after the Amendment No. 2 Effective Date (as defined in the ABL Credit Agreement) in an amount equal to $5,000,000 (reducing dollar for dollar for prepayments of the Term Loans in accordance with clause (x) of the definition of “Permitted Indebtedness” set forth in the ABL Credit Agreement, but not less than $0) until otherwise instructed in writing by the Required Lenders (as defined in the Term Loan Agreement).”

“(7) (x) fail to establish and maintain (i) any Reserve in effect on the date hereof; provided that the amount of such Reserves may be adjusted based on changes in the facts or circumstances that gave rise thereto (as long as the methodology for the calculation thereof is not modified), and the foregoing shall not limit the discretion of the ABL Agent to establish, eliminate and adjust the amount of any other Reserves not in effect on the date hereof; provided further that the ABL Agent shall have the discretion to cause any Reserves (other than the Term Loan Reserve, the EBITDA Reserve, and the Incremental Equipment Reserve) to be maintained as Availability Reserves, Inventory Reserves, Realty Reserves or Receivables Reserves as the ABL Agent determines, or (ii) the Term Loan Reserve as and when required under Section 3.9 hereof, (y) fail to establish and maintain the EBITDA Reserve as and when required by Section 3.11 or the Incremental Equipment Reserve as and when required by Section 3.12, or (z) change the definition of “EBITDA Reserve” or “Incremental Equipment Reserve” (each as set forth in the ABL Credit Agreement on the date hereof), in a manner which would effect an increase in the ABL Borrowing Base or any component thereof;”.

2. Effective Date . This Second Amendment shall be and become effective as of the date hereof (the “ Effective Date ”) when all of the conditions set forth in this Section 2 shall have been satisfied:

(a) Execution of Counterparts of Second Amendment . The ABL Agent and the Term Agent shall have received counterparts of this Agreement, which collectively shall have been duly executed on behalf of the Loan Parties, the ABL Agent and the Term Agent.

(b) Effectiveness of ABL Second Amendment . All of the conditions to effectiveness of the ABL Second Amendment, other than execution of this Second Amendment, shall have been met or waived by the ABL Agent.

(c) Effectiveness of the Term Loan Second Amendment . All of the conditions to the effectiveness of the Term Loan Second Amendment, other than execution of this Second Amendment, shall have been met or waived by the Term Agent.

3. Governing Law . The validity, interpretation and enforcement of this Second Amendment and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

4. Binding Effect . This Second Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

5. Further Assurances . Loan Parties shall execute and deliver such additional documents and take such additional action as may be reasonably requested by ABL Agent or Term Agent to effectuate the provisions and purposes of this Second Amendment.

6. Entire Agreement . This Second Amendment, the ABL Second Amendment and the Term Loan Second Amendment and any other document executed in connection therewith represent the entire agreement and understanding concerning the subject matter hereof and thereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof and thereof, whether oral or written.

7. Headings . The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Second Amendment.

8. Counterparts . This Second Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Second Amendment by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Second Amendment. Any party delivering an executed counterpart of this Second Amendment by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Second Amendment, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Second Amendment.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.


ABL AGENT:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as ABL Agent

By:		/s/ Michele L. Riccobono
Name:		Michele L. Riccobono
Its Authorized Signatory


TERM AGENT:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Term Agent

By:		/s/ Wai Yin Cheng
Name:		Wai Yin Cheng
Its Authorized Signatory


LENDER:

TPG SPECIALTY LENDING, INC. , as a Required Lender

By:		/s/ Michael Fishman
Name:		Michael Fishman
Its Authorized Signatory

[Signature Page to Second Amendment

to Intercreditor Agreement]

Acknowledged and Agreed:


BORROWERS:

DESTINATION MATERNITY CORPORATION

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


CAVE SPRINGS, INC.

By:		/s/ Ronald J. Masciantonio
Name:		Ronald J. Masciantonio
Title:		Assistant Secretary


GUARANTORS:

MOTHERS WORK CANADA, INC.

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


DM URBAN RENEWAL, LLC

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

[Signature Page to Second Amendment

to Intercreditor Agreement]

Exhibit 99.1

LOGO

232 Strawbridge Drive, Moorestown, NJ 08057. 856.291.9700. Destinationmaternitycorp.com

DESTINATION MATERNITY REPORTS FOURTH QUARTER AND FISCAL 2016 RESULTS

•

Fourth quarter GAAP net loss of $32.8 million, which includes a $27.8 million non-cash income tax charge, compared to GAAP net loss of $3.1 million for the quarter ended January 30, 2016

•

Fourth quarter Adjusted EBITDA before other charges totals $2.1 million compared to Adjusted EBITDA before other charges of $3.2 million for the quarter ended January 30, 2016

•

Fiscal year GAAP net loss of $32.8 million, or $2.39 per share, including a $27.8 million, or $2.02 per share non-cash income tax charge, compared to GAAP net loss of $4.5 million, or $0.33 per share for the fiscal year ended January 30, 2016

•

Fiscal year Adjusted net loss of $1.9 million, or $0.14 per share, compared to Adjusted net loss of $0.2 million, or $0.01 per share, for the fiscal year ended January 30, 2016

•

Fiscal year Adjusted EBITDA before other charges improves to $23.3 million compared to Adjusted EBITDA before other charges of $22.8 million for the fiscal year ended January 30, 2016

Moorestown, NJ, April 13, 2017 – Destination Maternity Corporation (NASDAQ: DEST), the world’s leading maternity apparel retailer, today announced financial results for the fourth quarter and full year fiscal 2016 ended January 28, 2017 compared to the fourth quarter and full year fiscal 2015 ended January 30, 2016.

