<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarter ended June 30, 2000.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition from _________ to _________.
Commission file number 333-81987
SLEEPMASTER L.L.C.
(Exact name of registrant as it appears in its charter)
New Jersey 22-3341313
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
2001 Lower Road, Linden, New Jersey 07036-6520
(Address of principal executive offices) (Zip Code)
(732) 381-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
All of the registrant's voting and nonvoting membership interests are held by
affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:
Class A common units, no par value - 8,000 units as of August 14, 2000
Class B common units, no par value - 0 units as of August 14, 2000
<PAGE> 2
SLEEPMASTER L.L.C.
FORM 10-Q/A FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - Financial Information (unaudited)
Item 1 - Financial Statements
Condensed Consolidated Statements of Income for the
Three and Six Months Ended June 30, 2000 and 1999.................. 3
Condensed Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999 ............................................. 4
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 2000 and 1999........................ 5
Notes to Condensed Consolidated Financial Statements.................. 6-16
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations .................................. 17-20
Item 3 - Quantitative and Qualitative Disclosures about
Market Risk........................................................... 20
PART II - Other Information
Item 1 - Legal Proceedings..................................................... 21
Item 6 - Exhibits and Reports on Form 8-K...................................... 21
Signatures................................................................. 22
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SLEEPMASTER L.L.C.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------ -----------------------
2000* 1999 2000* 1999
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net sales $ 63,921 $ 39,759 $ 120,022 $ 73,986
Costs and expenses:
Cost of sales 39,564 24,807 74,403 46,068
Selling, general and administrative
expenses 16,534 9,829 30,789 18,214
Amortization of intangibles 1,063 458 1,905 836
Interest expense, net 5,796 2,848 10,333 4,878
Other expense (income), net 22 43 54 (43)
--------- --------- --------- --------
Income before income taxes and
extraordinary items 942 1,774 2,538 4,033
Provision for income taxes 404 833 1,028 1,748
--------- --------- --------- --------
Income before extraordinary items $ 538 $ 941 $ 1,510 $ 2,285
Extraordinary items, net of income taxes (208) (3,167) (208) (3,167)
--------- --------- --------- --------
Net income (loss) $ 330 $ (2,226) $ 1,302 $ (882)
======== ======== ========= ========
</TABLE>
* Restated Refer to note 9
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 4
SLEEPMASTER L.L.C.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 2000* December 31, 1999
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,437 $ 2,842
Accounts receivable, less allowance for doubtful accounts
of $3,562 and $2,360 39,480 24,217
Accounts receivable--other 1,985 1,691
Inventories 14,584 7,531
Other current assets 5,695 613
Deferred income taxes 549 720
--------- ---------
Total current assets 75,730 37,614
--------- ---------
Property, plant and equipment, net 46,344 20,967
Intangible assets, net 306,414 130,824
Other assets 13,203 7,290
Deferred income taxes -- 12,292
--------- ---------
Total assets $ 441,691 $ 208,987
========= =========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 25,883 $ 14,264
Accrued advertising and sales allowances 8,165 5,755
Accrued interest 1,878 2,077
Payable to sellers in connection
with purchase of Crescent 11,293 --
Other current liabilities 12,240 6,472
Current portion of long-term debt 9,889 5,010
--------- ---------
Total current liabilities 69,348 33,578
--------- ---------
Long-term debt 283,569 161,603
Other liabilities 1,426 1,463
Deferred income taxes 32,109 --
--------- ---------
Total long-term liabilities 317,104 163,066
--------- ---------
Commitments and contingencies
Redeemable cumulative preferred interests 21,644 20,423
Members' Equity (Deficit):
Class A common interests 53,854 12,229
Class B common interests -- --
Accumulated deficit (20,391) (20,472)
Foreign currency translation adjustment 132 163
--------- ---------
Total members' equity (deficit) 33,595 (8,080)
--------- ---------
Total liabilities and members' equity (deficit) $ 441,691 $ 208,987
========= =========
</TABLE>
* Restated Refer to note 9
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 5
SLEEPMASTER L.L.C.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30
---------------------------------
2000* 1999
------------ --------------
<S> <C> <C>
Net cash provided by operating activities $ 19,849 $ 4,161
Cash flows from investing activities:
Purchases of property, plant and equipment, net (1,966) (1,971)
Proceeds from sale of asset -- 11
Acquisitions, net of cash acquired (160,960) (41,470)
--------- ---------
Net cash used in investing activities (162,926) (43,430)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of senior subordinated notes 25,000 115,000
Proceeds from long-term debt 175,861 --
Payments on long-term debt (72,255) (64,281)
Loan origination fees/bond issuance costs (5,898) (5,787)
Penalties on early extinguishment of debt -- (3,645)
Borrowings under revolving line of credit 16,700 --
Payments on revolving line of credit (27,361) --
Capital contributions 41,625 --
Distributions -- (748)
--------- ---------
Net cash provided by financing activities. 153,672 40,539
--------- ---------
Net increase in cash and cash equivalents 10,595 1,270
Cash and cash equivalents, beginning of period 2,842 162
--------- ---------
Cash and cash equivalents, end of period $ 13,437 $ 1,432
========= =========
</TABLE>
* Restated Refer to note 9
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 6
SLEEPMASTER L.L.C.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
the accounts of Sleepmaster L.L.C. ("Sleepmaster") and all majority-owned
domestic and foreign subsidiaries (the "Company"). All material intercompany
transactions and balances have been eliminated. The interim statements are
unaudited and, in the opinion of management, include all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation of the Company's financial position as of June 30, 2000 and the
results of its operations and cash flows for the interim periods presented. The
condensed consolidated balance sheet data at December 31, 1999 is derived from
the audited financial statements which are included in the Company's Form 10-K/A
for the year ended December 31, 1999 and which should be read in connection with
these financial statements. In accordance with the rules of the Securities and
Exchange Commission, these financial statements do not include all disclosures
required by generally accepted accounting principles.
