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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 16, 1997
MOTHERS WORK, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-21196 13-3045573
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
456 North 5th Street, Philadelphia, PA 19123
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 215-873-2200
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<PAGE>
Item 5. Other Events
On April 16, 1997, the Company announced its results of operations for
the second fiscal quarter of 1997, a restructuring of its maternity product line
and an extension of its credit agreement. A copy of the Company's April 16, 1997
press release is attached hereto as an exhibit.
SIGNATURES
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 thereunto duly authorized.
MOTHERS WORK, INC.
Date: April 25, 1997 By: /s/ Thomas Frank
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Thomas Frank
Vice President - Finance
and Chief Financial Officer
-2-
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EXHIBIT INDEX
Exhibit Number Exhibit Title
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99 Press Release
<PAGE>
MOTHERS WORK, INC.
CONTACT: Tom Frank
Chief Financial Officer
and VP-Finance
(215) 873-2200
For Immediate Release
MOTHERS WORK, INC. ANNOUNCES SECOND QUARTER RESULTS,
MATERNITY PRODUCT LINE RESTRUCTURING AND EXTENSION OF
CREDIT AGREEMENT
o Philadelphia, PA, April 16, 1997 -- Mothers Work, Inc. (NASDAQ:MWRK), the
Real Time Retailer(Trademark), today announced a loss of $2.30 per share
for the Second Fiscal Quarter, including a loss from one time charges of
$1.40 per share.
o The loss, exclusive of the one time charges, was primarily attributable to
the Company's recently acquired Episode non-maternity fashion business.
o Operating cash flow for the first six months of the fiscal year for the
core maternity business (defined as operating income excluding amortization
and depreciation expense) and exclusive of the one time charges was $13.5
million, comparable to the same period in the prior year.
o Concurrently, Mothers Work announced that it will restructure its core
maternity business by combining the Mimi Maternity(Registered Trademark)
and Maternite(Registered Trademark) over-lapping product lines, and closing
approximately 30 retail locations serviced by other Company stores. In
connection with this restructuring and related actions, the company will
take a charge in the second fiscal quarter of $7.6 million, the cash
portion of which is approximately $1.3 million to be paid out through the
second quarter of fiscal 1998.
<PAGE>
MOTHERS WORK ANNOUNCES SECOND QUARTER RESULTS Page 2
o The Company also announced a commitment from CoreStates Bank to extend its
$20 million revolving credit facility for an additional year to July 31,
1999.
Net sales for the second quarter increased 24.0% to $55.8 million from $45.0
million in the same quarter of the preceding year. The total increase was
primarily due to sales generated by Episode(Registered Trademark) America
stores, acquired on June 1, 1996, quarterly comparable store sales increase of
2.0% in the Company's core maternity clothing business (based on 384 stores),
and a $3.0 million net increase due to other maternity store opening and closing
activity. Comparable store sales during the second quarter of the preceding
fiscal year increased 11.1% (based on 143 stores). During the quarter, the
Company opened 68 new locations, including 55 leased departments and 13 stores,
and closed 4 stores, ending the quarter with 560 locations compared to 431 on
March 31, 1996.
The net loss for the second quarter was $8,189,093 or $2.30 per common share
after deducting accrued dividends on preferred stock, compared to a net loss of
$322,230 or $0.10 per common share, in the same quarter of the preceding year.
The fiscal net loss includes a pre-tax loss of $7.6 million ($5.0 million after
tax) or $1.40 per share for the restructuring charges discussed previously. This
amount consists of a $5.6 million charge to restructure and consolidate upscale
maternity lines, a $0.8 million charge to write-down inventory related to this
consolidation and $1.2 million to write-down long-lived assets at some of its
continuing retail locations and for certain other costs.
Rebecca Matthias, President and Chief Operating Officer of Mothers Work, Inc.,
noted, "Upscale and moderately priced maternity appareal continues to be our
core business, representing approximately 88% of our total revenue. This
consolidation of our maternity clothing lines is intended to improve operating
performance by eliminating redundancy in product styles and store locations.