Fourth Quarter Fiscal 2016 Selected Financial Results (13 weeks ended January 28, 2017)

•

Comparable sales decreased 7.8% following a 3.5% decline for the fourth quarter of fiscal 2015;

•

Gross margin improved 120 basis points to 51.0% from 49.8% in the fourth quarter of fiscal 2015;

•

SG&A declined $6.9 million to $53.9 million, a decrease of 11.3% from the fourth quarter of fiscal 2015;

•

Pretax loss was $7.8 million, compared to pretax loss of $5.0 million in the fourth quarter of fiscal 2015;

•

GAAP net loss was $32.8 million, or $2.39 per share, and included a $27.8 million non-cash income tax charge, or $2.02 per share, related to a valuation allowance against net deferred tax assets. This compared to a GAAP net loss of $3.1 million, or $0.22 per share, for the fourth quarter of fiscal 2015;

•

Adjusted net loss was $3.2 million, or $0.23 per share, compared to adjusted net loss of $1.5 million, or $0.11 per share for the fourth quarter of fiscal 2015;

•

Adjusted EBITDA before other charges was $2.1 million compared to $3.2 million in the prior year quarter.

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232 Strawbridge Drive, Moorestown, NJ 08057. 856.291.9700. Destinationmaternitycorp.com

Fiscal Year 2016 Selected Financial Results (52 weeks ended January 28, 2017)

•

Comparable sales decreased 5.3%, compared to a decrease of 1.5% for the fiscal year ended January 30, 2016;

•

GAAP net loss was $32.8 million, or $2.39 per share and included a $27.8 million non-cash income tax charge, or $2.02 per share, related to a valuation allowance against net deferred tax assets. This compared to a GAAP net loss of $4.5 million, or $0.33 per share for the fiscal year ended January 30, 2016.

•

Adjusted net loss was $1.9 million, or $0.14 per share, compared to adjusted net loss of $0.2 million, or $0.01 per share, for the fiscal year ended January 30, 2016.

Anthony M. Romano, Chief Executive Officer & President, stated, “In a challenging year that saw several headwinds pressure sales, we achieved increased adjusted EBITDA before other charges reflecting improvement in gross profit margin and a reduction in expenses. While the year included several headwinds, including business exits from Sears and Gordmans, certain Macy’s store closures, Kohl’s business wind down, mall traffic declines, and cancelled fourth quarter orders due to the Hanjin bankruptcy, we continued to advance our key strategies. To this end, we implemented our product allocation tool, which will assist us to increase sales productivity and reduce markdowns, and we introduced Demandware to support our new web platform that launched early in the first quarter of fiscal 2017. We also evolved our merchandising and marketing strategies to more closely align with the Millennial consumer. We remain confident that with the completion of our merger with Orchestra-Prémaman, we will begin to benefit from both the groundwork we laid in 2016 and the synergies we will experience with our new partners. We expect these efforts to enable us to deliver improved operating performance in fiscal 2017 and beyond.”

Full Fourth Quarter Fiscal 2016 Financial Results

•

Net sales were $100.2 million compared with $118.3 million for the comparable prior year quarter. The decrease was primarily driven by the wind down of the Kohl’s ^® , Sears ^® and Gordmans relationships and by a decline in comparable sales.

•

Comparable sales decreased 7.8%, following a 3.5% decline for the fourth quarter of fiscal 2015.

•

Gross margin for the fourth quarter of fiscal 2016 was 51.0%, up 120 basis points over the comparable prior year quarter gross margin of 49.8%.

•

Selling, general and administrative expenses (“SG&A”) for the fourth quarter of fiscal 2016 decreased 11.3% to $53.9 million, compared to $60.8 million for the fourth quarter of fiscal 2015. As a percentage of net sales, SG&A increased to 53.8% for the fourth quarter of fiscal 2016 compared to 51.4% for the fourth quarter of fiscal 2015.

•

The Company incurred store closing, asset impairment and asset disposal expenses of $1.0 million for the fourth quarter of fiscal 2016, compared to $0.3 million for the fourth quarter of fiscal 2015.

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232 Strawbridge Drive, Moorestown, NJ 08057. 856.291.9700. Destinationmaternitycorp.com

•

Other charges during the fourth quarter of fiscal 2016 were $2.9 million, related to the proposed business combination, as well as management and organizational changes, compared to $2.5 million in the fourth quarter of fiscal 2015.

•

Adjusted EBITDA before other charges was $2.1 million for the fourth quarter of fiscal 2016, compared to $3.2 million for the fourth quarter of fiscal 2015. Adjusted EBITDA before other charges is defined in the financial tables at the end of this press release.

•

Income tax provision was $25.0 million for the fourth quarter of fiscal 2016 and included a non-cash charge of $27.8 million as a valuation allowance against substantially all of the Company’s deferred tax assets. As a result of cumulative losses over the prior three years, the Company’s GAAP evaluation of the realizable value of the deferred tax assets indicated that the valuation allowance should be increased. The valuation allowance does not limit the Company’s ability to use the deferred tax assets going forward as taxable income is generated.

•

GAAP net loss was $32.8 million, or $2.39 per share and included the $27.8 million non-cash income tax charge, or $2.02 per share, related to the valuation allowance against net deferred tax assets. This compared to a GAAP net loss of $3.1 million, or $0.22 per share, for the fourth quarter of fiscal 2015.

•

Adjusted net loss was $3.2 million, or $0.23 per share, compared to adjusted net loss of $1.5 million, or $0.11 per share, for the fourth quarter of fiscal 2015. For a reconciliation of GAAP to non-GAAP financial information refer to the financial tables at the end of this press release.

Full Year Fiscal 2016 Financial Results (52 weeks ended January 28, 2017)

•

Net sales were $433.7 million compared with $498.8 million for the fiscal year ended January 30, 2016. The decrease in sales was primarily driven by the wind down of the Kohl’s, Sears and Gordmans relationships, and by a decline in comparable sales.

•

Comparable sales decreased 5.3%, compared to a decrease of 1.5% for the fiscal year ended January 30, 2016.

•

Gross margin increased 310 basis points to 52.4% compared to 49.3% for the fiscal year ended January 30, 2016. The year-over-year increase in gross margin is driven by the Company’s tightened inventory management and a shift in business mix to higher margin sales.

•

SG&A declined $23.0 million to $223.9 million, or 51.6% of net sales, compared to $246.9 million, or 49.5% of net sales for the fiscal year ended January 30, 2016.

•

Store closing, asset impairment and asset disposal expenses were $2.8 million, compared to income of $2.1 million for the fiscal year ended January 30, 2016. During fiscal 2015 the Company received a one-time cash benefit of $4.1 million from the termination of a store lease.