Operating results for the three and six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for any other
interim period or for the year ending December 31, 2000.
Certain reclassifications of previously reported financial information
were made to conform to the 2000 presentation.
2. ACQUISITIONS
On April 28, 2000, Sleepmaster acquired all the capital stock of Simon
Mattress Manufacturing Co. ("Simon ")for approximately $42,623,000 in cash.
Sleepmaster financed the acquisition using proceeds from a second amended and
restated credit facility.
On June 30, 2000, Sleepmaster acquired all the capital stock of
Crescent Sleep Products Company ("Crescent") for approximately $118,277,000 in
cash. Sleepmaster financed the acquisition using proceeds from a third amended
and restated credit facility, the issuance of an additional $25,000,000 of
senior subordinated notes, and $41,500,000 of equity from a group of investors
and certain members of Crescent's management. Sleepmaster remitted $11,293,000
of the proceeds from the amended credit facility to the sellers of Crescent on
July 5, 2000, which is classified as a current payable at June 30, 2000.
These acquisitions were accounted for under the purchase method and,
accordingly, Simon's and Crescent's results are included in the consolidated
financial statements since their respective dates of acquisition. The assets
acquired and liabilities assumed have been recorded at their estimated fair
values at the dates of acquisition. The excess of the purchase price over the
estimated fair values of the net assets acquired has been recorded as goodwill
and is being amortized over 40 years.
A summary of the purchase price allocations (in thousands) is as
follows:
<TABLE>
<CAPTION>
Simon Crescent
----- --------
<S> <C> <C>
Current assets...................................$ 11,850 $ 12,476
Property, plant and equipment................... 8,756 15,970
Other assets.................................... 787 5,956
Goodwill........................................ 14,627 40,370
License......................................... 20,495 96,004
Current liabilities............................. (5,779) (8,376)
Long-term debt.................................. -- (8,900)
Other liabilities............................... (8,113) (35,223)
------ --------
Total.................................. $ 42,623 $ 118,277
</TABLE>
6
<PAGE> 7
The following summarized unaudited pro forma financial information (in
thousands) for the six month periods ended June 30, 2000 and 1999 assumes that
the acquisitions of Simon and Crescent were consummated on January 1, 1999. This
information is not necessarily indicative of the results that the Company would
have achieved had these events actually occurred on such dates or of the
Company's actual or future results.
<TABLE>
<CAPTION>
June 30, June 30,
2000 1999
---- ----
<S> <C> <C>
Net sales.................................... $ 176,685 $ 172,424
(Loss) income before extraordinary items..... (179) 2,533
</TABLE>
The unaudited pro forma (loss) income before extraordinary items, for
the six months ended June 30, 2000, includes one- time transaction related
expenses for legal and investment banker fees of approximately $2,837,000.
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
Raw materials.................................................... $ 10,339 $ 5,402
Work-in-process.................................................. 1,039 476
Finished goods................................................... 3,206 1,653
---------------- ----------------
Total inventories....................................... $ 14,584 $ 7,531
================ ================
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
Goodwill......................................................... $ 96,301 $ 35,176
Licenses......................................................... 216,748 100,249
---------------- ----------------
313,049 135,425
Less: accumulated amortization................................... 6,635 4,601
---------------- ----------------
$ 306,414 $ 130,824
================ ================
</TABLE>
5. DEBT
On April 28, 2000, the Company expanded and restated its existing
credit facility to provide for an aggregate amount of borrowings of up to
$103,875,000, comprising a $33,000,000 revolving credit facility, a $35,875,000
amortizing term loan facility and a $35,000,000 incremental amortizing term
loan facility (the "Second Amended and Restated Credit Facility"). The terms of
the Second Amended and Restated Credit Facility were substantially equivalent
to those of the prior facility. Borrowings under the Second Amended and
Restated Credit Facility were used to finance the acquisition of Simon.
