- Revenue from continuing operations decreased 21.9% for quarter,
20.2% year-to-date - Comparable store sales decreased by 26.5% for
quarter, 23.9% year-to-date - Loss from continuing operations
$1,514,000 versus $620,000 for quarter, $5,503,000 versus
$2,217,000 year to date - Basic and Diluted EPS ($0.22) versus
($0.10) for quarter, ($0.81) versus ($0.35) year to date - Release
of Security Interest and Termination of Obligations Under Credit
Facility - Engages TM Capital Corp WOODBURY, N.Y., July 14
/PRNewswire-FirstCall/ -- Jennifer Convertibles, Inc. (AMEX:JEN)
announced today its unaudited financial results for the third
fiscal quarter ended May 30, 2009. For the third quarter, revenue
from continuing operations decreased by 21.9% to $22.1 million from
the $28.3 million reported for the same period last year. For the
nine-month period, revenue from continuing operations decreased
20.2% to $71.4 million from the $89.5 reported in the same period
last year. For the third quarter, the net loss was $1,532,000 or
($0.22) per basic and diluted share, compared to net loss of
$711,000 or ($0.10) per basic and diluted share, for the same
period last year. For the nine-month period, the net loss was
$5,745,000 or ($0.81) per basic and diluted share, compared to net
loss of $2,462,000 or ($0.35) per basic and diluted share, for the
same period last year. Operating margins from continuing operations
decreased during the current three-month period to 28.4% compared
to 28.8% the same period last year. For the current nine-month
period operating margins from continuing operations decreased to
28.5% compared to 28.8% for the nine-month period last year. For
the third quarter, selling, general, and administrative expenses
from continuing operations increased to 34.2% as a percentage of
revenue from continuing operations compared to 30.4% for the same
period last year. For the nine-month period, selling, general and
administrative expenses from continuing operations increased to
35.0% compared to 31.0% for the same period last year. During the
third quarter, the Company closed one store in Illinois, one store
in Arizona and one store in New York compared to three stores in
Ohio and one store in New York the same period last year. The
operating results of the closed store in Illinois and New York were
recorded in continuing operations based on management's judgment
that there will be significant continuing sales to customers of the
closed stores from other stores in the respective areas. The
operating results of the closed store in Arizona were reported as
discontinued operations. Loss from discontinued operations was
$18,000 and $91,000 in the third quarter of fiscal 2009 and 2008,
respectively. For the nine-month periods for fiscal 2009 and 2008,
loss from discontinued operations amounted to $242,000 and
$245,000, respectively. Commenting on the results of the third
fiscal quarter, Harley J Greenfield, Chief Executive Officer of
Jennifer said, "While our results for the quarter continue to be
disappointing, we began to see some impact of the cost reductions
we have made. Compared to the second fiscal quarter, we reduced our
loss by approximately $800,000, despite recording about $700,000
less in revenue. Selling, general, and administrative expenses were
reduced by approximately $600,000 from the previous quarter and our
EPS loss was reduced from ($0.33) per share to ($0.22)." Mr.
Greenfield added, "We are still very optimistic about the future.
When either the economy begins to strengthen or our new marketing
initiatives take hold, we have positioned ourselves to quickly
resume sales momentum with a highly efficient infrastructure and a
very competitive product mix. Our Ashley division continues to
grow, producing about 15% of revenues and increased profitability
from the second fiscal quarter." On July 10, 2009, the Company
entered into a letter agreement with Caye, the major supplier for
the Company, pursuant to which it agreed to pay down its debt to
Caye by approximately $400,000 in exchange for Caye releasing their
security interest in all of the Company's assets and terminating
all obligations under the Credit Facility. In connection with the
release, the $1,000,000 that was required to be maintained by the
Company in a restricted deposit account is unrestricted and
available for operating purposes. In exchange for this release,
Caye has provided the Company with $500,000 of trade credit.
Neither Caye nor the Company will incur any termination costs or
penalties as a result of the termination of the Credit Facility.
