Sealy Announces First Quarter 2001 Financial Results

Company Reports Record Sales and Adjusted EBITDA



Apr 02, 2001, 01:00 ET from Sealy Corporation

    HIGH POINT, N.C., April 2 /PRNewswire/ -- Sealy Corporation, the world's
 largest manufacturer of bedding products, today announced record first quarter
 results, including a 3.6 percent increase in worldwide sales.
     For the quarter ended February 25, 2001, Sealy reported sales of
 $265.8 million, compared with $256.6 million for the same period a year ago.
 Adjusted earnings before interest, taxes, depreciation and amortization
 (Adjusted EBITDA) during the first quarter rose 3.7 percent to $36.3 million,
 compared with $35.0 million a year earlier.
     "The overall economic slowdown impacted our first quarter results," said
 Ron Jones, chairman and chief executive officer of Sealy Corporation.  "We
 were very pleased that, in spite of the difficult economic situation, Sealy
 was able to achieve increases in both sales and adjusted EBITDA.  This is
 strong evidence of the stability of the industry and the strength of our
 brands and retail customers."
     The company reported that its gross profit margin for the quarter improved
 to 45.0% from 44.9% last year.  In addition, an Adjusted EBITDA margin rate of
 13.6% was achieved in both years.
     During the first quarter, Sealy recorded non-recurring charges of
 $1.2 million for severance costs related to the closing of its plant in
 Memphis and a management reorganization.  The plant in Memphis is one of
 21 such plants in the United States.  Jones noted that the company will
 continue to have adequate capacity with its remaining plants and should
 improve service to new and existing customers previously served from the
 Memphis plant.
     "We continue to believe that sales growth will be slower during the first
 half of this year compared to last year.  The second half of the year should
 reflect the impact of previously announced growth initiatives and hopefully an
 improving economy," Jones said.
     Sealy Corporation is the largest manufacturer of bedding in the world.
 Through its subsidiaries, Sealy has manufacturing operations in the United
 States, Canada, Puerto Rico, Argentina, Brazil and Mexico, and has licensees
 and distributors serving markets around the globe.  The Company recently
 signed an agreement to acquire Sapsa Bedding S.A., which has manufacturing
 facilities in France and Italy.  The Company produces and sells a complete
 line of mattresses and foundations, including those marketed under such
 leading brand names as Sealy(R), Sealy Posturepedic(R), Stearns & Foster(R),
 and Bassett(R).
 
     Note:  This news release contains forward-looking statements within the
 meaning of the safe harbor provisions of the Securities Litigation Reform Act
 of 1995.  Statements regarding Sealy's ability post double-digit growth in
 2001, as well as similar comments, are forward-looking in nature.  While Sealy
 believes its plans are based on reasonable assumptions as of the current date,
 it can give no assurances that such expectations can be attained.  Factors
 that could cause actual results to differ materially from Sealy's expectations
 include: general business and economic conditions, competitive factors, raw
 materials purchasing, and fluctuations in demand.  Please refer to the
 Company's Securities and Exchange Commission filings for further information.
 
     SEALY CORPORATION
     Selected Consolidated Unaudited Financial Data
     (Dollars in thousands)
 
 
     Statement of Income
 
                                   For the Quarter Ended  For the Quarter Ended
                                       February 25, 2001      February 27, 2000
 
     Dollars in thousands
     Net Sales                                  $265,838              $256,639
     Cost and expenses:
       Cost of goods sold                        146,232               141,427
       Selling, general and administrative        87,664                84,669
       Restructuring charge                        1,183                    --
       Amortization of intangibles                 3,426                 3,162
     Income from operations                      $27,333               $27,381
 
     Interest expense, net                        16,992                17,234
     Other (income) expenses                       1,283                  (144)
     Income before taxes and cumulative effect
       of change in accounting principle          $9,058               $10,291
 
     Income tax expense                            4,275                 4,734
     Income before cumulative effect of change in
       accounting principle                       $4,783                $5,557
 
     Cumulative effect of change in accounting
       principle, net of tax                         152                    --
 
     Net Income                                   $4,935                $5,557
 
     Balance Sheet:
 
                                          As of February 25, As of November 26,
                                                       2001               2000
 
     Current assets:
       Cash and cash equivalents                    $15,777           $ 18,114
       Accounts receivable, net                     168,860            145,489
       Inventories                                   56,175             51,872
       Prepaid expenses and deferred income taxes    28,552             24,351
     Total current assets                           269,364            239,826
 
