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<PAGE> 1
EXHIBIT 99
Simmons Company and Subsidiaries
Reconciliation of Operating Income to Adjusted EBITDA
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 2000 September 25, 1999
(14 weeks) (13 weeks)
---------- ----------
<S> <C> <C>
Operating income $16,015 $14,883
Add: Depreciation and amortization 4,832 4,661
ESOP expense 1,675 1,792
------ ------
EBITDA (a) 22,522 21,336
Add: Charges related to change in retail investment
strategy 3,113 -
Increase in bad debt reserve related to
Heilig-Meyers bankruptcy filing 1,820 -
Cash operating loss related to Gallery Corp. 401 -
------ ------
Adjusted EBITDA $27,856 $21,336
====== ======
</TABLE>
<TABLE>
<CAPTION>
September 30, 2000 September 25, 1999
(40 weeks) (39 weeks)
---------- ----------
<S> <C> <C>
Operating income $18,047 $22,582
Add: Depreciation and amortization 14,309 13,663
Management compensation--severance related 3,777 -
ESOP expense 5,339 5,376
------ ------
EBITDA (a) 41,472 41,621
Add: Charges related to change in retail investment
strategy 7,801 -
Increase in bad debt reserve related to
Heilig-Meyers bankruptcy filing 1,820 -
Cash operating loss related to Gallery Corp. 911 -
------ ------
Adjusted EBITDA $52,004 $41,621
====== ======
</TABLE>
(a) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization. We believe that EBITDA is a widely
accepted financial indicator of a company's ability to service or incur
debt and a similar measure is utilized for purposes of the covenants
contained in the indenture related to the 10.25% Series B Subordinated
Notes due 2009 and the Senior Credit Facility. EBITDA and adjusted
EBITDA are not measurements of operating performance calculated in
accordance with generally accepted accounting principles and should not
be considered substitutes for operating income, net income, cash flows
from operating activities or other statements of operations or cash
flow data prepared in accordance with generally accepted accounting
principles, or as measures of profitably or liquidity. EBITDA and
adjusted EBITDA may not be indicative of our historical operating
results, nor are they meant to be predictive of potential future
results. Our measures of EBITDA and adjusted EBITDA may not be
comparable to those recorded by other companies.
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