On June 30, 2000, in connection with the acquisition of Crescent, the
Company issued an additional $25,000,000 of 13.4% senior subordinated notes due
November, 2009. Also on June 30, 2000, the Company entered into a third amended
and
7
<PAGE> 8
restated credit agreement to provide for an aggregate amount of borrowings of up
to $172,500,000, comprising a $40,000,000 5.5 year revolving credit facility, a
5.5 year Tranche A term loan of $57,500,000 and a 6.5 year Tranche B term loan
of $75,000,000 (the "Third Amended and Restated Credit Facility"). This new
facility includes a letter of credit sublimit of $25,000,000. Similar to the
prior credit facility entered into on November 5, 1999, borrowings under this
credit facility bear interest at floating rates based on LIBOR or applicable
alternative base rates. Sleepmaster financed the acquisition of Crescent using
proceeds from the Third Amended and Restated Credit Facility, the issuance of
the $25,000,000 of senior subordinated notes, and $41,500,000 of equity from a
group of investors and certain members of Crescent's management.
In connection with the Third Amended and Restated Credit Facility, the
Company wrote-off unamortized debt issuance costs. One bank included in the
syndication of banks which were part of the Second Amended and Restated Credit
Facility did not continue in the syndication of banks in connection with the
Third Amended and Restated Credit Facility and its debt was extinguished. An
extraordinary loss of $208,000, net of the associated income tax benefit, was
recorded in connection with this extinguishment. In accordance with the
Emerging Issues Task Force No. 98-14, for banks which continued with the
syndication of banks in connection with the Third Amended and Restated Credit
Facility, a charge to interest expense of $564,000 to write-off unamortized debt
issuance costs was recorded.
At June 30, 2000, the Company was not in compliance with two financial
covenants contained in the Third Amended and Restated Credit Facility (1) the
Interest Coverage Ratio and (2) the Minimum Consolidated EBITDA. The failure to
comply with these covenants constituted an event of default. On September 19,
2000 the lenders granted a waiver for the debt covenant violations and an
amendment to the Third Amended and Restated Credit Facility (the "Waiver and
First Amendment to the Third Amended and Restated Credit Facility" or the
"Waiver and Amendment"). The Waiver and Amendment also modified various
financial covenants going forward including the two identified above.
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 1999, the staff of the Securities and Exchange Commission
issued SAB 101, "Revenue Recognition in Financial Statements," which addressed
some of the staff's concerns over the application of Generally Accepted
Accounting Principles for revenue recognition. The Company is currently
evaluating the impact, if any, of SAB 101, as amended, on its results of
operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended, is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. The Company presently does not have any derivative
instruments or hedging activities and, consequently, SFAS No. 133 is not
expected to have a material impact on the Company's results of operations,
financial position or cash flow.
7. SUPPLEMENTAL CASH FLOW INFORMATION
The Company recorded a charge to retained earnings (deficit)
of $1,221,000 and $1,111,000 for the six months ended June 30, 2000 and
1999, respectively, representing the accretion of redeemable cumulative
preferred interests at a compounded annual rate of 12%.
8
<PAGE> 9
8. GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
As of May 18, 1999 and June 30, 2000, Sleepmaster and each of its
domestic wholly owned subsidiaries ("Guarantor Subsidiaries") fully and
unconditionally guaranteed, on a joint and several basis, the obligation to pay
principal and interest with respect to the $115,000,000 of 11% senior
subordinated notes due 2009 and the $25,000,000 of 13.4% senior subordinated
notes due 2009 (the "Notes"), respectively. The Company generates funds
necessary to satisfy its debt service obligations from either its own operations
or by distributions or advances from its subsidiaries. There are no contractual
or legal restrictions that could limit the Company's ability to obtain cash from
its subsidiaries for the purpose of meeting its debt service obligations,
including the payment of principal and interest on the Notes. Although holders
of the Notes will be direct creditors of Sleepmaster's principal direct
subsidiaries by virtue of the guarantees, Sleepmaster has a foreign subsidiary
("Non-Guarantor Subsidiary") that is not included among the Guarantor
Subsidiaries and such subsidiary will not be obligated with respect to the
Notes. As a consequence, the claims of creditors of the Non-Guarantor Subsidiary
will effectively have priority with respect to the assets and earnings of this
subsidiary over the claims of creditors of Sleepmaster, including the holders of
the Notes.
The following supplemental condensed consolidating financial statements
present:
1. Condensed consolidating statements of income for the three and six
months ended June 30, 2000 and 1999, respectively; condensed
consolidating balance sheets as of June 30, 2000 and December 31, 1999
condensed consolidating statements of cash flows for the six months
ended June 30, 2000 and 1999.
2. Sleepmaster, combined Guarantor Subsidiaries and Non-Guarantor
Subsidiary with their investments in subsidiaries accounted for using
the equity method.
3. Elimination entries necessary to consolidate Sleepmaster and all of
its subsidiaries.