     Property, plant & equipment, net               155,596            157,083
     Intangibles, net                               372,167            375,238
     Other Assets                                    60,281             57,868
 
 
     Total Assets                                  $857,408           $830,015
 
     Current liabilities:
       Current portion-Long-term obligations         37,069             34,373
       Accounts payable                              58,774             57,687
       Other current liabilities                     96,286            115,961
     Total current liabilities                     $192,129           $208,021
 
     Long-term obligations                          692,933            651,810
 
     Other non-current liabilities                   60,038             63,474
 
     Stockholders' deficit                          (87,692)           (93,290)
 
     Total Liabilities and Shareholders' Deficit   $857,408           $830,015
 
 
     Cash Flow Statement:
 
                                  For the Quarter Ended  For the Quarter Ended
                                      February 25, 2001      February 27, 2000
 
     Net cash provided by operating
       activities                             $ (29,276)               $ 8,966
 
     Cash flows from investing activities:
       Purchase of property, plant and equipment,
        net                                      (2,457)                (3,836)
 
     Net cash used in investing activities       (2,457)                (3,836)
 
     Cash flows from financing activities:
       Purchase of treasury stock               (11,416)                    --
       Proceeds from long-term obligations, net  39,570                  4,754
       Equity contributions                       1,242                     --
 
       Net cash provided by financing activities 29,396                  4,754
 
     Change in cash and cash equivalents         (2,337)                 9,884
 
     Cash and cash equivalents:
       Beginning of period                       18,114                 10,845
 
     End of period                             $ 15,777                $20,729
 
 
                                  For the Quarter Ended  For the Quarter Ended
     Adjusted EBITDA:                February 25, 2001       February 27, 2000
 
     Income before cumulative effect of
       change in accounting principle           $4,783                  $5,557
     Interest                                   16,992                  17,234
     Depreciation                                3,952                   3,627
     Amortization                                3,426                   3,162
     Income taxes                                4,275                   4,734
 
     EBITDA                                    $33,428                 $34,314
 
     Adjustments:
     Non-cash compensation                         500                     990
     Severance costs                             1,183                      --
     Other relief items - including primarily
      equity in the earnings (losses) of equity
       investees, minority interest, foreign
        currency losses, etc.                    1,169                    (307)
 
     Adjusted EBITDA                           $36,280                 $34,997
 
 

SOURCE Sealy Corporation
    HIGH POINT, N.C., April 2 /PRNewswire/ -- Sealy Corporation, the world's
 largest manufacturer of bedding products, today announced record first quarter
 results, including a 3.6 percent increase in worldwide sales.
     For the quarter ended February 25, 2001, Sealy reported sales of
 $265.8 million, compared with $256.6 million for the same period a year ago.
 Adjusted earnings before interest, taxes, depreciation and amortization
 (Adjusted EBITDA) during the first quarter rose 3.7 percent to $36.3 million,
 compared with $35.0 million a year earlier.
     "The overall economic slowdown impacted our first quarter results," said
 Ron Jones, chairman and chief executive officer of Sealy Corporation.  "We
 were very pleased that, in spite of the difficult economic situation, Sealy
 was able to achieve increases in both sales and adjusted EBITDA.  This is
 strong evidence of the stability of the industry and the strength of our
 brands and retail customers."
     The company reported that its gross profit margin for the quarter improved
 to 45.0% from 44.9% last year.  In addition, an Adjusted EBITDA margin rate of
 13.6% was achieved in both years.
     During the first quarter, Sealy recorded non-recurring charges of
 $1.2 million for severance costs related to the closing of its plant in
 Memphis and a management reorganization.  The plant in Memphis is one of
 21 such plants in the United States.  Jones noted that the company will
 continue to have adequate capacity with its remaining plants and should
 improve service to new and existing customers previously served from the
 Memphis plant.
     "We continue to believe that sales growth will be slower during the first
 half of this year compared to last year.  The second half of the year should
 reflect the impact of previously announced growth initiatives and hopefully an
 improving economy," Jones said.
     Sealy Corporation is the largest manufacturer of bedding in the world.
 Through its subsidiaries, Sealy has manufacturing operations in the United
 States, Canada, Puerto Rico, Argentina, Brazil and Mexico, and has licensees
 and distributors serving markets around the globe.  The Company recently
 signed an agreement to acquire Sapsa Bedding S.A., which has manufacturing
 facilities in France and Italy.  The Company produces and sells a complete
 line of mattresses and foundations, including those marketed under such
 leading brand names as Sealy(R), Sealy Posturepedic(R), Stearns & Foster(R),
 and Bassett(R).
 
