Jennifer Convertibles Reports Second Quarter Results

- Successfully emerged from bankruptcy

- Successful in restructuring leases

- Reorganization items, net $34,128,000 for quarter, $33,378,000 year-to-date

- Basic EPS $4.06 versus ($0.91) for quarter, $3.63 versus ($1.89) year-to-date

- Diluted EPS $4.04 versus ($0.91) for quarter, $3.62 versus ($1.89) year-to-date

- Revenue from continuing operations decreased 14.8% for quarter, 6.0% year-to-date

- Comparable store sales decreased by 11.9% for quarter, 12.2% year-to-date

- Income (loss) from continuing operations $32,076,000 versus ($6,096,000) for quarter, $28,654,000 versus ($11,999,000) year-to-date

News provided by

Jennifer Convertibles, Inc.

Apr 12, 2011, 04:45 ET

WOODBURY, N.Y., April 12, 2011 /PRNewswire/ -- Jennifer Convertibles, Inc. (www.jenniferfurniture.com) announced today its financial results for the second quarter ended February 26, 2011.

For the second quarter, revenue from continuing operations decreased by 14.8% to $16,746,000 from the $19,655,000 reported for the same period last year.  For the six-month period, revenue from continuing operations decreased 6.0% to $35,266,000 from the $37,532,000 reported in the same period last year.  

For the second quarter, the net income was $32,076,000 or $4.06 and $4.04 per basic and diluted share, respectively, compared to net loss of ($6,413,000) or ($0.91) per basic and diluted share, for the same period last year.  For the six-month period, the net income was $28,716,000 or $3.63 and $3.62 per basic and diluted share, respectively, compared to net loss of ($13,283,000) or ($1.89) per basic and diluted share, for the same period last year.

For the second quarter, operating margins from continuing operations increased to 26.1% compared to 25.7% the same period last year. For the six-month period operating margins from continuing operations decreased to 25.4% compared to 26.8% for the same period last year.

For the second quarter, selling, general, and administrative expenses from continuing operations decreased to 37.2% as a percentage of revenue from continuing operations compared to 38.2% for the same period last year. For the six-month period, selling, general and administrative expenses from continuing operations decreased to 37.7% compared to 40.2% for the same period last year.

Reorganization items, net were $34,128,000 and $0 in the second quarter of fiscal 2011 and 2010, respectively.  For the six-month period, reorganization items, net were $33,378,000 compared to $0 for the same period last year. Reorganization items consist of a gain on discharge of debt, legal and other professional fees for bankruptcy services and fair value adjustments.

Income (loss) from operations of discontinued operations was $0 and ($317,000) in the second quarter of fiscal 2011 and 2010, respectively.  For the six-month periods for fiscal 2011 and 2010, income (loss) from discontinued operations amounted to $62,000 and ($1,284,000), respectively.

Rami Abada, President of Jennifer, commenting on the results of the second fiscal quarter said, "During the quarter we successfully emerged from Chapter 11 and we were successful in restructuring our leases and in closing and consolidating unprofitable stores."

Mr. Abada added, "On February 28, 2011 we entered into a multi-year agreement with GE Capital Sales Finance, which allows us to offer our customers the option of using a private label, Jennifer Convertible credit card in all our stores nationwide which should improve sales.  Additionally, we have secured credit terms with many of our suppliers.  We have new product lines in development and we believe we are now poised to be a stronger organization that will better satisfy our customers, suppliers and employees.  We are very excited about the future."

Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 64 Jennifer Convertibles® stores and is the largest specialty retailer of leather furniture with 8 Jennifer Leather stores.  As of April 12, 2011, the Company owned 72 stores and operates six licensed Ashley Furniture HomeStores.

Statements in this press release other than the statements of historical fact are "forward-looking statements."  Such statements are subject to certain risks and uncertainties, including changes in retail demand, vendor performance and other risk factors identified from time to time in Jennifer Convertibles' filings with the Securities and Exchange Commission that could cause actual results to differ materially from any forward-looking statements.  These forward-looking statements represent Jennifer Convertibles' judgment as of the date of the release.  Jennifer Convertibles disclaims, however, any interest or obligations to update these forward-looking statements.

JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES

SUMMARY CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)



SUCCESSOR

PREDECESSOR



COMPANY

COMPANY



02/26/11

08/28/10



(Unaudited)

(Audited)






CASH AND CASH EQUIVALENTS

$         5,209

$         5,591

RESTRICTED CASH

-

99

ACCOUNTS RECEIVABLE

1,658

4,160

MERCHANDISE INVENTORIES, Net

7,807

8,603

PREPAID EXPENSES AND OTHER CURRENT ASSETS

1,337

2,086



16,011

20,539






FIXTURES, EQUIPMENT & LEASEHOLD IMPROVEMENTS, Net

2,042

2,239

OTHER ASSETS

546

577

TRADEMARK


3,260

-

OTHER INTANGIBLES

245

-

GOODWILL

15,642

-









$        37,746

$        23,355












ACCOUNTS PAYABLE

$          1,579

$          1,590

CUSTOMER DEPOSITS

5,758

5,353

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

8,107

5,565

NOTE PAYABLE

1,400

-

DEFERRED RENT AND ALLOWANCES – Current Portion


-

359

TOTAL CURRENT LIABILITIES

16,844

12,867






LONG TERM-DEBT


8,167

-

DEFERRED RENT AND ALLOWANCES – Net of Current Portion

-

1,897

DEFERRED TAX LIABILITY

1,255

-

OBLIGATIONS UNDER CAPITAL LEASES – Net of Current Portion

47

58

     TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE

26,313

14,822





LIABILITIES SUBJECT TO COMPROMISE

-

37,249

     TOTAL LIABILITIES

26,313

52,071





STOCKHOLDERS' EQUITY (DEFICIENCY)

11,433

(28,716)









$        37,746

$        23,355

JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE DATA)


PREDECESSOR COMPANY



THREE MONTHS ENDED

SIX MONTHS ENDED



02/26/11

02/27/10

02/26/11

02/27/10

REVENUE:








NET SALES

$      16,010

$      18,610

$     33,749

$    35,641

REVENUE FROM SERVICE CONTRACTS

736

1,045

1,517

1,891


16,746

19,655

35,266

37,532









COST OF SALES AND OTHER CHARGES

12,372

14,612

26,321

27,477










LOSS RELATED TO SERVICE CONTRACTS

-

3,500

-

3,500








SELLING, GENERAL & ADMINISTRATIVE EXPENSES

6,226

7,501

13,299

15,081








(RECOVERY OF) PROVISION FOR LOSS ON AMOUNTS DUE FROM RELATED COMPANY

-

(39)

-

3,128








DEPRECIATION AND AMORTIZATION

129

196

288

367

18,727

25,770

39,908

49,553








LOSS FROM OPERATIONS

(1,981)

(6,115)

(4,642)

(12,021)









GAIN ON ACQUISITION OF RELATED COMPANY

-

23

-

23









INTEREST INCOME

2

2

2

11









INTEREST EXPENSE

(65)

(4)

(68)

(8)









LOSS FROM CONTINUING OPERATIONS BEFORE REORGANIZATION ITEMS AND INCOME TAXES



(2,044)

(6,094)

(4,708)

(11,995)










REORGANIZATION ITEMS, NET

34,128

-

33,378

-









INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

32,084

(6,094)

28,670

(11,995)









INCOME TAXES

8

2

16

4










INCOME (LOSS) FROM CONTINUING OPERATIONS

32,076

(6,096)

28,654

(11,999)










INCOME (LOSS) FROM OPERATIONS OF DISCONTINUED OPERATIONS



-

(317)

62

(1,284)










NET INCOME (LOSS )

$     32,076

$       (6,413)

$     28,716

$     (13,283)


















BASIC INCOME (LOSS) PER COMMON SHARE:







  INCOME (LOSS) FROM CONTINUING OPERATIONS


$         4.06

$        (0.87)

$        3.62

$        (1.71)

  INCOME (LOSS) FROM DISCONTINUED OPERATIONS


-

(0.04)

0.01

(0.18)

  NET INCOME (LOSS) PER COMMON SHARE

$         4.06

$        (0.91)

$        3.63

$        (1.89)









DILUTED INCOME (LOSS) PER COMMON SHARE:







  INCOME (LOSS) FROM CONTINUING OPERATIONS


$         4.04

$        (0.87)

$        3.61

$        (1.71)

  INCOME (LOSS) FROM DISCONTINUED OPERATIONS


-

(0.04)

0.01

(0.18)

  NET INCOME (LOSS) PER COMMON SHARE

$         4.04

$        (0.91)

$        3.62

$        (1.89)









WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

6,979,887

7,014,199

6,979,887

7,043,996









COMMON SHARES ISSUABLE ON CONVERSION OF SERIES A PARTICIPATING PREFERRED STOCK

924,500

-

924,500

-









TOTAL WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC



7,904,387

7,014,199

7,904,387

7,043,996









EFFECT OF POTENTIAL COMMON SHARE ISSUANCE:







   STOCK OPTIONS

-

-

-

-

   WARRANTS

-

-

-

-

   SERIES B CONVERTIBLE PREFERRED STOCK


33,592

-

33,592

-









WEIGHTED AVERAGE COMMON SHARES DILUTED

7,937,979

7,014,199

7,937,979

7,043,996

Contact: Jennifer Convertibles, Inc., 516-496-1900, [email protected]

SOURCE Jennifer Convertibles, Inc.

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