•

Other charges during fiscal 2016 were $4.9 million, related to the proposed business combination, as well as management and organizational changes, compared to $7.0 million for fiscal 2015, which included $4.2 million for management and organizational changes and $2.7 million for the Company’s relocations.

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232 Strawbridge Drive, Moorestown, NJ 08057. 856.291.9700. Destinationmaternitycorp.com

•

Adjusted EBITDA before other charges was $23.3 million for the fiscal year ended January 28, 2017 compared to $22.8 million for the fiscal year ended January 30, 2016.

•

Income tax provision was $25.1 million for fiscal 2016 and included the $27.8 million non-cash valuation allowance charge.

•

GAAP net loss was $32.8 million, or $2.39 per share, and included the $27.8 million non-cash income tax charge, or $2.02 per share, related to the valuation allowance against net deferred tax assets. This compared to a GAAP net loss of $4.5 million, or $0.33 per share, for the fiscal year ended January 30, 2016.

•

Adjusted net loss was $1.9 million, or $0.14 per share, compared to adjusted net loss of $0.2 million, or $0.01 per share, for the fiscal year ended January 30, 2016.

Other Fiscal Year 2016 Financial Information

•

Capital expenditures totaled $12.7 million primarily driven by investments in stores and investments to support key systems projects.

•

At January 28, 2017, inventory was $69.0 million, a decrease of $3.5 million compared to $72.5 million at January 30, 2016.

To provide the Company with flexibility as it moves toward the closing of the Orchestra-Prémaman merger and beyond, on April 7, 2017 the Company’s Term Loan and Credit Facility were amended to allow the Company to enter into certain equipment financing arrangements, on the condition that a portion of the proceeds be used to make a prepayment against the Term Loan. The Term Loan amendment also deletes the covenant requiring maintenance of a minimum level of Consolidated EBITDA and provides for an additional reserve of $5.0 million against availability under the Credit Facility that will be reduced dollar for dollar for prepayments of the Term Loan in accordance with the amendment.

Real Estate and Partnerships

As previously announced, the Company’s leased department relationship with Gordmans ended in the first quarter of fiscal 2016, and the Company discontinued its Two Hearts ^® Maternity by Destination Maternity ^® line, ending its relationship with Sears in June 2016. Additionally, the Company phased out production of its Oh Baby by Motherhood ^® line during fiscal 2016 after being informed that Kohl’s had elected to scale back, and ultimately discontinue, its exclusive license with the Company for this line. Our license agreement with Kohl’s ended in February 2017. These actions allowed the Company to direct resources to the highest return opportunities and further optimize its footprint while reducing costs.

Capital Allocation

The Company remains focused on implementing key systems projects to have the tools needed to drive sustained profitable growth. To this end, in fiscal 2016 the Company completed the implementation of a new best-in-class product allocation tool, and in early fiscal 2017, completed a re-platforming of each of its e-commerce sites through integration with a best-in-class enterprise cloud commerce solution.

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232 Strawbridge Drive, Moorestown, NJ 08057. 856.291.9700. Destinationmaternitycorp.com

Destination Maternity and Orchestra–Prémaman Combination

On December 20, 2016, Destination Maternity and Orchestra-Prémaman announced that they entered into a definitive agreement to merge, which will create a leading global provider of maternity apparel, children’s wear and baby hard goods. The strategic transaction, which was unanimously approved by the Boards of Directors of both companies, will combine two highly complementary businesses resulting in enhanced capabilities for the benefit of customers, shareholders and employees. The combined company, which is expected to have pro forma revenues of approximately $1.1 billion, will also enjoy greater financial strength and flexibility, with the ability to deliver long-term operating performance and improvements through its increased scale and significant synergy opportunities.

Retail Locations

The table below summarizes store opening and closing activity for the fourth quarter and full year fiscal 2016 and fiscal 2015, as well as the Company’s total store, leased department and retail location count at the end of each fiscal period.


	Fourth Quarter Ended				Year Ended
	January 28, 2017		January 30, 2016		January 28, 2017		January 30, 2016
Store Openings (1)		2		2		11		18
Store Closings (1)		13		20		32		46
Period End Retail Location Count (1)
Stores		515		536		515		536
Leased Department Locations		705		1,279		705		1,279

Total Retail Locations		1,220		1,815		1,220		1,815

1)	Excludes international franchised locations. As of January 28, 2017 Destination Maternity has 213 international franchised locations, including 19 standalone stores operated under one of the Company’s nameplates and 194 shop-in-shop locations.

Conference Call Information

As announced previously, a pre-recorded conference call regarding the Company’s fourth quarter and full year fiscal 2016 financial results that includes comments on the results from members of senior management, will be available today at 9:00 a.m. Eastern Time. Interested parties can listen to this conference call by dialing (800) 219-6970 in the United States and Canada or (574) 990-1028 outside of the United States and Canada. The conference call will also be available on the

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investor section of the Company’s website at http://investor.destinationmaternity.com. The passcode for the conference call is 98335054. In the event that you are unable to listen to the call, a replay will be available at 12:00 p.m. Eastern Time on Thursday, April 13, 2017 through 12:00 p.m. Eastern Time Thursday, April 20, 2017 by calling (855) 859-2056 in the United States and Canada or (404) 537-3406 outside of the United States and Canada. The passcode for the replay is 98335054.

About Destination Maternity

Destination Maternity Corporation is the world’s largest designer and retailer of maternity apparel. As of January 28, 2017 Destination Maternity operates 1,220 retail locations in the United States, Canada and Puerto Rico, including 515 stores, predominantly under the trade names Motherhood Maternity ^® , A Pea in the Pod ^® and Destination Maternity ^® , and 705 leased department locations. The Company also sells merchandise on the web primarily through its brand-specific websites, motherhood.com and apeainthepod.com, as well as through its destinationmaternity.com website. Destination Maternity has international store franchise and product supply relationships in the Middle East, South Korea, Mexico, Israel and India. As of January 28, 2017 Destination Maternity has 213 international franchised locations, including 19 standalone stores operated under one of the Company’s nameplates and 194 shop-in-shop locations.

