MOTHERS WORK INC - 10-Q Quarterly Report

United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

ý		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2003

or

o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 0-21196

MOTHERS WORK, INC.

(Exact name of registrant as specified in its charter)

Delaware		13-3045573
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

456 North 5th Street, Philadelphia, Pennsylvania		19123
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (215) 873-2200

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value — 5,219,774 shares outstanding as of August 12, 2003

MOTHERS WORK, INC. AND SUBSIDIARIES
INDEX

PART I — FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4.	Controls and Procedures	21

PART II — OTHER INFORMATION		22

Item 1.	Legal Proceedings	22
Item 6.	Exhibits and Reports on Form 8-K	23

Signatures		24

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MOTHERS WORK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

	June 30, 2003			September 30, 2002
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	25,142		$	14,759
Trade receivables	5,129			4,839
Inventories	82,208			76,830
Deferred income taxes	6,581			8,888
Prepaid expenses and other current assets	6,219			5,126
Total current assets	125,279			110,442

Property, Plant and Equipment, net	56,643			50,460
Assets Held for Sale	1,200			1,200
Other Assets:
Goodwill	52,677			52,677
Deferred financing costs, net of accumulated amortization of $749 and $465	4,183			4,467
Other intangible assets, net of accumulated amortization of $2,441 and $2,249	1,186			1,199
Deferred income taxes	11,831			11,831
Other non-current assets	993			1,009
Total other assets	70,870			71,183

	$	253,992		$	233,285

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Line of credit borrowings	$	—		$	—
Current portion of long-term debt	269			369
Accounts payable	20,494			20,110
Accrued expenses and other current liabilities	40,051			32,045
Total current liabilities	60,814			52,524

Long-Term Debt	127,901			127,913
Deferred Rent and Other Liabilities	5,954			5,343
Series C Cumulative Redeemable Preferred Stock	—			—
Total liabilities	194,669			185,780

Commitments and Contingencies (Note 3)

Stockholders’ Equity:
Preferred stock, 2,000,000 shares authorized
Series A cumulative convertible preferred stock, $.01 par value; $280.4878 stated value; 41,000 shares authorized, none outstanding	—			—
Series B junior participating preferred stock, $.01 par value; 300,000 shares authorized, none outstanding	—			—
Common stock, $.01 par value; 20,000,000 shares authorized, 5,207,124 and 5,179,901 shares issued and outstanding, respectively	52			52
Additional paid-in capital	63,129			63,623
Accumulated deficit	(3,858		)	(16,170		)
Total stockholders’ equity	59,323			47,505

	$	253,992		$	233,285

The accompanying notes are an integral part of these consolidated financial statements.

MOTHERS WORK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,				Nine Months Ended June 30,
	2003		2002		2003		2002
Net sales	$	132,403	$	122,599	$	370,047	$	341,849
Cost of goods sold	56,706		54,566		168,727		160,201
Gross profit	75,697		68,033		201,320		181,648
Selling, general and administrative expenses	58,420		52,667		170,579		153,918
Operating income	17,277		15,366		30,741