9. RESTATEMENT
Subsequent to filing its Form 10Q for the quarter ended June 30, 2000,
the Company discovered an error in its provision for income taxes, and the
goodwill and deferred income taxes liabilities recorded in the acquisition of
Simon and Crescent for the three and six month periods ended. The impact of the
correction of these errors was to reduce income before extraordinary items and
net income by $56,000.
8.1
<PAGE> 10
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
GUARANTOR NON-GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $ 18,527 $ 40,957 $ 4,467 $ (30) $ 63,921
Costs and expenses:
Cost of sales 12,614 24,147 2,833 (30) 39,564
Selling, general and
administrative expenses 4,146 11,404 984 -- 16,534
Amortization of intangibles 122 845 96 -- 1,063
Interest expense (income), net 3,995 1,803 (2) -- 5,796
Other expense (income), net 25 1 (4) -- 22
-------- -------- -------- -------- --------
(Loss) income before income
taxes and extraordinary items (2,375) 2,757 560 -- 942
(Benefit) provision for income taxes (1,169) 1,373 200 -- 404
-------- -------- -------- -------- --------
(Loss) income before extraordinary
items (1,206) 1,384 360 -- 538
Extraordinary items, net of
income taxes (208) -- -- -- (208)
(Income) loss from equity investees
net of tax (1,744) -- -- 1,744 --
-------- -------- -------- -------- --------
Net income (loss) $ 330 $ 1,384 $ 360 $(1,744) $ 330
======== ======== ======== ======== ========
</TABLE>
9
<PAGE> 11
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
GUARANTOR NON-GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $ 19,060 $ 18,486 $ 2,301 $ (88) $ 39,759
Costs and expenses:
Cost of sales 12,556 10,924 1,415 (88) 24,807
Selling, general and
administrative expenses 4,513 4,805 511 -- 9,829
Amortization of intangibles 160 298 -- -- 458
Interest expense, net 2,781 60 7 -- 2,848
Other expense, net 36 -- 7 -- 43
-------- -------- -------- -------- --------
(Loss) income before income
taxes and extraordinary items (986) 2,399 361 -- 1,774
(Benefit) provision for income taxes (409) 1,112 130 -- 833
-------- -------- -------- -------- --------
(Loss) income before extraordinary items (577) 1,287 231 -- 941
Extraordinary items, net of income taxes (3,167) -- -- -- (3,167)
(Income) loss from equity
investees, net of tax (1,518) -- -- 1,518 --
-------- -------- -------- -------- --------
Net (loss) income $ (2,226) $ 1,287 $ 231 $ (1,518) $ (2,226)
======== ======== ======== ======== ========
</TABLE>
10
<PAGE> 12
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
GUARANTOR NON-GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $ 37,290 $ 75,117 $ 8,276 $ (661) $120,022
Costs and expenses:
Cost of sales 25,099 44,737 5,228 (661) 74,403
Selling, general and
administrative expenses 8,632 20,343 1,814 -- 30,789
Amortization of intangibles 244 1,468 193 -- 1,905
Interest expense (income), net 6,691 3,649 (7) -- 10,333
Other expense (income), net 82 (3) (25) -- 54
-------- -------- -------- -------- --------
(Loss) income before income
taxes and extraordinary items (3,458) 4,923 1,073 -- 2,538
(Benefit) provision for income taxes (1,567) 2,230 365 -- 1,028
-------- -------- -------- -------- --------
(Loss) income before extraordinary items (1,891) 2,693 708 -- 1,510
Extraordinary items, net of income taxes (208) -- -- -- (208)
(Income) loss from equity investees, net
of tax (3,401) -- -- 3,401 --
-------- -------- -------- -------- --------
Net income (loss) $ 1,302 $ 2,693 $ 708 $(3,401) $ 1,302
======== ======== ======== ======== ========
</TABLE>
11
<PAGE> 13
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
GUARANTOR NON-GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $ 37,245 $ 34,570 $ 2,301 $ (130) $ 73,986
Costs and expenses:
Cost of sales 24,382 20,401 1,415 (130) 46,068
Selling, general and
administrative expenses 8,867 8,836 511 -- 18,214
Amortization of intangibles 322 514 -- -- 836
Interest expense, net 4,762 109 7 -- 4,878
Other (income) expense, net (49) (1) 7 -- (43)
-------- -------- -------- -------- --------
(Loss) income before income taxes and
extraordinary items (1,039) 4,711 361 -- 4,033
(Benefit) provision for income taxes (430) 2,048 130 -- 1,748
-------- -------- -------- -------- --------
(Loss) income before extraordinary items (609) 2,663 231 -- 2,285
Extraordinary items, net of income taxes (3,167) -- -- -- (3,167)
(Income) loss from equity investees,
net of tax (2,894) -- -- 2,894 --
-------- -------- -------- -------- --------
Net (loss) income $ (882) $ 2,663 $ 231 $ (2,894) $ (882)
======== ======== ======== ======== ========
</TABLE>
12
<PAGE> 14
\
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED NON-
GUARANTOR GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,217 $ 140 $ 80 $ -- $ 13,437
Accounts receivable 12,395 23,787 3,303 (5) 39,480
Accounts receivable--other 1,286 644 55 -- 1,985
Intercompany receivable (payable) -- 28,652 2,175 (30,827) --
Inventories 2,674 11,452 458 -- 14,584
