- Net Sales Increase 3.5%
- Ninth Consecutive Quarter of Domestic Sales Growth Rate Exceeding the
Industry
ATLANTA, May 6 /PRNewswire/ -- Simmons Company ("Company" or
"Simmons"), the holding company for Simmons Bedding Company ("Simmons
Bedding"), a leading manufacturer of premium-branded bedding products,
today released operating results for the first quarter of 2008.
For the first quarter of 2008, net sales increased 3.5% to $276.9
million compared to $267.4 million for the same period last year. Domestic
segment net sales increased $6.8 million, or 2.9%, to $245.1 million
compared to the same period of 2007. The domestic segment sales growth was
primarily attributable to an increase in conventional bedding average unit
sales price of 7.9% which was partially offset by a decrease in
conventional bedding units sold of 3.6%. Gross profit for the first quarter
of 2008 was $109.7 million, or 39.6% of net sales, compared to $108.2
million, or 40.5% of net sales, for the same period of 2007. For the first
quarter of 2008, operating income was $22.1 million, or 8.0% of net sales,
compared to $25.2 million, or 9.4% of net sales, for the same period last
year. Net income was $2.5 million for the first quarter of 2008 compared to
$4.4 million for the same period in 2007. For the first quarter of 2008,
Adjusted EBITDA (see the Supplemental Information to this press release)
was $33.0 million, or 11.9% of net sales, compared to $36.1 million, or
13.5% of net sales for the first quarter of 2007.
"Despite a very difficult retail and economic environment, we continued
to gain market share in the U.S. during the first quarter," said Charlie
Eitel, Simmons Chairman and Chief Executive Officer. "Our sales growth rate
has exceeded that of the industry for nine consecutive quarters due to our
strong product offerings across all retail price points, outstanding
service and our solid relationships with our customers."
Mr. Eitel continued, "Our operating results for the quarter were
negatively impacted by rising raw material and fuel prices. While we have
taken significant measures to lower our overall cost structure and
implemented price increases on certain products in November 2007 and March
2008, the majority of the benefits associated with these initiatives will
not begin to be realized until the second and third quarters of 2008. We
believe our efforts will put us in a position to continue to be successful
in this challenging retail and manufacturing environment."
As of March 29, 2008, Simmons' working capital (see Supplemental
Information to this press release) was 2.4% of net sales for the trailing
twelve months compared to 2.3% a year ago.
The Company will discuss its first quarter 2008 financial results on a
webcast Tuesday, May 6, 2008 beginning at 5:00 p.m. Eastern time. The
webcast will be available for replay or download through podcast at the
Company's website http://www.simmons.com until May 20, 2008.
About Simmons Company
Atlanta-based Simmons Company, through its indirect subsidiary Simmons
Bedding Company, is one of the world's largest mattress manufacturers,
manufacturing and marketing a broad range of products including
Beautyrest(R), Beautyrest Black(R), ComforPedic by Simmons(TM), Natural
Care(R), Beautyrest Beginnings(TM) and Deep Sleep(R). Simmons Bedding
Company operates 21 conventional bedding manufacturing facilities and two
juvenile bedding manufacturing facilities across the United States, Canada
and Puerto Rico. Simmons also serves as a key supplier of beds to many of
the world's leading hotel groups and resort properties. Simmons is
committed to developing superior mattresses and promoting a higher quality
sleep for consumers around the world. For more information, visit the
Company's website at http://www.simmons.com.
"Safe Harbor" Statement under Private Securities Litigation Reform Act
of 1995:
This press release includes forward-looking statements that reflect our
current views about future events and financial performance. Words such as
"estimates," "expects," "anticipates," "projects," "plans," "intends,"
"believes," "forecasts" and variations of such words or similar expressions
that predict or indicate future events, results or trends, or that do not
relate to historical matters, identify forward-looking statements. The
forward-looking statements in this press release speak only as of the date
of this report. These forward-looking statements are expressed in good
faith and we believe there is a reasonable basis for them. However, there
can be no assurance that the events, results or trends identified in these
forward- looking statements will occur or be achieved. Investors should not
rely on forward-looking statements because they are subject to a variety of
risks, uncertainties, and other factors that could cause actual results to
differ materially from our expectations. These factors include, but are not
limited to: (i) general economic and industry conditions; (ii) competitive
pricing pressures in the bedding industry; (iii) legal and regulatory
requirements; (iv) the success of our new products and the future costs to
roll out such products; (v) our relationships with and viability of our
major suppliers; (vi) fluctuations in our costs of raw materials and energy
prices; (vii) our relationship with and viability of significant customers
and licensees; (viii) our ability to increase prices on our products and
the effect of these price increases on our unit sales; (ix) an increase in
our return rates and warranty claims; (x) our labor relations; (xi)
departure of our key personnel; (xii) encroachments on our intellectual
property; (xiii) our product liability claims; (xiv) our level of
indebtedness; (xv) interest rate risks; (xvi) foreign currency exchange
rate risks; (xvii) compliance with covenants in our debt agreements;
(xviii) our future acquisitions; (xix) our ability to achieve the expected
benefits from any personnel realignments; (xx) our ability to successfully
implement our new enterprise resource planning system; and (xxi) other
risks and factors identified from time to time in our reports filed with
the Securities and Exchange Commission. We undertake no obligation to
update or revise any forward-looking statements, either to reflect new
developments or for any other reason.