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 loss, 2) adjusted net 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, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company’s 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. The Company uses each of these non-GAAP financial measures as a measure of the performance of the Company. In addition, certain of the Company’s cash and equity incentive compensation plans are based on the Company’s level of achievement of Adjusted EBITDA before other charges. The Company provides these various non-GAAP financial measures to investors to assist them in performing their analysis of its 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 (loss) or operating income (loss) as an indicator of the Company’s operating performance, as determined in accordance with generally accepted accounting principles. The Company may calculate each of these non-GAAP financial measures differently than other companies.

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232 Strawbridge Drive, Moorestown, NJ 08057. 856.291.9700. Destinationmaternitycorp.com

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, 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 strength or weakness of the retail industry in general and of apparel purchases in particular, our ability to successfully manage our various business initiatives, the success of our international business and its expansion, our ability to successfully manage and retain our leased department and international franchise relationships and marketing partnerships, future sales trends in our various sales channels, 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 (such as fluctuations in pregnancy rates and birth rates), 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, develop and retain senior management and sales associates, our ability to develop and source merchandise, our ability to receive production from foreign sources on a timely basis, our compliance with applicable financial and other covenants under our financing arrangements, potential debt prepayments, the trading liquidity of our common stock, changes in market interest rates, our compliance with certain tax incentive and abatement programs, 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.

We have made and may in the future make forward-looking statements relating to our planned merger with Orchestra-Prémaman S.A. Factors that could cause our actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements include, but are not limited to, the possibility that the merger does not close when expected or at all because required regulatory, shareholder, stockholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; or the possibility that the anticipated benefits of the merger are not realized as a result of such matters as general business and economic conditions in France, the United States and other countries in which we or Orchestra-Prémaman conduct business; the impact of the movement of Euro relative to other currencies, particularly the U.S. dollar and the currencies of other countries in which the combined company will conduct business; the effects of competition in the markets in which we or Orchestra-Prémaman operate; the impact of changes in the laws and regulations regulating the clothing and childcare products industries or affecting domestic and foreign operations; judicial or regulatory judgments and legal proceedings; our ability to successfully integrate the two companies; our success in retaining the services of executives, key personnel and other employees that the combined company needs to realize all of the anticipated benefits of the merger; the risk that expected synergies and benefits of the merger will not be realized within the expected time frame or at all; reputational risks; and other factors that may affect future results of us or Orchestra-Prémaman, including changes in trade policies, timely development and introduction of new products and services, changes in tax laws, technological and regulatory changes, and adverse developments in general market, business, economic, labor, regulatory and political conditions.

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 –

CONTACT:

Allison Malkin

Caitlin Morahan

ICR, Inc.

DestinationMaternityIR@icrinc.com

203-682-8225

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except percentages and per share data)

(unaudited)


	Three Months Ended						Twelve Months Ended
	January 28, 2017			January 30, 2016			January 28, 2017			January 30, 2016
Net sales	$	100,158		$	118,287		$	433,699		$	498,753
Cost of goods sold		49,120			59,359			206,271			252,713

Gross profit		51,038			58,928			227,428			246,040
Gross margin		51.0	%		49.8	%		52.4	%		49.3	%
Selling, general and administrative expenses (SG&A)		53,914			60,793			223,881			246,914
SG&A as a percentage of net sales		53.8	%		51.4	%		51.6	%		49.5	%
Store closing, asset impairment and asset disposal expenses (income)		996			258			2,768			(2,084	)
Other charges		2,911			2,482			4,914			6,979

Operating loss		(6,783	)		(4,605	)		(4,135	)		(5,769	)
Interest expense, net		969			373			3,575			1,520

Loss before income taxes		(7,752	)		(4,978	)		(7,710	)		(7,289	)
Income tax provision (benefit)		25,034			(1,916	)		25,050			(2,806	)

Net loss	$	(32,786	)	$	(3,062	)	$	(32,760	)	$	(4,483	)

Net loss per share – Basic and Diluted	$	(2.39	)	$	(0.22	)	$	(2.39	)	$	(0.33	)

Average shares outstanding – Basic and Diluted		13,723			13,628			13,702			13,596

Reconciliation of Net Loss to Adjusted Net Loss:
Net loss, as reported	$	(32,786	)	$	(3,062	)	$	(32,760	)	$	(4,483	)
Add: other charges for proposed business combination		1,858			61			3,154			61
Add: other charges for management and organizational changes		1,053			2,367			1,760			4,196
Add: other charges for relocations		—			54			—			2,695
Add: other charges for fiscal year change		—			—			—			27
Less: income tax effect of other charges		(1,092	)		(944	)		(1,858	)		(2,664	)
Add: deferred tax valuation allowance related to cumulative losses		27,758			—			27,758			—

Adjusted net loss	$	(3,209	)	$	(1,524	)	$	(1,946	)	$	(168	)

Adjusted net loss per share – diluted	$	(0.23	)	$	(0.11	)	$	(0.14	)	$	(0.01	)

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	January 28, 2017		January 30, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	2,859	$	2,116
Trade receivables, net		5,683		10,154
Inventories		69,040		72,509
Deferred income taxes		3,251		13,803
Prepaid expenses and other current assets		9,464		9,792

Total current assets		90,297		108,374
Property and equipment, net		83,029		92,673
Other assets		2,661		18,027

Total assets	$	175,987	$	219,074

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit borrowings	$	4,600	$	28,400
Current portion of long-term debt		6,948		2,897
Accounts payable		17,656		21,738
Accrued expenses and other current liabilities		31,359		39,488

Total current liabilities		60,563		92,523
Long-term debt		31,485		9,302
Deferred rent and other non-current liabilities		22,789		24,351

Total liabilities		114,837		126,176
Stockholders’ equity		61,150		92,898

Total liabilities and stockholders’ equity	$	175,987	$	219,074

Selected Consolidated Balance Sheet Data

(in thousands)

(unaudited)


	January 28, 2017		January 30, 2016
Cash and cash equivalents	$	2,859	$	2,116
Inventories		69,040		72,509
Property and equipment, net		83,029		92,673
Line of credit borrowings		4,600		28,400
Total debt		43,033		40,599
Stockholders’ equity		61,150		92,898