Other current assets 2,254 3,391 50 -- 5,695
Deferred income taxes 692 307 -- (450) 549
--------- --------- --------- --------- ---------
Total current assets 32,518 68,373 6,121 (31,282) 75,730
--------- --------- --------- --------- ---------
Property, plant and equipment, net 4,724 40,692 928 -- 46,344
Intangible assets, net 16,875 273,741 15,798 -- 306,414
Intercompany receivable (payable) 70,879 -- -- (70,879) --
Investment in subsidiaries 231,952 -- -- (231,952) --
Other assets 11,450 1,724 29 -- 13,203
Deferred income taxes 12,972 -- -- (12,972) --
--------- --------- --------- --------- ---------
Total assets $ 381,370 $ 384,530 $ 22,876 $(347,085) $ 441,691
========= ========= ========= ========= =========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 9,273 $ 15,848 $ 762 $ -- $ 25,883
Accrued advertising and sales allowances 3,447 4,194 524 -- 8,165
Accrued interest 1,738 140 -- -- 1,878
Payable to sellers in connection with
with purchase of Crescent 11,293 -- -- -- 11,293
Other current liabilities 3,329 7,503 1,408 -- 12,240
Intercompany payable (receivable) 30,862 -- -- (30,862) --
Current portion of long-term debt 9,375 514 -- -- 9,889
Deferred income taxes -- 252 198 (450) --
--------- --------- --------- --------- ---------
Total current liabilities 69,317 28,451 2,892 (31,312) 69,348
--------- --------- --------- --------- ---------
Intercompany payable (receivable) -- 70,879 -- (70,879) --
Long-term debt 267,125 16,444 -- -- 283,569
Other liabilities 431 320 675 -- 1,426
Deferred income taxes -- 44,984 97 (12,972) 32,109
--------- --------- --------- --------- ---------
Total long-term liabilities 267,556 132,627 772 (83,851) 317,104
--------- --------- --------- --------- ---------
Redeemable cumulative preferred interests 21,644 -- -- -- 21,644
Members' equity (deficit) 22,853 223,452 19,212 (231,922) 33,595
--------- --------- --------- --------- ---------
Total liabilities and members' equity
(deficit) $ 381,370 $ 384,530 $ 22,876 $(347,085) $ 441,691
========= ========= ========= ========= =========
</TABLE>
13
<PAGE> 15
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED NON-
GUARANTOR GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,294 $ 934 $ 612 $ 2 $ 2,842
Accounts receivable 10,282 11,800 2,310 (175) 24,217
Accounts receivable--other 1,061 630 -- -- 1,691
Intercompany (payable) receivable (17) 18,144 1,503 (19,630) --
Inventories 2,378 4,637 516 -- 7,531
Other current assets 1,076 626 24 (393) 1,333
--------- --------- --------- --------- ---------
Total current assets 16,074 36,771 4,965 (20,196) 37,614
--------- --------- --------- --------- ---------
Property, plant and equipment, net 4,477 15,773 717 -- 20,967
Intangible assets, net 17,119 97,707 15,998 -- 130,824
Intercompany receivable (payable) 67,378 -- -- (67,378) --
Investment in subsidiaries 67,628 -- -- (67,628) --
Other assets 19,132 569 3 (122) 19,582
--------- --------- --------- --------- ---------
Total assets $ 191,808 $ 150,820 $ 21,683 $(155,324) $ 208,987
========= ========= ========= ========= =========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 4,984 $ 8,808 $ 645 $ (173) $ 14,264
Accrued advertising and sales allowances 3,541 1,758 456 -- 5,755
Other current liabilities 4,251 3,327 1,364 (393) 8,549
Intercompany payable (receivable) 19,599 -- -- (19,599) --
Current portion of long-term debt 4,500 510 -- -- 5,010
--------- --------- --------- --------- ---------
Total current liabilities 36,875 14,403 2,465 (20,165) 33,578
--------- --------- --------- --------- ---------
Intercompany payable (receivable) -- 67,378 -- (67,378) --
Long-term debt 153,800 7,803 -- -- 161,603
Other liabilities (437) 1,337 685 (122) 1,463
--------- --------- --------- --------- ---------
Total long-term liabilities 153,363 76,518 685 (67,500) 163,066
--------- --------- --------- --------- ---------
Redeemable cumulative preferred interests 20,423 -- -- -- 20,423
Members' (deficit) equity (18,853) 59,899 18,533 (67,659) (8,080)
--------- --------- --------- --------- ---------
Total liabilities and members' equity
(deficit) $ 191,808 $ 150,820 $ 21,683 $(155,324) $ 208,987
========= ========= ========= ========= =========
</TABLE>
14
<PAGE> 16
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
GUARANTOR NON-GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities $ 23,284 $ 484 $ (240) $(3,679) $19,849
------- ------- ------- ------- -------
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (687) (989) (290) -- (1,966)
Acquisitions, net of cash acquired (160,960) (38) -- 38 (160,960)
Net activity in investment in
subsidiaries (3,641) -- -- 3,641 --
------- ------- ------- ------- -------
Net cash (used in) provided by investing
activities (165,288) (1,027) (290) 3,679 (162,926)
------- ------- ------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of senior
subordinated notes 25,000 -- -- -- 25,000
Proceeds from long-term debt 175,861 -- -- -- 175,861
Payments on long-term debt (72,000) (255) -- -- (72,255)