During January 2009, the Company began a transition from Caye to
the Chinese supplier which currently manufactures approximately 95%
of the merchandise ordered through Caye. On April 13, 2009, the
terms of this agreement were restated to provide, effective August
1, 2009, vendor terms of 150 days without interest for up to a
balance of $10,000,000 in purchases though September 2010. There is
no security interest connected with this extension of credit and
certain terms will be reviewed October 31, 2009. Commenting on the
changes to the Credit Facility, Mr. Greenfield said, "We are
extremely pleased with the terms of this new credit facility. We
have been able to release $1,000,000 that had been restricted which
now can be used for general corporate purposes, extend the terms
for payments, and reduce potential interest expense, all without
encumbering our assets. This should provide additional liquidity
during this difficult economic period." We have retained the
investment banking firm of TM Capital Corp. to assist us in the
evaluation of our strategic alternatives. TM Capital Corp. is an
independent investment banking firm based in New York, Boston and
Atlanta, which has completed over 200 mergers, acquisitions and
financings with a combined value in excess of $11 billion for its
global roster of clients. Jennifer Convertibles is the owner and
licensor of the largest group of sofabed specialty retail stores in
the United States, with 149 Jennifer Convertibles stores and is the
largest specialty retailer of leather furniture with 14 Jennifer
Leather stores. As of July 14, 2009, the Company owned 142 stores
and licensed 21 stores (including 19 owned and operated by a
related company on a royalty free basis) and operates two 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
the Company's 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 the Company's judgment as of the date of the release. The
Company disclaims, however, any interest or obligations to update
these forward-looking statements. JENNIFER CONVERTIBLES, INC. &
SUBSIDIARIES SUMMARY CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
05/30/09 (Unaudited) 08/30/08 ----------- -------- CASH AND CASH
EQUIVALENTS $6,018 $9,057 RESTRICTED CASH 1,099 1,116 ACCOUNTS
RECEIVABLE 1,365 779 MERCHANDISE INVENTORIES, Net 8,645 10,646 DUE
FROM RELATED COMPANY 3,694 4,063 PREPAID EXPENSES AND OTHER CURRENT
ASSETS 1,524 1,508 ----- ----- 22,345 27,169 MARKETABLE AUCTION
RATE SECURITIES - 1,400 FIXTURES, EQUIPMENT & LEASEHOLD
IMPROVEMENTS, Net 2,535 3,202 GOODWILL 1,650 1,650 OTHER ASSETS 671
691 --- --- $27,201 $34,112 ======= ======= ACCOUNTS PAYABLE
$12,496 $12,932 CUSTOMER DEPOSITS 6,519 6,493 ACCRUED EXPENSES AND
OTHER CURRENT LIABILITIES 3,786 3,892 DUE TO RELATED COMPANY 350
400 DEFERRED RENT AND ALLOWANCES - Current Portion 562 634 --- ---
TOTAL CURRENT LIABILITIES 23,713 24,351 DEFERRED RENT AND
ALLOWANCES - Net of Current Portion 2,393 2,905 OBLIGATIONS UNDER
CAPITAL LEASES - Net of Current Portion 107 139 --- --- TOTAL
LIABILITIES 26,213 27,395 ------ ------ STOCKHOLDERS' EQUITY 988
6,717 --- ----- $27,201 $34,112 ======= ======= JENNIFER
CONVERTIBLES, INC. & SUBSIDIARIES SUMMARY CONSOLIDATED
STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED 05/30/09 05/24/08
05/30/09 05/24/08 -------- -------- -------- -------- REVENUE: NET
SALES $20,765 $26,586 $67,275 $84,168 REVENUE FROM SERVICE
CONTRACTS 1,328 1,664 4,084 5,293 ----- ----- ----- ----- 22,093
28,250 71,359 89,461 ------ ------ ------ ------ COST OF SALES AND
OTHER CHARGES 15,808 20,128 50,992 63,663 SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 7,557 8,591 24,994 27,691 DEPRECIATION AND
AMORTIZATION 239 248 936 758 --- --- --- --- 23,604 28,967 76,922
92,112 ------ ------ ------ ------ LOSS FROM OPERATIONS (1,511)
(717) (5,563) (2,651) INTEREST INCOME 6 102 80 451 INTEREST EXPENSE
(4) (5) (14) (11) --- --- --- --- LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (1,509) (620) (5,497) (2,211) INCOME TAXES 5 -
6 6 --- --- --- --- LOSS FROM CONTINUING OPERATIONS (1,514) (620)
(5,503) (2,217) LOSS FROM OPERATIONS OF DISCONTINUED OPERATIONS
(including loss on store closings of $3 and $19 for the thirteen
week and $116 and $89 for the for the thirty-nine week periods
ended in fiscal 2009 and 2008, respectively) (18) (91) (242) (245)
--- --- ---- ---- NET LOSS $(1,532) $(711) $(5,745) $(2,462)
======= ===== ======= ======= BASIC AND DILUTED LOSS PER COMMON
SHARE: LOSS FROM CONTINUING OPERATIONS $(0.22) $(0.09) $(0.78)
$(0.32) LOSS FROM DISCONTINUED OPERATIONS - (0.01) (0.03) (0.03)
----- ----- ----- ----- NET LOSS PER COMMON SHARE $(0.22) $(0.10)
$(0.81) $(0.35) ====== ====== ====== ====== BASIC AND DILUTED
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,073,466 7,073,466
7,073,466 7,073,466 ========= ========= ========= =========
DATASOURCE: Jennifer Convertibles, Inc. CONTACT: Donald Radcliffe,
Radcliffe & Associates, +1-212-605-0201, for Jennifer
Convertibles, Inc.
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