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(Graphic: Business Wire)

Stocks in this article: MFRM

The following table contains a reconciliation of our net income determined in accordance with U.S. GAAP to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):

         
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 1,     October 30, November 1,     October 30
  2011     2012     2011     2012  
Net income $ 12,314 $ 12,456 $ 16,979 $ 32,277
Income tax expense 551 8,484 870 19,972
Interest income (1 ) - (4 ) (1 )
Interest expense 8,530 2,097 25,479 6,386
Depreciation and amortization 4,234 6,257 12,951 16,432
Intangible assets and other amortization   439     (215 )   1,254     972  
EBITDA   26,067     29,079     57,529     76,038  
Loss on store closings and impairment of store assets 285 196 324 267
Loss from debt extinguishment - - 1,873 -
Financial sponsor fees and expenses 102 12 294 63
Stock-based compensation 19 651 58 1,653
Secondary offering costs - 1,935 - 1,935
Vendor new store funds (a) 473 304 773 937
Acquisition related expenses (b) 70 3,025 178 10,074
Other (c)   242     (132 )   924     (896 )
Adjusted EBITDA $ 27,258   $ 35,070   $ 61,953   $ 90,071  
 
 

(a)

   

Adjustment to recognize vendor funds received upon the opening of a new store in the period opened, rather than over 36-months as presented in our financial statements, which is consistent with how management has historically reviewed its results of operations.

 

(b)

Noncash effect included in net income related to purchase accounting adjustments made to inventories resulting from acquisitions and other acquisition-related cash costs included in net income, such as direct acquisition costs and costs related to training and integration of acquired businesses.

 

(c)

Consists of various items that management excludes in reviewing the results of operations.

 

As Adjusted EPS and the other “As Adjusted” data provided in this press release are also considered non-GAAP financial measures. For more information, please refer to “Reported to Adjusted Statements of Operations Data” below.

               

MATTRESS FIRM HOLDING CORP.

Consolidated Balance Sheets

(In thousands, except share amounts)

 
January 31, October 30,
  2012     2012  

Assets

(unaudited)
Current assets:
Cash and cash equivalents $ 47,946 $ 10,855
Accounts receivable, net 18,607 28,187
Inventories 40,961 62,181
Deferred income taxes 12,574 6,357
Prepaid expenses and other current assets   12,054     15,715  
Total current assets 132,142 123,295
Property and equipment, net 95,674 133,905
Intangible assets, net 84,795 91,206
Goodwill 291,141 345,423
Debt issue costs and other, net   9,729     10,839  

Total assets

$ 613,481   $ 704,668  

Liabilities and Stockholders' Equity

Current liabilities:
Notes payable and current maturities of long-term debt $ 2,414 $ 6,953
Accounts payable 42,396 76,952
Accrued liabilities 31,780 41,447
Customer deposits   6,294     8,290  
Total current liabilities 82,884 133,642
Long-term debt, net of current maturities 225,940 225,630
Deferred income taxes 31,045 25,840
Other noncurrent liabilities   49,353     61,367  
Total liabilities   389,222     446,479  
 
Stockholders' equity:
Common stock, $0.01 par value; 120,000,000 shares authorized;
33,768,828 shares issued and outstanding at
January 31, 2012 and October 30, 2012 338 338
Additional paid-in capital 361,717 363,370
Accumulated deficit   (137,796 )   (105,519 )
Total stockholders' equity   224,259     258,189  
Total liabilities and stockholders' equity $ 613,481   $ 704,668  
 
                         

MATTRESS FIRM HOLDING CORP.

Consolidated Statements of Operations

(In thousands, except share and per share amounts)

 
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 1,     % of     October 30, % of November 1,     % of     October 30, % of
  2011   Sales 2012 Sales   2011   Sales   2012   Sales
Net sales $ 183,514 100 % $ 277,259 100 % $ 515,352 100 % $ 749,091 100 %
Cost of sales   110,106   60.0 %   167,173 60.3 %   315,333   61.2 %   454,299   60.6 %
Gross profit from retail operations 73,408 40.0 % 110,086 39.7 % 200,019 38.8 % 294,792 39.4 %
Franchise fees and royalty income   1,329   0.7 %   1,490 0.5 %   3,401   0.7 %   4,022   0.5 %
  74,737   40.7 %   111,576 40.2 %   203,420   39.5 %   298,814   39.9 %
Operating expenses:
Sales and marketing expenses 41,420 22.6 % 67,475 24.3 % 122,138 23.7 % 183,167 24.5 %
General and administrative expenses 11,638 6.3 % 20,868 7.5 % 35,761 6.9 % 56,746 7.6 %
Loss on store closings and impairment of store assets   285   0.2 %   196 0.1 %   324   0.1 %   267   0.0 %
Total operating expenses   53,343   29.1 %   88,539 31.9 %   158,223   30.7 %   240,180   32.1 %
Income from operations   21,394   11.7 %   23,037 8.3 %   45,197   8.8 %   58,634   7.8 %
Other expense (income):
Interest income (1 ) 0.0 % - 0.0 % (4 ) 0.0 % (1 ) 0.0 %
Interest expense 8,530 4.6 % 2,097 0.8 % 25,479 4.9 % 6,386 0.9 %
Loss from debt extinguishment   -   0.0 %   - 0.0 %   1,873   0.4 %   -   0.0 %
  8,529   4.6 %   2,097 0.8 %   27,348   5.3 %   6,385   0.9 %
Income before income taxes 12,865 7.0 % 20,940 7.6 % 17,849 3.5 % 52,249 7.0 %
Income tax expense   551   0.3 %   8,484 3.1 %   870   0.2 %   19,972   2.7 %
Net income $ 12,314   6.7 % $ 12,456 4.5 % $ 16,979   3.3 % $ 32,277   4.3 %
 
