Orchestra Premaman : THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT DEST - Destination Maternity Corp and Orchestra Premaman SA to Merge - M&A Call

THOMSON REUTERS STREETEVENTS

EDITED TRANSCRIPT

DEST - Destination Maternity Corp and Orchestra Premaman SA to Merge - M&A Call

EVENT DATE/TIME: DECEMBER 20, 2016 / 02:00PM GMT

DECEMBER 20, 2016 / 02:00PM GMT, DEST - Destination Maternity Corp and Orchestra Premaman SA to Merge - M&A Call

CORPORATE PAR T ICIPANTS

David Courtwright Destination Maternity Corporation - Principal Accounting Officer, SVP and Corporate Controller

Anthony Romano Destination Maternity Corporation - CEO and President

Pierre Mestre Orchestra Premaman S.A. - Founder and Chairman

Ron Masciantonio Destination Maternity Corporation - EVP and Chief Administrative Officer

CONFER EN CE CA LL PARTIC IPAN TS

Albert Meier [AmCap] - Analyst

Steven RabinowitzPrivate Investor

Mike Wasserman Moors & Cabot, Inc. - Analyst

Timothy Stabosz Stabosz Asset Management

Michael Needleman Preservation Asset Management - Analyst

Brendan Baker Mondrian - Analyst

PRE SEN TA TION

Operator

Good day, ladies and gentlemen. Welcome to the joint conference call to discuss the combination of Destination Maternity and Orchestra Premaman. (Operator Instructions) As a reminder, today's conference call is being recorded.

I would like to introduce your first speaker for today David Courtwright, Senior Vice President and Corporate Controller for Destination Maternity. You have the floor, sir.

David Courtwright - Destination Maternity Corporation - Principal Accounting Officer, SVP and Corporate Controller

Thank you, operator. Good morning and welcome to the joint conference call to discuss the combination of Destination Maternity and Orchestra Premaman which was announced earlier today. Joining me on the call today are Anthony M. Romano, Destination Maternity's CEO and President, and Pierre Mestre, Chairman and Founder of Orchestra Premaman.

Before we begin, I would like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in the forward-looking statements. Please refer to the documents filed by Destination Maternity with the SEC and Orchestra Premaman with the AMF, specifically the most recent financial reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

Also, I would like to remind you that today's call cannot be reproduced in any form without the express written consent of Destination Maternity and Orchestra Premaman.

In addition, we have posted an investor presentation on both Company websites, destinationmaternitycorp.com and corporate.orchestra.fr with further details regarding this transaction.

Given that the transaction has just been announced, we may not be able to answer all questions. More information about the transaction will be included in our proxy materials that will be filed with the SEC.

Finally, we request that callers observe a two-question limit during the Q&A portion of our call to allow everyone a chance to participate. If you have additional questions, please rejoin the queue.

I will now turn the call over to Anthony M. Romano, Destination Maternity's CEO and President. Tony?

Anthony Romano - Destination Maternity Corporation - CEO and President

Thank you, Dave. Good morning, everyone, and thanks for joining us today on short notice to discuss the exciting merger between Destination Maternity and Orchestra Premaman. As announced earlier in our press release, the Boards of Directors for both Companies have unanimously approved the strategic combination which will create a leading global provider of maternity apparel, infant and childrenswear, as well as baby hard goods. We are combining two highly complementary businesses, which we expect will expand our growth and profit profile for the benefit of our shareholders, customers and employees.

As outlined in the press release during the deal -- announcing this deal, this stock for stock transaction is expected to be tax-free for US federal income tax purposes to Destination Maternity shareholders. With an implied offer price of $7.05 per share, we believe Destination Maternity shareholders are receiving an attractive valuation for the Company's assets and have the opportunity to participate in the future growth prospects of a powerful new company led by a best-in-class management team.

On a pro forma basis, following the closing of the transaction, Destination Maternity shareholders will own approximately 28% of the combined Company, and Orchestra Premaman shareholders will own approximately 72%. We currently expect the transaction to close during mid-2017.

Together, the combined Company will enjoy significantly greater scale, enhanced financial strength, and an expanded platform from which to grow with pro forma revenues of approximately $1.1 billion, benefiting our customers with a significantly expanded product offering that will meet all of their maternity and early childhood needs made available across multiple channels and geographies.

In addition to the increased diversity of our revenue and profit stream, the sharing of best practices should enable us to better navigate the ever-changing retail landscape. We have spent considerable time and energy analyzing the competitive strengths of both companies and expect to not only capitalize on the significant growth opportunities in front of us, but also benefit from transferring successful strategies and best practices across our combined enterprise.

Overall, we feel very good about the immediate and long-term value creation opportunities that will be achieved through the greater financial strength and flexibility, increased scale, and cost synergies this transaction forwards.

With that said, I want to take a moment to outline the strategic rationale for this transaction.

