Simmons Bedding Company Reports 16.9% Domestic Net Sales Decrease

Furniture World Magazine

Simmons Company, the holding company for Simmons Bedding Company, a leading manufacturer of premium-branded bedding products, released operating results for the first quarter of 2009. "The first quarter of 2009 remained a difficult retail environment for the mattress industry," said Simmons President and Chief Operating Officer Stephen G. Fendrich. "While our sales performance was in line with our expectations, it was our cost reduction efforts that highlighted our performance." "We have significantly reduced our cost structure over the past year and I am very proud of how the team at Simmons has performed in very tough circumstances," added Fendrich. "Increasing Adjusted EBITDA over what was a very good first quarter a year ago took extraordinary discipline in all areas of our business. We remain focused on providing the most relevant products for our customers and we will continue to develop new products to help make our dealers more successful. I am particularly pleased with the launch of our new BeautySleep® line as well as the relaunch of the newest Beautyrest Black® line, both of which were introduced in the first quarter." Results for the Fiscal Quarter Ended March 28, 2009 For the first quarter of 2009, net sales decreased 19.6% to $222.6 million compared to $276.9 million for the same period last year. Domestic segment net sales decreased $41.4 million, or 16.9%, to $203.6 million (includes $3.0 million of inter-segment net sales) compared to the same period of 2008. The domestic segment sales decline was primarily attributable to a decrease in conventional bedding unit volume of 18.2%, which was partially offset by an increase in conventional bedding average unit selling price ("AUSP") of 1.0%. In comparison, the International Sleep Products Association's "Barometer" of leading mattress manufacturers reported a sales dollar decline of 17.0%, attributable to decreases in conventional bedding unit volume and AUSP of 14.8% and 2.5%, respectively. Gross profit for the first quarter of 2009 was $94.9 million, or 42.6% of net sales, compared to $109.7 million, or 39.6% of net sales, for the same period of 2008. For the first quarter of 2009, Adjusted EBITDA (see the Supplemental Information to this press release) was $35.3 million, or 15.9% of net sales, compared to $33.0 million, or 11.9% of net sales for the same period of 2008. For the first quarter of 2009, Simmons had operating income of $18.8 million compared to operating income of $22.1 million for the same period last year. First quarter of 2009 operating income was negatively impacted by financial restructuring charges aggregating $7.4 million. Simmons's net loss was $3.2 million for the first quarter of 2009, compared to net income of $2.5 million for the same period in 2008. Status of Financial Restructuring On June 30, 2009, Simmons announced it had reached agreements with the majorities of both its senior bank lenders and holders of its $200.0 million 7.875% senior subordinated notes as required to amend the current forbearance agreements to extend the forbearance periods from June 30, 2009 to August 14, 2009. The extension under the senior bank lenders agreement is subject to meeting certain conditions on or before July 31, 2009. 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®, Beautyrest Black®, Beautyrest Studio(TM), ComforPedic by Simmons(TM), Natural Care®, Beautyrest Beginnings(TM), BeautySleep® and Deep Sleep®. Simmons Bedding Company operates 19 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 www.simmons.com.