Loan origination fees (5,898) -- -- -- (5,898)
Borrowings under revolving line of credit 16,700 -- -- -- 16,700
Payments on revolving line of credit (27,361) -- -- -- (27,361)
Capital contributions 41,625 -- -- -- 41,625
------- ------- ------- ------- -------
Net cash provided by (used in)
financing activities 153,927 (255) -- -- 153,672
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents 11,923 (798) (530) -- 10,595
Cash and cash equivalents, beginning of
period 1,294 938 610 -- 2,842
------- ------- ------- ------- -------
Cash and cash equivalents, end of period $ 13,217 $ 140 $ 80 $ -- $13,437
======= ======= ======= ======= =======
</TABLE>
15
<PAGE> 17
SLEEPMASTER L.L.C. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
GUARANTOR NON-GUARANTOR
SLEEPMASTER SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities $ 6,899 $ (1) $ 156 $(2,893) $ 4,161
------- ------- ------- ------- -------
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (1,507) (456) (8) -- (1,971)
Proceeds from sale of assets -- 11 -- -- 11
Acquisitions, net of cash acquired (42,160) -- -- 690 (41,470)
Net activity in investment in
subsidiaries (2,925) -- -- 2,925 --
------- ------- ------- ------- -------
Net cash (used in) provided by investing
activities (46,592) (445) (8) 3,615 (43,430)
------- ------- ------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of senior
subordinated notes 115,000 -- -- -- 115,000
Payments on long-term debt (63,996) (285) -- -- (64,281)
Loan origination fees/bond issuance costs (5,787) -- -- -- (5,787)
Penalties paid on early extinguishment of debt (3,645) -- -- -- (3,645)
Distributions (748) -- -- -- (748)
------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities 40,824 (285) -- -- 40,539
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents 1,131 (731) 148 722 1,270
Cash and cash equivalents, beginning of
period 41 843 -- (722) 162
------- ------- ------- ------- -------
Cash and cash equivalents, end of period $ 1,172 $ 112 $ 148 $ -- $ 1,432
======= ======= ======= ======= =======
</TABLE>
16
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the Company's results of operations and of
its liquidity and capital resources should be read in conjunction with the
Condensed Consolidated Financial Statements of the Company and the related Notes
thereto included elsewhere herein.
GENERAL
Sleepmaster acquired the stock of Crescent on June 30, 2000, the stock
of Simon on April 28, 2000, substantially all of the assets of Adam Wuest Inc.
and Adam Wuest Realty (collectively "Adam Wuest") on November 5, 1999,
substantially all of the assets of Star Bedding Products (1986) Limited ("Star")
on May 18, 1999 and the stock of Herr Manufacturing Company ("Herr") on February
26, 1999. Each of these acquisitions has been accounted for using the purchase
method of accounting. The Company's historical results of operations reflect the
results of the acquired businesses since their respective dates of acquisition.
Therefore, the historical operating results of the Company for the periods
presented are not necessarily comparable.
QUARTER ENDED JUNE 30, 2000 AS COMPARED TO QUARTER ENDED JUNE 30, 1999
Net Sales. Net sales increased 60.8%, or $24.1 million, to $63.9 for
the quarter ended June 30, 2000, from $39.8 million for the quarter ended June
30, 1999. A significant portion of the increase was due to the contribution of
net sales from Star, acquired on May 18, 1999, Adam Wuest, acquired on November
5, 1999 and Simon, acquired on April 28, 2000. Net sales contributed by Star,
Adam Wuest and Simon in the second quarter of 2000 were $25.1 million. Excluding
these acquisitions, net sales increased by 3.5%, or $1.3 million, for the second
quarter of 2000. Generally, higher unit sales volumes and higher average unit
selling prices resulting from shifts in product sales mix toward higher priced
products contributed to this increase.
Cost of Sales. Cost of sales increased 59.5%, or $14.8 million, to
$39.6 for the second quarter of 2000, from $24.8 million for the second quarter
of 1999. Cost of sales as a percentage of net sales decreased from 62.4% in 1999
to 61.9% in 2000. Margins were favorably impacted by Sleepmaster successfully
obtaining volume-related cost savings on raw material purchases as a result of
the acquisitions of Star, Adam Wuest and Simon. This impact was offset by an
increase in direct labor costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") increased 68.2%, or $6.7 million, to $16.5
million for the second quarter of 2000 from $9.8 million for the similar period
of 1999. The increase in SG&A is primarily due to the SG&A associated with the
Company's acquisitions of Star, Adam Wuest and Simon. SG&A as a percentage of
sales increased to 25.9% in the second quarter of 2000 from 24.7% in the second
quarter of 1999. This increase is primarily attributable to the increase in
corporate costs associated with the aforementioned acquisitions.