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Twelve Months Ended
	January 28, 2017			January 30, 2016
Operating Activities
Net loss	$	(32,760	)	$	(4,483	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		18,032			17,231
Stock-based compensation expense		1,801			2,784
Loss on impairment of long-lived assets		2,388			1,662
Loss on disposal of assets		272			193
Grow NJ award benefit		349			(3,600	)
Deferred income tax provision		24,614			2,020
Amortization of deferred financing costs		328			166
Changes in assets and liabilities:
Decrease (increase) in:
Trade receivables		4,471			(951	)
Inventories		3,469			3,250
Prepaid expenses and other current assets		328			3,194
Other non-current assets		37			(178	)
Decrease in:
Accounts payable, accrued expenses and other current liabilities		(11,593	)		(3,675	)
Deferred rent and other non-current liabilities		(1,025	)		(1,519	)

Net cash provided by operating activities		10,711			16,094

Investing Activities
Capital expenditures		(12,690	)		(29,272	)
Proceeds from sale of property and equipment		2			35
Additions to intangible assets		(97	)		(163	)

Net cash used in investing activities		(12,785	)		(29,400	)

Financing Activities
Increase (decrease) in cash overdraft		681			(277	)
(Decrease) increase in line of credit borrowings		(23,800	)		28,400
Proceeds from long-term debt		32,000			—
Repayment of long-term debt		(4,498	)		(2,801	)
Deferred financing costs paid		(1,519	)		(157	)
Withholding taxes on stock-based compensation paid in connection with repurchase of common stock		(54	)		(127	)
Cash dividends paid		—			(11,026	)
Proceeds from exercise of stock options		6			69

Net cash provided by financing activities		2,816			14,081

Effect of exchange rate changes on cash and cash equivalents		1			(8	)

Net Increase in Cash and Cash Equivalents		743			767
Cash and Cash Equivalents, Beginning of Period		2,116			1,349

Cash and Cash Equivalents, End of Period	$	2,859		$	2,116

DESTINATION MATERNITY CORPORATION AND SUBSIDIARIES

Supplemental Financial Information

Reconciliation of Net Loss to Adjusted EBITDA ⁽¹⁾

and Adjusted EBITDA Before Other Charges,

and Operating Loss Margin to Adjusted EBITDA Margin

and Adjusted EBITDA Margin Before Other Charges

(in thousands, except percentages)

(unaudited)


	Three Months Ended						Twelve Months Ended
	January 28, 2017			January 30, 2016			January 28, 2017			January 30, 2016
Net loss	$	(32,786	)	$	(3,062	)	$	(32,760	)	$	(4,483	)
Add: income tax provision (benefit)		25,034			(1,916	)		25,050			(2,806	)
Add: interest expense, net		969			373			3,575			1,520

Operating loss		(6,783	)		(4,605	)		(4,135	)		(5,769	)
Add: depreciation and amortization expense		4,449			4,510			18,032			17,231
Add: loss on impairment of long-lived assets		982			64			2,388			1,662
Add: (gain) loss on disposal of assets		(17	)		146			272			193
Add: stock-based compensation expense		528			645			1,801			2,784

Adjusted EBITDA (1)		(841	)		760			18,358			16,101
Add: other charges for proposed business combination		1,858			61			3,154			61
Add: other charges for management and organizational changes		1,053			2,367			1,760			4,196
Add: other charges for relocations (2)		—			54			—			2,462
Add: other charges for fiscal year change		—			—			—			27

Adjusted EBITDA before other charges	$	2,070		$	3,242		$	23,272		$	22,847

Net sales	$	100,158		$	118,287		$	433,699		$	498,753

Operating loss margin (operating loss as a percentage of net sales)		(6.8	)%		(3.9	)%		(1.0	)%		(1.2	)%
Adjusted EBITDA margin (adjusted EBITDA as a percentage of net sales)		(0.8	)%		0.6	%		4.2	%		3.2	%
Adjusted EBITDA margin before other charges (adjusted EBITDA as a percentage of net sales)		2.1	%		2.7	%		5.4	%		4.6	%

(1)	Adjusted EBITDA represents operating loss 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 relocations of its headquarters and distribution operations excludes accelerated depreciation expense of $233 for the twelve months ended January 30, 2016 (included in depreciation and amortization expense above).

# # #

Exhibit 99.2

Destination Maternity

Fourth Quarter Fiscal 2016

Results Conference Call

04/13/17

David L. Courtright, Senior Vice President & Corporate Controller:

Thank you, operator. Good afternoon everyone, and welcome to Destination Maternity’s fourth quarter and full year fiscal 2016 earnings call. The earnings release that was disseminated this morning is available on the investor section of our website. Additionally, we will file our 10-K today with the SEC.

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. If non-GAAP financial information is provided on this call, a reconciliation of the non-GAAP information to the most comparable GAAP financial measure is available in our press release.

This call will include certain forward-looking statements within the meanings 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 is Anthony M. Romano, our Chief Executive Officer and President, and David Stern, our Executive Vice President & Chief Financial Officer. Tony will open with an overview of the quarter and past year, the progress we’ve made toward our turnaround plan, and an update on the merger with Orchestra-Prémaman. Dave will follow with additional commentary on our financial results. Then Tony will provide closing remarks. It is now my pleasure to turn the call over to Tony.

Anthony M. Romano, Chief Executive Officer & President:

Thank you, Dave. Good morning, everyone. We appreciate you investing your time with us today.

Before I review our results, I wanted to acknowledge the challenges we have faced and review our progress to date.

Since shortly after I joined Destination Maternity near the end of fiscal 2014, we have been working hard on various strategic initiatives, which we sometimes refer

to as our “turnaround plan” or “turnaround”, to improve our business processes, key management personnel and planning resources with a focus on improving inventory management, driving sales productivity, optimizing real estate and controlling costs. Although we have made some progress, we have experienced challenges in implementing our turnaround given the overall weakness in the women’s specialty apparel retail space, declining mall-based traffic, and other factors. These challenges have led to a slower pace of progress than originally planned, resulting in a decline in net sales from fiscal 2015 and underperformance to 2016 expectations.

