Net Sales Rise 13.4% Driven by Domestic Unit Volume Increases
ATLANTA, May 15 /PRNewswire/ -- Simmons Company ("Company" or
"Simmons"), the indirect parent of Simmons Bedding Company ("Simmons
Bedding"), a leading manufacturer of premium-branded bedding products,
today released operating results for the first quarter of 2007.
For the first quarter of 2007, net sales increased to $267.4 million
compared to $235.9 million for the same period last year, a 13.4%
improvement. Net sales in the 2006 first quarter included $18.9 million in
sales from Simmons' former retail operation, Sleep Country USA, which was
sold in August 2006. Excluding the 2006 first quarter sales impact of the
Company's former retail business, Simmons' net sales increased $50.5
million, or 23.3%, driven by domestic sales growth of 9.8% and the addition
of $29.4 million of sales from the Company's Canadian operations, which
were acquired in November 2006. Simmons' domestic sales growth was
primarily attributable to an increase in conventional bedding units sold of
11.2%, or $26.4 million, compared to the same period last year, partially
offset by a decrease in conventional bedding average unit selling price of
3.1%, or $8.1 million. Gross profit for the first quarter of 2007 increased
to $108.2 million, or 40.5% of net sales, from $99.4 million, or 42.2% of
net sales, for the same period of 2006.
For the first quarter of 2007, operating income was $25.2 million, or
9.4% of net sales, compared to $29.4 million, or 12.5% of net sales, for
the same period last year. The financial results for the quarter included
approximately $11 million in costs related to the roll out of the Company's
2007 Beautyrest(R) product line. Net income was $4.4 million for the first
quarter of 2007 compared to $6.4 million for the same period of the prior
year. For the first quarter of 2007, Adjusted EBITDA (see the Supplemental
Information to this press release) was $36.1 million, or 13.5% of net
sales, compared to $39.0 million, or 16.5% of net sales, during the same
period last year. As of March 31, 2007, Simmons' working capital (see the
Supplemental Information to this press release) as a percentage of net
sales for the trailing twelve months was 2.3% compared to 2.0% a year ago.
Simmons' Chairman and Chief Executive Officer, Charlie Eitel, said,
"The strong sales momentum we had in 2006 continued into the first quarter
of 2007, resulting in a new first quarter sales record for Simmons. The
roll out of our new 2007 Beautyrest(R) product line, which is being well
received by dealers and consumers alike, commenced in our first quarter and
will be completed by early June."
The Company will webcast its first quarter 2007 financial results via a
conference call on Wednesday, May 16, 2007, beginning at 11:00 a.m. Eastern
Time. The webcast will be available at the Company's website
http://www.simmons.com and will also be available for replay through May
30, 2007.
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(TM), BackCare(R), Natural Care(TM) Latex,
BackCare Kids(R) 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 call. 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) competitive pricing pressures in the bedding industry; (ii)
legal and regulatory requirements; (iii) the success of our new products
and the future costs to roll out such products; (iv) our relationships with
and viability of our major suppliers; (v) fluctuations in our costs of raw
materials; (vi) our relationship with significant customers and licensees;
(vii) our ability to increase prices on our products and the effect of
these price increases on our unit sales; (viii) an increase in our return
rates and warranty claims; (ix) our labor relations; (x) departure of our
key personnel; (xi) encroachments on our intellectual property; (xii) our
product liability claims; (xiii) our level of indebtedness; (xiv) interest
rate risks; (xv) compliance with covenants in our debt agreements; (xvi)
our future acquisitions; (xvii) our ability to successfully integrate
Simmons Canada into our operations; (xviii) our ability to achieve the
expected benefits from any personnel realignments; and (xix) 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.
Simmons Company and Subsidiaries
Condensed Historical Consolidated Statements of Operations
(in thousands)
Quarters Ended
March 31, April 1,
2007 2006
Net sales $267,406 $235,867
Cost of products sold 159,215 136,439
Gross profit 108,191 99,428
Operating expenses:
Selling, general and administrative
expenses 84,708 70,906
Amortization of intangibles 1,479 1,417
Licensing fees (3,193) (2,288)
Total operating expenses 82,994 70,035
Operating income 25,197 29,393
Interest expense, net 18,389 19,176
Income before income taxes 6,808 10,217
Income tax expense 2,395 3,784
Net income $4,413 $6,433
Adjusted EBITDA (a) $ 36,101 $ 38,950
See Notes to Condensed Historical Financial Data.
Simmons Company and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 30,
2007 2006
Assets
Current assets:
Cash and cash equivalents $ 10,973 $ 20,784
Accounts receivable, net 107,853 92,035
Inventories 32,258 26,718
Other current assets 24,778 22,559
Total current assets 175,862 162,096
Property, plant and equipment, net 74,481 73,185
Goodwill, net 526,997 512,818
Intangible assets, net 591,979 592,802
Other assets 37,540 32,753
Total assets $1,406,859 $1,373,654
Liabilities and Stockholder's Equity
Current liabilities:
Current maturities of long-term debt $ 778 $ 778
Accounts payable and accrued liabilities 141,684 134,912
Total current liabilities 142,462 135,690
Long-term debt 900,941 896,001
Deferred income taxes 181,238 177,692
Other non-current liabilities 29,325 14,410
Total liabilities 1,253,966 1,223,793
Stockholder's equity 152,893 149,861
Total Liabilities and Stockholder's equity $1,406,859 $1,373,654
See Notes to Condensed Historical Financial Data.
Simmons Company and Subsidiaries
(Notes to Condensed Historical Financial Data - continued)
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, non-cash stock compensation expenses, reorganization
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:
Quarters Ended
March 31, April 1,
2007 2006
Net income $ 4,413 $ 6,433
Interest expense 18,756 19,260
Income tax expense 2,395 3,784
Depreciation and amortization 7,348 7,281
EBITDA 32,912 36,758
Reorganization expense including management
severance 620 1,467
Management fees 465 420
Conversion costs associated with meeting
new flammability standard 913 -
Transaction related expenditures 585 -
Other 606 305
Adjusted EBITDA $36,101 $38,950
b) Working capital computation (current assets less current liabilities,
excluding cash and current maturities of long-term debt):
March 31, April 1,
2007 2006
Current assets $175,862 $152,113
Less:
Cash and equivalents (10,973) (21,388)
Total current assets 164,889 130,725
Current liabilities 142,462 113,254
Less:
Current maturities of long-term debt (778) (413)
Total current liabilities 141,684 112,841
Working capital $ 23,205 $ 17,884
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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