Simmons Reports Third Quarter Net Sales Increase of 20.1%

Furniture World News

Simmons Company, a leading manufacturer of premium-branded bedding products, released operating results for the quarter and nine months ended September 29, 2007. Results for the Quarter Ended September 29, 2007 For the third quarter of 2007, net sales increased 20.1% to $312.0 million compared to $259.8 million for the same period last year. Domestic segment net sales increased $31.4 million, or 12.7%, to $279.7 million compared to the same period of 2006. The domestic segment sales growth was primarily attributable to a 13.5% increase in conventional bedding units sold. Gross profit for the third quarter of 2007 was $125.3 million, or 40.2% of net sales, compared to $117.2 million, or 45.1% of net sales, for the same period of 2006. For the third quarter of 2007, operating income was $38.8 million, or 12.4% of net sales, compared to $33.9 million, or 13.1% of net sales, for the same period last year exclusive of the $43.8 million gain on the sale of Sleep Country USA ("SCUSA") in August 2006. Net income was $12.3 million for the third quarter of 2007 compared to $10.4 million for the same period in 2006, exclusive of the gain on the sale of SCUSA net of related taxes (see the Supplemental Information to this press release). For the third quarter of 2007, Adjusted EBITDA (see the Supplemental Information to this press release) was $51.8 million, or 16.6% of net sales, compared to $43.5 million, or 16.7% of net sales, in the third quarter of 2006. Results for the Nine Months Ended September 29, 2007 For the first nine months of 2007, net sales rose 16.3% to $857.3 million compared to $736.8 million for the same period last year. Domestic segment net sales increased $75.3 million, or 10.9%, to $763.2 million for the first nine months of 2007 compared to the same period of the prior year. Domestic segment sales growth for the first nine months of 2007 was primarily attributable to an 11.9% increase in conventional bedding units sold. Gross profit for the first nine months of 2007 was $339.6 million, or 39.6% of net sales, compared to $325.8 million, or 44.2% of net sales, for the same period of 2006. For the first nine months of 2007, operating income was $84.6 million, or 9.9% of net sales, compared to $91.4 million, or 12.4% of net sales, for the same period last year exclusive of the gain on the sale of SCUSA. Net income was $17.7 million for the first nine months of 2007 compared to $18.9 million for the same period of the prior year, exclusive of the gain on the sale of SCUSA net of related taxes. For the first nine months of 2007, Adjusted EBITDA was $121.1 million, or 14.1% of net sales, compared to $119.7 million, or 16.2% of net sales, during the same period last year. Simmons' Chairman and Chief Executive Officer Charlie Eitel said, "The strong sales momentum we have experienced over the last six quarters continued into the third quarter of 2007, with the third quarter being the seventh successive quarter our sales growth in the U.S. exceeded that reported by ISPA for the industry. In the third quarter and first nine months of this year, our business operated at record sales levels despite a very competitive sales environment." He added, "Our year-to-date sales growth of 16.3% has been driven principally by effective marketing and our decision to be competitive at a broad range of retail price points. Our marketing and sales efforts have resulted in strong demand for our U.S. products and we believe a sizable gain in market share this year. Our top line growth of 20.1% was driven by the Beautyrest® 2007 product line, which was launched earlier this year and has proven to be our most successful Beautyrest product line in our history. Our top line performance helped offset gross margin pressures. Our net sales and Adjusted EBITDA in the third quarter were quarterly records for Simmons." Mr. Eitel continued, "In the third quarter we made further progress in the integration of our recent Simmons Canada and ComforPedic acquisitions. In Canada, we have been able to significantly expand our Adjusted EBITDA margins through a change in product mix and achievement of cost synergies. We also began manufacturing our new ComforPedic by Simmons(TM) product in several of our U.S. facilities and started the roll out of this new product line to several new major accounts during this last quarter. We expect that these two acquisitions will be very beneficial to Simmons." The Company will webcast its third quarter and first nine months 2007 financial results via a conference call on Wednesday, November 14, 2007, beginning at 10:30 a.m. Eastern Time. The webcast will be available at the Company's website www.simmons.com and will also be available for replay through November 28, 2007. About Simmons 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 under brands including Beautyrest®, Beautyrest Black (TM), Natural Care(TM), ComforPedic by Simmons(TM), BackCare®, Beautyrest Beginnings(TM), and Deep Sleep®. 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, casinos 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.