However, while 2016 presented us with significant headwinds to our topline, we have made progress as we reduced our operating loss, and achieved improved adjusted ebitda before other charges compared to last year. Specifically we continued to make progress, albeit slower than we planned, against our strategic initiatives focused on implementing improved qualitative and quantitative components of our inventory disciplines, as well as our ongoing efforts to rationalize our expense structure in light of our lower sales. As we sit here today, it is imperative that we begin to recapture the market share that was yielded in fiscal year 2016 as we exited several distribution channels and continued to close underperforming stores as we fight the ongoing macro retail struggle of brick and mortar declining store traffic.

While we believe our turnaround is beginning to take hold , I expect the progress will continue to be at a slow pace, as we expect the external challenges to continue, and will be subject to uncertainty without a dramatic change in our model and scale. This is why we are excited about the possibilities of our combination with Orchestra-Prémaman, which we announced last December. We expect this transaction will provide significant cost and revenue synergies, and we also expect the increased scale of the overall group will give us access to many more tools and resources to greatly accelerate our progress on our turnaround plan.

Now, let me turn to our fourth quarter and full year performance.

As you saw from our earnings release this morning, our results included a $27.8 million, or $2.02 per share non-cash charge to establish a tax valuation allowance against our deferred tax assets. While Dave will speak more about this in a moment, I want to emphasize that this non-cash charge does not have any impact on our operating income or cash flow, and, in fact, the recording of the charge does not in any way affect our ability to utilize the tax assets as we generate taxable income in future periods.

Excluding this non-cash charge, our adjusted net loss for the fourth quarter of 2016 was $3.2 million or $0.23 per share. Adjusted net loss was $1.9 million or $0.14 per share for the full year fiscal 2016.

For the quarter, total sales declined 15.3% driven by a comparable sales decline of 7.8%, as well as exits from company stores and certain leased and wholesale partner doors. We held conversion and units flat compared to a year ago and saw a slight increase in average selling price though traffic continued to be challenging. Our web sales only rose 5% for the quarter as a direct result of the transition to our new web platform given the one month delay in our upgrade launch date from January to February. As I will expand on shortly, we are pleased with our web performance thus far in Q1 of fiscal 2017.

From a merchandising standpoint, we maintained positive trends in our nursing tops and graphic tee shirt programs. We also saw ongoing success with our Jessica Simpson collection, which continues to be a positive performer within our Motherhood offering. Overall, however, our Motherhood assortment was too

spring-forward, too early in Q4, as we received spring colors in December in an effort to transition the color palette earlier; while our customers were responding more to the wear-now, winter assortments. And, across both brands, the customers did not respond to formal holiday, which were best sellers the year prior; we noticed a marked shift into cozy, casual wear.

For the year, we experienced similar dynamics as total sales declined 13.0% including a comparable sales decline of 5.3%. The decline in our comparable sales performance continued to be driven by the challenging store traffic headwinds with conversion and units per transaction essentially flat and average selling price slightly up.

Importantly, the majority of the negative impact from our non-comparable business activities such as the exit from Sears and Gordmans is behind us. As we enter 2017, we are intensely focused on recapturing market share by transferring a portion of these sales to our ongoing direct channels.

Other notable highlights of the quarter and year included:

•

Improvement in gross margin in the fourth quarter, and an overall 310 basis point improvement in gross margin for the year. Gross margin improvement resulted from better inventory management and lower levels of excess current season and aged merchandise;

•

Inventory at year end was down $3.5 million from the prior year. And, while our inventory turn and year-end balances did not improve as much as we had planned due to the cumulative impact of absorbing inventory from leased partner exits at Sears and Gordman’s, Macy’s closings, discontinued designer programs and Kohl’s inventory cancellation caused by the Hanjin bankruptcy, we are pleased with the discipline we have instilled in our inventory management model and entered fiscal 2017 in a better inventory position with more seasonally appropriate merchandise.

•

We have also continued to tightly manage expenses. During Q4, we completed a reduction-in-force in our ongoing efforts to right size the expense structure given our sales declines. Over the past two fiscal years, we have taken specific proactive expense savings actions and SG&A expenditures have declined by nearly $28 million.

I will now discuss our progress against our strategic initiatives.

First, driving our web performance. In fiscal 2016 we generated a positive increase in web sales, driven by our growth with our affiliates as we expanded our SKU offerings in these channels.

We are also very pleased to announce the successful launch of our new web platform with Demandware on February 16 ^th . As I mentioned, we experienced a negative impact to our topline in Q4 as we transitioned to our new site. That said, web sales were up for the fourth quarter and we have been very pleased with the launch in Q1 of fiscal 2017. Our customers are quickly embracing the enhancements made to our web shopping experience that include a more intuitive navigation; improved site merchandising; elevated product recommendations; and simpler, faster checkout.

Our mobile first mentality is also working to drive sales. Since the launch, we have experienced 50+% growth in our conversion rates, as well as increased traffic, and increased order value driven by higher units per transaction.

This is a critical initiative for us as Mobile continues to be an important device for our customers. In fact, almost one-third of our sales came from mobile devices in fiscal 2016. We expect mobile to continue to grow as our new platform is “mobile first” taking a highly complex transaction to a much simpler process.

Second: Improving our ability to present our customers with the right product at the right time in the right quantities. In the second half of this year we made tremendous strides with our new allocation tool which gave us the ability to:

•

Proactively allocate inventory to stores for future demand;

•

Effectively allocate inventory for a planned promotion to maximize the full potential of the event and then replenish store inventory quickly to sustain sales; and

•

Direct inventory to stores, lease, and online channels in real time, based on need, thus allowing better management of overall inventory levels and helping to drive sales as we proactively manage receipts.