Amortization of Intangibles. Amortization of intangibles increased $0.6
million to $1.1 million for the second quarter of 2000 from $0.5 for the second
quarter of 1999. The increase is a result of the intangible assets acquired in
connection with the acquisitions of Star, Adam Wuest and Simon.
Interest Expense, Net. Interest expense increased $3.0 million to $5.8
million for the quarter ended June 30, 2000 from $2.8 million for the quarter
ended June 30, 1999. This increase was due primarily to the cost of additional
debt financing incurred for the acquisitions of Adam Wuest and Simon, the
issuance of senior subordinated notes on May 18, 1999 and the write-off of $0.6
million of unamortized debt issuance costs in the second quarter of 2000.
17
<PAGE> 19
Provision for Income Taxes. The provision for income taxes resulted in
an effective tax rate of 42.9% in the second quarter of 2000, down from 47.0% in
the second quarter of 1999. The effective tax rate decreased due to the
expansion of business activities into lower tax jurisdictions as a result of the
aforementioned acquisitions.
Extraordinary Items. The extraordinary item recorded in the second
quarter of 2000 consisted of a write-off of unamortized debt issuance costs, net
of the associated income tax benefit of $208,000 and was recorded in connection
with the Company's third amended credit facility. The extraordinary item
recorded in the second quarter of 1999 consisted of the payment of $3.6 million
in premiums on the redemption of $20 million in aggregate principal amount of
Series A and Series B 12% Subordinated Notes and repayment of $69.2 million of
borrowings under the Company's former credit facility, together with the
write-off of $1.8 million of unamortized debt issuance costs relating to such
redemption and repayment on May 18, 1999, less an income tax benefit totaling
$2.3 million.
Net Income. As a result of the above factors, net income increased by
$2.5 million, to $0.3 million for the quarter ended June 30, 2000 compared to
the net loss of $2.2 million for the quarter ended June 30, 1999.
SIX MONTHS ENDED JUNE 30, 2000 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Net Sales. Net sales increased 62.2%, or $46.0 million, to $120.0 for
the six months ended June 30, 2000, from $74.0 million for the six months ended
June 30, 1999. A significant portion of the increase was due to the contribution
of net sales from Herr, acquired on February 26, 1999, Star, acquired on May 18,
1999, Adam Wuest, acquired on November 5, 1999 and Simon, acquired on April 28,
2000. Net sales contributed by Herr, Star, Adam Wuest and Simon for the six
months were $53.1 million. Excluding these acquisitions, net sales increased by
4.9%, or $3.1 million, for the six months ended June 30, 2000. Generally, higher
unit sales volumes and higher average unit selling prices resulting from shifts
in product sales mix toward higher priced products contributed to this increase.
Cost of Sales. Cost of sales increased 61.5%, or $28.3 million, to
$74.4 for the first half of 2000, from $46.1 million for the first half of 1999.
Cost of sales as a percentage of net sales decreased slightly from 62.3% in 1999
to 62.0% in 2000. Margins were favorably impacted by Sleepmaster successfully
obtaining volume-related cost savings on raw material purchases as a result of
the acquisitions of Star, Adam Wuest and Simon. This impact was offset by an
increase in direct labor costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") increased 69.0%, or $12.6 million, to $30.8
million for the first half of 2000 from $18.2 million for the similar period
of 1999. The increase in SG&A is primarily due to the SG&A associated with the
Company's acquisitions of Herr, Star, Adam Wuest and Simon. SG&A as a percentage
of sales increased to 25.7% in 2000 from 24.6% in 1999. This increase is
primarily attributable to the increase in corporate costs associated with the
aforementioned acquisitions.
Amortization of Intangibles. Amortization of intangibles increased $1.1
million to $1.9 million for the first half of 2000 from $0.8 for the similar
period of 1999. The increase is a result of the intangible assets acquired in
connection with the acquisitions of Herr, Star, Adam Wuest and Simon.
Interest Expense, Net. Interest expense increased $5.4 million to $10.3
million for the first half of 2000 from $4.9 million for the first half of 1999.
This increase was due primarily to the cost of additional debt financing
incurred for the acquisitions of Adam Wuest and Simon, the issuance of senior
subordinated notes on May 18, 1999 and the write-off of $0.6 million of
unamortized debt issuance costs in the first half of 2000.
18
<PAGE> 20
Provision for Income Taxes. The provision for income taxes resulted in
an effective tax rate of 40.5% in the first half of 2000, down from 43.3% in the
first half of 1999. The effective tax rate decreased due to the expansion of
business activities into lower tax jurisdictions as a result of the
aforementioned acquisitions.