This merger will clearly establish Orchestra as one of the world's largest specialty providers of maternity apparel, childrenswear and baby hard goods. For Destination Maternity, the result is a stronger enterprise with enhanced offerings, a more diverse product portfolio, greatly expanded customer connectivity, and increased market penetration.

Importantly, combining our portfolio of brands will grow the lifetime value of our customer base by expanding our customer relationship from months into years creating significant cross-selling opportunities and diversification of sales by product, channel and geography.

Merging with Orchestra also offers greater distribution and sourcing capabilities. Orchestra has a highly efficient direct sourcing network with over 15 years of experience, which includes six buying offices which will allow us to realize anticipated annual cost synergies of $15 million to $20 million within three years of closing. These savings will be a big driver of sustainable long-term value creation.

The combination also provides an unparalleled international growth platform. Orchestra's expansive global footprint of more than 560 stores, the vast majority of which are located in Europe, Africa and Asia provide Destination with the infrastructure necessary to expand our brand awareness outside of North America.

Conversely, Destination's state-of-the-art retail infrastructure and network of US retail location provides a platform to facilitate and accelerate Orchestra's entrance into the world's largest and most profitable children's market.

In addition to providing our shareholders with compelling value for their investment, as well as the option to participate in the combined Company's upside potential, the combination provides other clear advantages, including a more diversified cash flow stream and meaningful opportunities for better near-term and long-term revenue and earnings growth.

Put simply, Destination Maternity and Orchestra Premaman can achieve greater growth and earnings together than they each could stand alone. Together, we will enjoy enhanced top-line growth, a strong balance sheet, and significant cash flow from diversified revenue streams.

Finally, this transaction is expected to be accretive to margins and EPS when full-year run rate synergies are realized.

We are pleased to bring together our two companies in a way that we believe will create lasting value for all parties involved. I will now turn the call over to Orchestra, Founder and Chairman of Orchestra Premaman. Pierre?

Pierre Mestre - Orchestra Premaman S.A. - Founder and Chairman

Thank you, Tony, and thank you, everyone, for joining our call today. Because Tony did such a wonderful job outlining why we're so excited about this merger, I will keep my remarks rather concise so we have time to answer your questions.

The merger of our Companies fulfills a vision for me today. Together with my wife, Chantal, we founded Orchestra, and through the years, I have enjoyed sustained success as we grew for Europe and other continents, including Asia and Africa. But in order to truly become the leading specialty retailer of childrenswear, we knew that one day we will need to enter the US, the world's largest and most profitable childrenswear market.

As we conduct our research and became aware of the synergy in maternity, an idea was conceived. We have learned from our 2012 acquisition of Orchestra Premaman, the oldest maternity brand in Europe, but introducing maternity approach, while our childrenswear stores was highly complementary and profitable. (inaudible) Destination Maternity we came to believe that combining our cash flow and Destination will not only provide a strong platform on which to enter the US, but also strengthen maternity prospects by opening our global retail footprint for an improved maternity offering and by leveraging our extensive sourcing network.

Today's deal brings together two global leaders in highly complementary products and geographies, but offer a collection of authentic brands and two work forces, but comprise highly (inaudible) retail professionals located through US and Europe.

And we are bringing together two distribution channels, each with capacity to support growth without significant additional financial investments. Our measure has the opportunity to create something that is truly unique and powerful. Since founding this Company 21 years ago, we have experienced positive sales growth each and every year. We now look to Destination Maternity to be a catalyst in driving the future growth in both our organizations.

Previously, Orchestra has stated standalone goal of achieving EUR1 billion in sales by 2019. This goal remains. But through this merger, we will achieve a level of sales in a combined basis with Destination Maternity in 2017.

Together, Destination Maternity and Orchestra Premaman are measurably stronger. Our shareholders will benefit from a unified retail strategy that is focused on customer connectivity and driving strong, consistent revenue streams across different geographics and product categories.

With this merger, Destination Maternity and Orchestra Premaman have the chance to work together to accomplish even greater growth on a global scale. I look forward to working with the Destination Maternity team to achieve a seamless integration so we can begin delivering enhanced value upon the closing of the transaction.

Now let me turn the call back to Tony for some closing remarks. Tony?

Anthony Romano - Destination Maternity Corporation - CEO and President

Thank you, Pierre. In closing, I want to reiterate that this merger aligns perfectly with our plans to maximize long-term shareholder value, which is why we are so excited to move forward together.

In addition to the strategic benefits of our combination that I walk through earlier, our shareholders have the additional opportunity to participate in Orchestra's current and prospective growth initiatives. We expect the transaction to close mid-2017. So, over the next quarters, we will be working diligently with Orchestra team to complete this merger seamlessly and hit the ground running. We will keep you updated as necessary through filings and various other documents to assist you in reviewing this merger.

That concludes our prepared remarks. Before turning the call over to the operator for the Q&A portion of our call, I wish to recommend that when asking your questions, please speak slowly and distinctively, and if necessary, we may translate your question into French.