Looking forward, we believe even with the significant progress we have made with our new allocation tool and related processes, we have significant runway ahead to continue to enhance the tool and identify opportunities. For example:

•

We believe our initial SKU reduction may have been too extreme, and as a result we have left some sales on the table. As we have more history behind us we should be better able to plan, buy, and allocate the appropriate assortment breadth to optimize sales;

•

We also see opportunity to shorten the in-channel weeks-of-supply by product class. This will enable us to limit movement between channels, focusing on just-in-time replenishment by channel to increase sales;

•

And, as we enhance our ability to utilize the allocation tool, we expect to be better positioned to provide a more continuous flow of inventory by channel, by location based on projected demand.

Third: With respect to Marketing, we continue to identify new opportunities to drive consumer engagement, heighten interest in our brands and encourage shopping visits. In Q4, we launched our new, monthly, “Win Diapers for a Year Contest.” This promotion encourages consumers to engage with us as we provide a variety of methods to “earn an entry” including signing up for text alerts, providing a customer review, and sharing experiences. As we look ahead, we are continuing to work to drive customer traffic and engagement by growing our customer database. We will also continue to build customer engagement through fun and interactive content on our digital platform and through our new SMS text channel. All of our digital marketing work will also help to enhance our insights into our customer as we will build grassroots quantitative surveys to better track customer sentiment, competition and brand perceptions.

Fourth: We continue to make progress in our real estate strategy where we are seeking to optimize market-by-market the appropriate distribution network between stores and lease partners, and always supported by our web.

Stores are a strategic and competitive advantage in our niche, as many of our millennial customers are shopping maternity for the first time, and are not aware of fit and functionality needed for their changing shape. The shopping experience for this customer isn’t intuitive or easily successfully self-assisted.

We are focusing efforts on Try On Events, Expert Fittings, Appointments and ‘clientelling’ to provide a customized experience to help navigate these new waters. Web and Mobile are, and will continue to be, complimentary to Stores; this gives our customers many convenient shopping options.

Additionally, we are currently exploring options, which would allow us to more efficiently manage store listings, create individual store pages with personalized offers and information, and provide appointment scheduling to reserve dressing rooms and styling sessions. All of this will assist us to create a closer connection with our customers, which we expect to increase loyalty and sales.

Now before I wrap up, I again want to reiterate that we believe we are positioning our company well for long term success and a major part of this positioning relates to our merger with Orchestra-Prémaman We have been busy working diligently with Orchestra on preparation of its stock registration statement with the SEC and related documents and we believe we are on track for closing in our third fiscal quarter.

I want to quickly recap the deal for you and the tremendous upside potential we see in a combination.

As previously announced on December 20th, 2016, the Board of Directors of both companies unanimously approved the merger between our Company and Orchestra. Each Destination Maternity shareholder will receive .5150 of an Orchestra ordinary share in the form of American Depository Shares which will be listed on the NASDAQ stock market. This stock-for-stock transaction is expected to be tax-free for U.S. federal income tax purposes to Destination Maternity shareholders. After closing, Destination Maternity shareholders will own 28% of the combined business immediately after the merger (including approximately 3% to be acquired by an affiliate of Orchestra, due to the Destination shares it owns).

As we have outlined previously, we believe this transaction offers a compelling strategic rationale for both sets of shareholders. The combination brings together two global leaders in highly complementary products and geographies and will create a leading global provider of maternity apparel, infant and childrenswear, as well as baby hard goods. As I noted, our Company has been in the midst of an ongoing turnaround, which has proved more challenging than anticipated given the specialty retail environment. We believe the merger with Orchestra will provide Destination Maternity with additional tools and resources to accelerate our turnaround and fully realize the benefits of all the work we have done to date.

The merger with Orchestra is also expected to provide the following benefits:

•

Increase the customer lifetime value from an average of 14 weeks to 14 years, allowing for additional marketing spend to acquire maternity customers;

•

Provide the opportunity for increased in-store traffic through expanded product offering in certain of our stores, which will lead to increased 4-wall profitability by generating additional sales per square foot;

•

Provide expanded offering on our ecommerce platform, increasing our reach and relevance to our millennial customer; as well as marketing to our historic customer list with more than 1 million new names added annually;

•

Allow us to optimally use our new state-of-the-art distribution center which has adequate capacity to handle significantly more volume with minimal additional capital spend, generating leverage on distribution costs as volume increases;

•

Additionally, our access to Orchestra stores outside of the U.S. will allow us to accelerate progress in our international expansion efforts, which have been only marginally successful so far

•

Further, we are excited to share in the benefits of rolling out the Orchestra brand in the approximately $25 billion US children’s wear market.

The merger is also expected to result in estimated annual-run rate synergies of $15 million to $20 million within 3 years of closing. We expect the majority of these cost synergies will be driven by our collaboration with Orchestra’s impressive direct sourcing organization, which has over 200 people on the ground in 6 buying offices. While we had already started the migration to a direct sourcing model, Orchestra’s significant on the ground resources should allow for accelerated progress. In addition, we believe we bring significant sourcing expertise and experience to the table that can be fully realized with access to such a robust

sourcing organization for the benefit of the overall group. In addition, we expect the combined company can benefit from enhanced scale to drive volume-based discounts on aggregated purchases as well as facilitate more favorable vendor payment terms, substantially reducing working capital requirements.

To summarize, this transaction is expected to create a leading global provider of maternity apparel, infant and children’s wear and baby hard goods with aggregate sales of $1.1 billion, across more than 40 countries and approximately 1,800 retail locations. Our companies are complementary in terms of both products and geography and a combination of the two will provide meaningful achievable synergies.

Additional information regarding the transaction will be made public in the coming weeks but I want to reiterate that we are excitedly focused on a bright future together with Orchestra.

And with that I will turn the call over to Dave.

David Stern, Executive Vice President & Chief Financial Officer:

Thank you, Tony and good morning to everyone on the call.

This morning I will review our fiscal 2016 fourth quarter results, our full year performance, and key items on our balance sheet.

First, I would like to elaborate on the remarks that Tony made regarding the valuation allowance we recorded in the fourth quarter related to our deferred tax assets.

During the quarter, we recorded a non-cash income tax charge of $27.8 million, or $2.02 per share, to increase the valuation allowance related to our deferred tax assets. In accordance with GAAP, we assessed the realizable value of these deferred tax assets, and, considering our cumulative losses over the prior three years and the inability to include the projected synergies related to the upcoming merger, we determined that our valuation allowance needed to be increased. Importantly, this allowance does not limit our ability to use the tax assets going forward as taxable income is generated.