     Note:  This news release contains forward-looking statements within the
 meaning of the safe harbor provisions of the Securities Litigation Reform Act
 of 1995.  Statements regarding Sealy's ability post double-digit growth in
 2001, as well as similar comments, are forward-looking in nature.  While Sealy
 believes its plans are based on reasonable assumptions as of the current date,
 it can give no assurances that such expectations can be attained.  Factors
 that could cause actual results to differ materially from Sealy's expectations
 include: general business and economic conditions, competitive factors, raw
 materials purchasing, and fluctuations in demand.  Please refer to the
 Company's Securities and Exchange Commission filings for further information.
 
     SEALY CORPORATION
     Selected Consolidated Unaudited Financial Data
     (Dollars in thousands)
 
 
     Statement of Income
 
                                   For the Quarter Ended  For the Quarter Ended
                                       February 25, 2001      February 27, 2000
 
     Dollars in thousands
     Net Sales                                  $265,838              $256,639
     Cost and expenses:
       Cost of goods sold                        146,232               141,427
       Selling, general and administrative        87,664                84,669
       Restructuring charge                        1,183                    --
       Amortization of intangibles                 3,426                 3,162
     Income from operations                      $27,333               $27,381
 
     Interest expense, net                        16,992                17,234
     Other (income) expenses                       1,283                  (144)
     Income before taxes and cumulative effect
       of change in accounting principle          $9,058               $10,291
 
     Income tax expense                            4,275                 4,734
     Income before cumulative effect of change in
       accounting principle                       $4,783                $5,557
 
     Cumulative effect of change in accounting
       principle, net of tax                         152                    --
 
     Net Income                                   $4,935                $5,557
 
     Balance Sheet:
 
                                          As of February 25, As of November 26,
                                                       2001               2000
 
     Current assets:
       Cash and cash equivalents                    $15,777           $ 18,114
       Accounts receivable, net                     168,860            145,489
       Inventories                                   56,175             51,872
       Prepaid expenses and deferred income taxes    28,552             24,351
     Total current assets                           269,364            239,826
 
     Property, plant & equipment, net               155,596            157,083
     Intangibles, net                               372,167            375,238
     Other Assets                                    60,281             57,868
 
 
     Total Assets                                  $857,408           $830,015
 
     Current liabilities:
       Current portion-Long-term obligations         37,069             34,373
       Accounts payable                              58,774             57,687
       Other current liabilities                     96,286            115,961
     Total current liabilities                     $192,129           $208,021
 
     Long-term obligations                          692,933            651,810
 
     Other non-current liabilities                   60,038             63,474
 
     Stockholders' deficit                          (87,692)           (93,290)
 
     Total Liabilities and Shareholders' Deficit   $857,408           $830,015
 
 
     Cash Flow Statement:
 
                                  For the Quarter Ended  For the Quarter Ended
                                      February 25, 2001      February 27, 2000
 
     Net cash provided by operating
       activities                             $ (29,276)               $ 8,966
 
     Cash flows from investing activities:
       Purchase of property, plant and equipment,
        net                                      (2,457)                (3,836)
 
     Net cash used in investing activities       (2,457)                (3,836)
 
     Cash flows from financing activities:
       Purchase of treasury stock               (11,416)                    --
       Proceeds from long-term obligations, net  39,570                  4,754
       Equity contributions                       1,242                     --
 
       Net cash provided by financing activities 29,396                  4,754
 
     Change in cash and cash equivalents         (2,337)                 9,884
 
     Cash and cash equivalents:
       Beginning of period                       18,114                 10,845
 
     End of period                             $ 15,777                $20,729
 
 
                                  For the Quarter Ended  For the Quarter Ended
     Adjusted EBITDA:                February 25, 2001       February 27, 2000
 
     Income before cumulative effect of
       change in accounting principle           $4,783                  $5,557
     Interest                                   16,992                  17,234
     Depreciation                                3,952                   3,627
     Amortization                                3,426                   3,162
     Income taxes                                4,275                   4,734
 
     EBITDA                                    $33,428                 $34,314
 
     Adjustments:
     Non-cash compensation                         500                     990
     Severance costs                             1,183                      --
     Other relief items - including primarily
      equity in the earnings (losses) of equity
       investees, minority interest, foreign
        currency losses, etc.                    1,169                    (307)
 
     Adjusted EBITDA                           $36,280                 $34,997
 
 SOURCE  Sealy Corporation