Basic net income per common share $ 0.55 $ 0.37 $ 0.76 $ 0.96
Diluted net income per common share $ 0.55 $ 0.37 $ 0.76 $ 0.95
 
Reconciliation of weighted-average shares outstanding:
Basic weighted average shares outstanding 22,399,952 33,768,828 22,399,952 33,768,828
Effect of dilutive securities:
Stock options - 93,907 - 113,592
Restricted shares   -     4,773   -     2,742  
Diluted weighted average shares outstanding   22,399,952     33,867,508   22,399,952     33,885,162  
 
               

MATTRESS FIRM HOLDING CORP.

Consolidated Statements of Cash Flows

(In thousands)

 
Thirty-Nine Weeks Ended
November 1,     October 30,

Cash flows from operating activities:

  2011     2012  
Net income $ 16,979 $ 32,277
Adjustments to reconcile net income to cash flows
provided by operating activities:
Depreciation and amortization 12,951 16,432
Interest expense accrued and paid-in-kind 18,872 -
Loan fee and other amortization 1,911 1,855
Loss from debt extinguishment 1,873 -
Deferred income tax expense - 8,613
Stock-based compensation 58 1,653
Loss on store closings and impairment of store assets 324 267
Effects of changes in operating assets and liabilities,
excluding business acquisitions:
Accounts receivable (3,389 ) (6,887 )
Inventories (8,136 ) (15,219 )
Prepaid expenses and other current assets 256 (647 )
Other assets (2,476 ) (904 )
Accounts payable 9,531 22,138
Accrued liabilities 4,780 1,837
Customer deposits 933 134
Other noncurrent liabilities   3,250     4,906  
Net cash provided by operating activities   57,717     66,455  

Cash flows from investing activities:

Purchases of property and equipment (22,192 ) (50,726 )
Business acquisitions, net of cash acquired   (100 )   (51,613 )
Net cash used in investing activities   (22,292 )   (102,339 )

Cash flows from financing activities:

Proceeds from issuance of debt 40,198 18,000
Principal payments of debt (51,248 ) (19,207 )
Debt issuance costs   (1,273 )   -  
Net cash used in financing activities   (12,323 )   (1,207 )
Net increase (decrease) in cash and cash equivalents 23,102 (37,091 )
Cash and cash equivalents, beginning of period   4,445     47,946  
Cash and cash equivalents, end of period $ 27,547   $ 10,855  
 

                         

MATTRESS FIRM HOLDING CORP.

Reported to Adjusted Statements of Operations Data

(In thousands, except share and per share amounts)

 
Thirteen Weeks Ended
November 1, 2011 October 30, 2012
Acquisition- Secondary
Related Offering
As Reported As Reported Costs (1) Costs (2) As Adjusted
Income from operations $ 21,394 $ 23,037 $ 3,025 $ 1,935 $ 27,997
Other expense, net   8,529   2,097   -   -   2,097
Income before income taxes 12,865 20,940 3,025 1,935 25,900
Income tax expense (3)   551   8,484   1,175   492   10,151
Net income $ 12,314 $ 12,456 $ 1,850 $ 1,443 $ 15,749
 
Basic net income per common share * $ 0.55 $ 0.37 $ 0.05 $ 0.04 $ 0.47
Diluted net income per common share * $ 0.55 $ 0.37 $ 0.05 $ 0.04 $ 0.47
 
Basic weighted average shares outstanding 22,399,952 33,768,828 33,768,828 33,768,828 33,768,828
Diluted weighted average shares outstanding 22,399,952 33,867,508 33,867,508 33,867,508 33,867,508
 
Thirty-Nine Weeks Ended
November 1, 2011   October 30, 2012
Acquisition- Secondary
Related Offering
As Reported As Reported Costs (1) Costs (2) As Adjusted
Income from operations $ 45,197 $ 58,634 $ 10,074 $ 1,935 $ 70,643
Other expense, net   27,348   6,385   -   -   6,385
Income before income taxes 17,849 52,249 10,074 1,935 64,258
Income tax expense (3)   870   19,972   3,395   492   23,859
Net income $ 16,979 $ 32,277 $ 6,679 $ 1,443 $ 40,399
 
Basic net income per common share * $ 0.76 $ 0.96 $ 0.20 $ 0.04 $ 1.20
Diluted net income per common share * $ 0.76 $ 0.95 $ 0.20 $ 0.04 $ 1.19
 
Basic weighted average shares outstanding 22,399,952 33,768,828 33,768,828 33,768,828 33,768,828
Diluted weighted average shares outstanding 22,399,952 33,885,162 33,885,162 33,885,162 33,885,162
 

_____________________________

* Due to rounding to the nearest cent per diluted share, totals may not equal the sum of the line items in the table above.

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