While we are very disappointed with results of the Episode division including
its effect on the Company's performance for the quarter, we are encouraged by
the comparable store sales trend through the quarter. The turnaround of
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MOTHERS WORK ANNOUNCES SECOND QUARTER RESULTS Page 3
the Episode business is taking longer than originally anticipated and management
is focused on the need to improve results in that division."
Mothers Work is the Real Time Retailer(Trademark), using its custom
TrendTrack(Trademark) computer systems and quick response replenishment process
to "give the customer what she wants, when she wants it." Mothers Work operates
559 locations, including 34 Episode(Registered Trademark) upscale "bridge"
women's apparel specialty stores and 525 maternity clothing stores consisting of
223 Motherhood Maternity(Registered Trademark) stores, 74 Maternite(Registered
Trademark) stores, 49 Mimi Maternity(Registered Trademark) stores, 45 Maternity
Works(Registered Trademark) outlet stores, 39 A Pea in the Pod(Registered
Trademark) stores and 95 leased departments.
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
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 for fiscal 1997 and beyond to
differ materially from those expressed or implied in any such forward-looking
statements; changes in consumer spending patterns, consumer preferences and
overall economic conditions, the impact of competition and pricing, continued
availability of capital and financing, ability to develop and source
merchandise, and other factors affecting the Company's business beyond the
Company's control.
Episode(Registered Trademark) America, a division of Mothers Work, Inc., is
licensed to use the EPISODE(Registered Trademark) trademark by Episoda USA, Inc.
-Table to Follow-
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MOTHERS WORK, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
---------------------------- -----------------------------
3/31/97 3/31/96 3/31/97 3/31/96
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net Sales .............................. $55,755,776 $45,014,474 $116,989,104 $95,064,883
Cost of Goods Sold ..................... 26,033,562 19,343,870 53,534,324 40,067,191
----------- ----------- ------------ -----------
Gross Profit ......................... 29,722,214 25,670,604 63,454,780 54,997,692
SG&A Expenses .......................... 28,405,273 20,304,914 54,479,537 41,119,449
Depreciation and Amortization .......... 3,452,493 2,449,472 6,567,128 4,870,034
Restructuring Charges .................. 5,617,094 -- 5,617,094 --
----------- ----------- ------------ -----------
Operating Income (Loss) .............. (7,752,646) 2,916,218 (3,208,979) 9,008,209
Interest Expense -- Net ................ 3,240,093 3,065,284 6,572,231 6,142,324
----------- ----------- ------------ -----------
Net Income (Loss) Before
Income Taxes ....................... (10,992,739) (149,066) (9,781,210) 2,865,885
Income Taxes (Benefit) ................. (3,103,413) (71,211) (2,359,945) 1,364,161
----------- ----------- ------------ -----------
Net Income (Loss) .................... (7,889,326) (77,855) (7,421,265) 1,501,724
Preferred Dividends .................... 299,767 244,375 544,142 488,750
----------- ----------- ------------ -----------
Net Income Available to
Common Stockholders ................ $(8,189,093) $ (322,230) $ (7,965,407) $ 1,012,974
=========== =========== ============ ===========
Net Income (Loss) Per
Common Share ......................... $ (2.30) $ (0.10) $ (2.24) $ 0.30
=========== =========== ============ ===========
Weighted Average Common
Shares Outstanding ................... 3,563,342 3,123,170 3,561,306 3,365,362
=========== =========== ============ ===========
</TABLE>
Selected Balance Sheet Data
March 31, September 30,
1997 1996
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Cash and Cash Equivalents ............... $ 1,451,686 $ 1,262,435
Inventories ............................. 51,618,248 57,209,499
Property, Plant and Equipment, Net ...... 44,499,558 45,451,114
Long-Term Debt .......................... 96,544,514 96,680,722
Stockholders' Equity .................... 27,141,517 35,106,514
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