Now turning to our results for the quarter:

Sales for the fourth quarter were $100.2 million, a decline of $18.1 million, or 15.3% from the comparable quarter last year. The decrease in sales was primarily driven by the previously referenced changes to our leased department relationships, specifically the exits from Sears and Gordmans, the reduction of the licensed brand relationship with Kohl’s preceding the exit of that business in February of 2017, and the net closure of 21 stores since the end of the fourth quarter last year. Comparable retail sales for the quarter declined by 7.8% predominantly driven by decreased traffic. This trend has continued, but improved marginally in the first quarter of 2017 with comparable sales quarter to date being down 6.4%.

Gross margin for the fourth quarter was 51.0%, an increase of 120 basis points from the comparable quarter last year. The improvement in gross margin was primarily driven by reduced promotional activity. Gross profit for the fourth quarter was $51.0 million, a decline of $7.9 million, or 13.4% from the comparable quarter last year as the decline in sales was partially offset by improved gross margin.

Selling, general & administrative expenses for the fourth quarter were $53.9 million, a decline of $6.9 million, or 11.3%, from the comparable quarter last year. The decline in SG&A was primarily driven by reduced employee costs, lower occupancy expense and less marketing spend. However, as a percentage of sales, SG&A increased by 240 basis points to 53.8%.

Adjusted EBITDA before other charges for the fourth quarter was $2.1 million, a decrease of $1.1 million from the comparable quarter last year.

The net loss for the fourth quarter was $32.8 million, or $2.39 per share, and included the previously referenced non-cash income tax charge of $27.8 million, or $2.02 per share. The net loss for the fourth quarter of 2015 was $3.1 million, or $0.22 per.

Adjusted net loss was $3.2 million, or $0.23 per share, compared to adjusted net loss of $1.5 million, or $0.11 per share for the fourth quarter of fiscal 2015.

I will now turn to our full year results:

Sales for the fiscal year ended January 28, 2017 were $433.7 million, a decline of $65.1 million, or 13.0%, from last year. The decline in sales was primarily driven by the previously referenced decreases in store counts, leased department relationships and the licensed brand relationship and a decrease in comparable sales of 5.3%.

Gross margin for fiscal 2016 was 52.4%, an increase of 310 basis points from fiscal 2015. This improvement was primarily driven by reduced promotional activity. Gross profit for the year was $227.4 million, a decrease of $18.6 million, or 7.6%, from last year. The decline in gross profit was driven by reduced sales partially offset by the increased gross margin.

Selling, general & administrative expenses for fiscal 2016 were $223.9 million, a decrease of $23.0 million, or 9.3%. The reduction in SG&A was primarily driven by reduced employee costs, lower occupancy expense and less marketing spend. However, as a percentage of sales, SG&A increased 210 basis points to 51.6%.

Adjusted EBITDA before other charges for the full year was $23.3 million, an increase of $0.5 million from last year. The prior year results included the benefit of $4.1 million related to a store lease termination.

Net loss for fiscal 2016 was $32.8 million, or $2.39 per share, and included the previously referenced non-cash income tax charge of $27.8 million, or $2.02 per share. For fiscal 2015, the net loss was $4.5 million, or $0.33 per share.

Adjusted net loss was $1.9 million, or $0.14 per share, compared to adjusted net loss of $0.2 million, or $0.01 per share, for the twelve months ended January 30, 2016.

Turning now to the balance sheet:

At year end, Inventory was $69.0 million, a decrease from last year of $3.5 million, or 4.8% and Debt, net of cash, was $40.1 million, an increase of $1.7 million from last year.

During fiscal 2016, we opened 11 stores and closed 32 stores for a net reduction of 21 retail stores. We ended the year with 515 retail stores.

Capital Expenditures for 2016 were $12.7 million, a reduction of $16.6 million from last year. Excluding the capital expenditures related to the relocation of our corporate office and distribution center in fiscal 2015, 2016 capital expenditures

were $7.1 million below last year. 2016 capital outlays were primarily the result of modest store investments, as we optimize our real estate portfolio, as well as investments in systems including our new web platform and inventory management applications. These investments represent a measured and revenue-focused approach to capital expenditures that we will continue as we move forward.

We are pleased to announce that we have agreed to amendments to our revolving credit facility and term loan that allow us flexibility as we move toward the closing of the Orchestra deal and beyond. The amendments remove the covenant requiring certain Consolidated EBITDA levels. The amendments also allow the Company to enter into equipment financing arrangements, on the condition that a portion of the proceeds of such financing be applied as a prepayment of our term loan obligation.

Finally, due to the limited amount of information that is appropriate to discuss prior to the filing of the Orchestra proxy, we will resume taking questions at that time.

With that, I will turn the call back over to Tony for closing remarks.

Thank you Dave.

To sum up, we had significant accomplishments in fiscal 2016, including:

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Reduced our operating loss and improved our adjusted ebitda before other charges versus fiscal 2015;

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Executed on our push allocation model with implementation of our new allocation tool and team;

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Continued to improve our inventory management disciplines resulting in improved gross margins; and

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Reduced our dollar spend on SG&A expenses.

That said, we recognize that our progress to date, as reflected in our comparable retail sales and our overall financial performance, is slower than planned and significantly challenged by the existing macro retail environment.

Turning to fiscal 2017, we believe we are positioned to drive improvement as we continue to monetize our investments, through:

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Leveraging insights gained from our new allocation tool, and new allocation team, to optimize stock by channel, by location;

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Improving inventory efficiencies and fine tuning investments by channel;

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Continued customer and competitive focus by the merchandising team;

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Leveraging the web relaunch to drive eCommerce sales and to digitally influence our millennial customers to shop us more, including visiting us in stores

Further, we look forward to completing our proposed merger with Orchestra- Prémaman, which we expect to provide significant cost and revenue synergies, along with access to more tools and resources to allow us to accelerate our turnaround.

We look forward to discussing more details with you following the public filing with the SEC of the transaction’s registration and proxy statement.

Thank you again for your time today.