Simmons charges lead to $492.2 million annual loss
Sales decline 8.7% in 2008 to $1.03 billion
David Perry -- Furniture Today, June 11, 2009
ATLANTA — Bedding major Simmons, in the midst of a financial restructuring expected to result in the sale of the company, reported a net loss of $492.2 million for 2008 as net sales fell 8.7% from the previous year to $1.03 billion.The loss included $547.6 million in non-cash goodwill and trademark impairment charges. In 2007, the company had reported net income of $23.9 million.
In the fourth quarter, the net loss was $487.4 million, including the impairment charges, compared with net income of $6.2 million in the year-earlier quarter.
For the year, Simmons reported an operating loss of $503.7 million. In addition to the impairment charges, the results included operational and financial restructuring costs totaling $21.3 million.
Simmons also said that given its defaults on its debt covenants and other factors, its independent accounting firm has expressed "substantial doubt about Simmons' ability to continue as a going concern."
But the company said it continues to operate normally and without interruption, and had cash on hand of $57.3 million as of May 30.
"As we make progress in our restructuring, Simmons continues to perform with innovations in all aspects of our business and an offering of a full complement of industry-leading bedding products to our customers," said Simmons President Steve Fendrich.
The company said that domestic net sales in 2008 fell 9.4% from a year earlier, to $908.2 million. In conventional bedding domestic sales, unit volume declined 14.1% but the drop was partially offset by an increase in average unit selling price of 5.6%.
Gross profit for 2008 was $379.9 million or 36.9% of net sales, compared with $450.6 million or 40% of net sales in 2007.
Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was $115.7 million or 11.3% of net sales, compared with $157 million or 13.9% of net sales in 2007.
For the fourth quarter, net sales decreased 23.8% to $205.5 million. Domestic net segment sales were down 22.3% to $185.9 million as conventional bedding unit volume declined 22.5%, partially offset by an increase in average unit selling price of 0.3%.
"The economic environment in which we operated in 2008 was a very difficult one, particularly in the fourth quarter, and was highlighted by a significant decline in consumer spending and large increases in raw material costs," said Fendrich.
"Despite this operating environment we believe our products continued to gain market share as evidenced by the fourth quarter being the 12th consecutive quarter that our year-over-year sales performance was better than that reported by the International Sleep Products Assn. leading manufacturer reporting sample," he said.
Simmons had not previously reported its third- or fourth-quarter results for last year.
The company said it plans to report its first-quarter 2009 results by the end of June.
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Seriously - there is no mention that as recently as lest year they borrowed more money to pay another of their famous "special dividends" - who is the sucker?
Chas I-Tell - 2009-13-6 00:19:46 EDT -
This company has cut sales staff repeatedly.
(think Circuit City)
They have cut experienced manufacturing and production people. (think GM and Chrysler)
They have raised prices frequently. (think
and they have treated many former employees very poorly going so far as to do a downsizing just days before Christmas and then telling those that were being forced out that the ONLY way they could get a severance package was to sign a no-compete agreement as they were being fired!
Better hope for Obama to come in and run the company!
Bob - 2009-12-6 10:32:10 EDT -
If you saw how the factorys were run,you would understand why they lost so much money.You are right anymore progress and they will be like GM.
Dan Floris - 2009-11-6 21:29:11 EDT -
Anymore "progress" and they will end up like GM.
Benny Salami - 2009-11-6 19:33:14 EDT -
Simmons' concept of innovation is to continue to make the SUV of mattresses with technology it developed in 1900. This company has been coasting on its name since Grant Simmons destroyed it. One more shell game giant of our industry. No matter how you cut it with bedding, the ultimate consumer is still confronted with a sea of white rectangles and an overload of construction information which he/she has no real way of judging. There has been no consequential innovation for decades unless you consider memory foam honest innovation. There is just a continual flow of marketing hype that does not address the consumer's need to make a studied decision on their purchase. Ironically bedding isn't even _exy.
Robert Mark - 2009-11-6 13:07:54 EDT
Simmons loses $492.2M
06/15/2009Fendrich ignores Simmons’ struggles
06/19/2009Fendrich ignores Simmonsâ struggles
10/07/2009Fendrich ignores Simmonsâ struggles
06/18/2009
