* Reports Fourth Consecutive Profitable Quarter
WOODBURY, N.Y., April 10 /PRNewswire-FirstCall/ -- Jennifer Convertibles, Inc. (AMEX:JEN) announced today its unaudited financial results for the second fiscal quarter ended February 25, 2006.
For the second quarter, revenue from continuing operations increased by 31.7% to $33.0 million from the $25.0 million reported for the same period last year. For the six-month period, revenue from continuing operations increased 24.1% to $68.8 million from the $55.4 reported in the same period last year.
For the second quarter, the Company generated net income of $554,000 or $0.08 and $0.07 per basic and diluted share, respectively, compared to a net loss of $5,363,000 or ($0.93) per basic and diluted share for the same period last year. For the six-month period, the net income was $1,401,000 or $0.19 and $0.18 per basic and diluted share, respectively, compared to a net loss of $7,828,000 or ($1.36) per basic and diluted share for the same period last year.
Operating margins from continuing operations increased during the current three and six month periods to 29.2% and 30.8%, respectively, compared to operating margins from continuing operations of 23.2% and 26.1%, respectively, during the three and six month periods last year.
For the second quarter, selling, general, and administrative expenses from continuing operations decreased to 27.0% as a percentage of revenue from continuing operations compared to 34.4% for the same period last year. For the six-month period, selling, general and administrative expenses from continuing operations decreased to 28.5% compared to 34.4% for the same period last year.
During the second quarter, we closed a store in Indianapolis, Indiana. The operating results of this closed store are recorded in discontinued operations. During fiscal 2005, the Company closed 20 stores, of which the operating results of 18 were reported as discontinued operations. Loss from discontinued operations amounted to ($32,000) and ($418,000) in the second quarter of 2006 and 2005, respectively. For the six month periods for fiscal 2006 and 2005, income (loss) from discontinued operations amounted to and $115,000 and ($818,000), respectively.
During the quarter, the Company did not open any stores and closed one store as described above.
On April 7, 2006 the Credit Agreement entered into on July 11, 2005 with Caye Home Furnishings, LLC and its affiliates was amended to increase the line from $10 million to $11.5 million under the same terms and conditions.
Commenting on the results Harley J. Greenfield, Chief Executive Officer of Jennifer said, "We are extremely pleased with the results achieved during our second fiscal quarter, traditionally our weakest quarter of the year. This quarter marks our fourth consecutive profitable quarter and the first time since 2001 that we have been profitable in the second fiscal quarter." Mr. Greenfield added, "We are continuing to see strong demand for our product offering, and expect to continue to report increased sales and operating margins. It is gratifying to see the results of our efforts generating such profitable results and the willingness of our major supplier to increase our line to accommodate this increased growth." Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 176 Jennifer Convertibles(R) stores and 16 Jennifer Leather stores. As of February 25, 2006, the Company owned 168 stores and licensed 24 (including 23 owned and operating stores by a private company on a royalty free basis.) 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)
02/25/06 08/27/05 CASH AND CASH EQUIVALENTS $10,432 $ 7,177
RESTRICTED CASH 864 111
ACCOUNTS RECEIVABLE 463 1,089
MERCHANDISE INVENTORIES, Net 14,397 13,366
DUE FROM AFFILIATED COMPANY, Net 4,312 4,890
PREPAID EXPENSES AND OTHER CURRENT ASSETS 1,444 1,072
31,912 27,705 FIXTURES, EQUIPMENT & LEASEHOLD
IMPROVEMENTS, Net 2,503 2,259
ANNUITY CONTRACT 1,027 1,013
GOODWILL, Net 1,650 1,650
OTHER ASSETS 647 588 $37,739 $33,215 ACCOUNTS PAYABLE $17,150 $18,612
CUSTOMER DEPOSITS 11,111 7,840
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 4655 3,559
DUE TO AFFILIATED COMPANY 550 450
DEFERRED RENT AND ALLOWANCES - Current Portion 544 551
TOTAL CURRENT LIABILITIES 34,010 31,012 DEFERRED RENT AND ALLOWANCES - Net of
Current Portion 2,990 3,051 STOCKHOLDERS' EQUITY (CAPITAL DEFICIT) 739 (848) $37,739 $33,215 JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED
02/25/06 02/26/05 02/25/06 02/26/05
REVENUE:
NET SALES $ 30,805 $ 23,464 $ 64,156 $ 51,891
REVENUE FROM SERVICE CONTRACTS 2,205 1,598 4,645 3,543
33,010 25,062 68,801 55,434 COST OF SALES AND OTHER CHARGES 23,361 19,251 47,582 40,943 SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 8,897 8,625 19,603 19,068 IMPAIRMENT OF GOODWILL -- 146 -- 146 DEPRECIATION AND AMORTIZATION 197 228 394 498
32,455 28,250 67,579 60,655 INCOME (LOSS) FROM OPERATIONS 555 (3,188) 1,222 (5,221) INTEREST INCOME 77 27 155 50 INTEREST EXPENSE -- 1 -- 1 INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 632 (3,162) 1,377 (5,172) INCOME TAXES 46 1,783 91 1,838 INCOME (LOSS) FROM CONTINUING
OPERATIONS 586 (4,945) 1,286 (7,010) INCOME (LOSS) FROM OPERATIONS OF
DISCONTINUED OPERATIONS (including
income (loss) on store closings of
$(32) and $(197) for the thirteen
weeks and $182 and $(331) for the
twenty-six weeks ended in 2006
and 2005 respectively) (32) (418) 115 (818) NET INCOME (LOSS) $ 554 $ (5,363) $ 1,401 $ (7,828) BASIC INCOME (LOSS) PER COMMON SHARE: INCOME (LOSS) FROM CONTINUING
OPERATIONS $ 0.08 $ (0.86) $ 0.17 $ (1.22)
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS -- (0.07) 0.02 (0.14)
NET INCOME (LOSS) PER COMMON
SHARE $ 0.08 $ (0.93) $ 0.19 $ (1.36) DILUTED INCOME (LOSS) PER COMMON
SHARE: INCOME (LOSS) FROM CONTINUING
OPERATIONS $ 0.07 $ (0.86) $ 0.16 $ (1.22)
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS -- (0.07) 0.02 (0.14)
NET INCOME (LOSS) PER COMMON
SHARE $ 0.07 $ (0.93) $ 0.18 $ (1.36) WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 5,829,714 5,775,947 5,811,285 5,760,351 COMMON SHARES ISSUABLE ON
CONVERSION OF SERIES A
PARTICIPATING PREFERRED STOCK 1,424,500 -- 1,424,500 -- TOTAL WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING BASIC 7,254,214 5,775,947 7,235,785 5,760,351 EFFECT OF POTENTIAL COMMON
SHARE ISSUANCE:
STOCK OPTIONS 921,973 -- 451,007 --
WARRANTS 276,719 -- 256,198 --
SERIES B CONVERTIBLE PREFERRED
STOCK 62,216 -- 56,882 -- WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING DILUTED 8,515,122 5,775,947 7,999,872 5,760,351
DATASOURCE: Jennifer Convertibles, Inc.
CONTACT: Donald Radcliffe of Radcliffe & Associates, Inc., +1-212-605-0201
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