-table follows-
Simmons Company and Subsidiaries
Unaudited Condensed Historical Consolidated Statements of Operations
(in thousands)
Quarters Ended
March 29, March 31,
2008 2007
Net sales $276,881 $267,406
Cost of products sold 167,207 159,215
Gross profit 109,674 108,191
Operating expenses:
Selling, general and administrative
expenses 88,551 84,708
Amortization of intangibles 1,589 1,479
Licensing revenues (2,568) (3,193)
87,572 82,994
Operating income 22,102 25,197
Interest expense, net 17,815 18,389
Income before income taxes 4,287 6,808
Income tax expense 1,772 2,395
Net income $2,515 $4,413
Adjusted EBITDA (a) $32,981 $36,101
See Notes to Condensed Historical Financial Data.
Simmons Company and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
March 29, December 29,
2008 2007*
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $17,972 $27,520
Accounts receivable, net 124,066 119,984
Inventories 39,148 35,207
Other current assets 24,176 25,281
Total current assets 205,362 207,992
Property, plant and equipment, net 90,909 87,449
Goodwill, net 538,568 540,126
Intangible assets, net 600,165 604,547
Other assets 40,934 37,539
Total assets $1,475,938 $1,477,653
Liabilities and Stockholder's Equity
Current liabilities:
Current maturities of long-term
debt $675 $772
Accounts payable 79,267 72,484
Accrued expenses 81,405 96,366
Total current liabilities 161,347 169,622
Long-term debt 923,731 900,716
Deferred income taxes 190,687 190,321
Other non-current liabilities 31,365 28,842
Total liabilities 1,307,130 1,289,501
Stockholder's equity 168,808 188,152
Total liabilities and
stockholder's equity $1,475,938 $1,477,653
* Derived from the Company's 2007 audited consolidated financial
statements
See Notes to Condensed Historical Financial Data.
Simmons Company and Subsidiaries
Notes to Unaudited Condensed Historical Financial Data
a) Adjusted EBITDA (as defined in Simmons Bedding's senior credit
facility) differs from the term "EBITDA" as it is commonly used. In
addition to adjusting net income to exclude interest expense, income
taxes and depreciation and amortization, Adjusted EBITDA as we
interpret the definition also adjusts net income by excluding items or
expenses not typically excluded in the calculation of "EBITDA" such as
management fees, reorganization costs, ERP system implementation costs
and other unusual or non-recurring charges or credits. In addition,
Adjusted EBITDA, as defined, includes the pro forma effect of business
acquisitions and dispositions including synergies. Adjusted EBITDA is
presented because it is a material component of the covenants
contained within Simmons Bedding's credit agreements and a measure
used by management to determine operating performance. EBITDA does
not represent net income or cash flow from operations as those terms
are defined by accounting principles generally accepted in the United
States and does not necessarily indicate whether cash flows will be
sufficient to fund cash needs. Below is a reconciliation of net
income to Adjusted EBITDA:
Quarter Ended
March 29, March 31,
2008 2007
Net income $2,515 $4,413
Depreciation and amortization 8,216 7,348
Income tax expense 1,772 2,395
Interest expense 17,946 18,756
EBITDA 30,449 32,912
Reorganization expense including
management severance 275 620
Management fees 488 465
Relocation of manufacturing and
Canada corporate facilities 558 -
Non-recurring professional service
fees 408 -
Transaction related expenditures
including integration costs 107 585
Conversion costs associated with
meeting new flammability standard - 913
ERP system implementation costs 482 -
Other 214 606
Adjusted EBITDA $32,981 $36,101
b) Working capital computation (current assets less current liabilities,
excluding cash and current maturities of long-term debt):
March 29, December 29,
2008 2007
Current assets $205,362 $207,992
Less:
Cash and cash equivalents (17,972) (27,520)
187,390 180,472
Current liabilities 161,347 169,622
Less:
Current maturities of long-term
debt (675) (772)
160,672 168,850
Working capital $26,718 $11,622
SOURCE Simmons Company
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Related links:
http://www.simmons.com
CONTACT:
Alan H. Oshiki of Broadgate Consultants,
Inc., +1-212-232-2222, for Simmons Company; or William S.
Creekmuir of Simmons Company, +1-770-673-2625
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