Extraordinary Items. The extraordinary item recorded in the first half
of 2000 consisted of a write-off of unamortized debt issuance costs, net of the
associated income tax benefit, of $208,000 and was recorded in connection with
the Company's third amended credit facility. The extraordinary item recorded in
the first half of 1999 consisted of the payment of $3.6 million in premiums on
the redemption of $20 million in aggregate principal amount of Series A and
Series B 12% Subordinated Notes and repayment of $69.2 million of borrowings
under the Company's former credit facility, together with the write-off of $1.8
million of unamortized debt issuance costs relating to such redemption and
repayment on May 18, 1999, less an income tax benefit totaling $2.3 million.
Net Income. As a result of the above factors, net income increased by
$2.2 million, to $1.3 million for the first half of 2000 compared to a net loss
of $0.9 million for the first half of 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash to fund its liquidity needs is
net cash provided by operating activities and availability under its current
credit facility. Cash and cash equivalents increased by $10.6 million to $13.4
million as of June 30, 2000 from $2.8 million at December 31, 1999. Included in
cash and cash equivalents at June 30, 2000 was an amount of $11,293,000 received
as part of the proceeds from the Third Amended and Restated Credit Facility, and
for which there was a corresponding payable at June 30, 2000 to the sellers of
Crescent. Net cash provided by operating activities totaled $19.8 million for
the six months ended June 30, 2000 compared to $4.2 for the six months ended
June 30, 1999. The increase in cash flows from operations is primarily a result
of the acquisitions of Herr, Star, Adam Wuest and Simon and the aforementioned
proceeds due to the sellers of Crescent. At June 30, 2000, the Company was not
in compliance with two financial covenants contained in the Third Amended and
Restated Credit Facility (1) the Interest Coverage Ratio and (2) the Minimum
consolidated EBITDA. The interest coverage ratio requires a minimum ratio of
1.80 and the actual was 1.73 at June 30, 2000. The minimum consolidated EBITDA
covenant required a minimum of $56,000,000 (which is a 12 month rolling
computation) and the actual was $55,312,000 at June 30, 2000. The principal
reason the Company did not meet these two covenants was an increase in the
competitive environment. The Company has implemented various steps to reverse
this trend. The failure to comply with these covenants constituted an event of
default. On September 19, 2000 the lenders granted a waiver for the debt
covenant violations and an amendment to the Third Amended and Restated Credit
Facility (the "Waiver and First Amendment to the Third Amended and Restated
Credit Facility" or the "Waiver and Amendment"). The Waiver and Amendment also
modified various financial covenants going forward including the two identified
above. The minimum consolidated EBITDA was reset to $50,000,000 for the
quarterly period ending September 30, 2000 and the interest coverage ratio was
reset to a minimum of 1.50 for the period July 1, 2000 through December 31,
2000. The Company expects to comply with all of the covenants and conditions of
the Third Amended and Restated Credit Facility, as amended, but there is no
assurance that the Company will not require additional waivers in the future,
or if required, the lenders will grant them.
Sleepmaster generated $153.7 million of cash inflows from financing
activities during the first half of 2000, principally arising from borrowings
under increased credit facilities to acquire Simon and Crescent, the issuance of
$25.0 million of 13.4% senior subordinated notes, and $41.5 million of equity
contributed by a group of investors and various members of Crescent's
management. Financing cash flows during the first half of 1999 of $40.5 million
arose primarily from net proceeds from the issuance on May 18, 1999 of $115.0
million of 11% senior subordinated notes, a portion of which was used to prepay
the existing credit facility, redeem the existing senior subordinated notes and
complete the acquisition of Star.
Capital expenditures totaled $2.0 million for the six months ended June
30, 2000. These capital expenditures consisted primarily of normal recurring
capital expenditures. Management expects that capital expenditures at all of its
existing facilities will be approximately $4.5 million in 2000. Management
believes that annual capital expenditure limitations under its current credit
facility will not significantly inhibit Sleepmaster from meeting its capital
needs.
On April 28, 2000, Sleepmaster amended and restated its existing credit
facility to provide for borrowings of up to $103,875,000, comprising a
$33,000,000 revolving credit facility, a $35,875,000 amortizing term loan
facility and a $35,000,000 incremental amortizing term loan facility (the
"Second Amended and Restated Credit Facility"). The terms of the Second Amended
and Restated Credit Facility were substantially equivalent to those of the prior
facility.
On June 30, 2000, the Company issued an additional $25,000,000 of 13.4%
senior subordinated notes due November 2009. Sleepmaster used the proceeds of
the senior subordinated notes to acquire all the capital stock of Crescent. Also
on June 30, 2000, in connection with the acquisition of Crescent, the Company
entered into a third amended and restated credit agreement to provide for an
aggregate amount of borrowings of up to $172,500,000, comprising a $40,000,000
revolving credit facility, a Tranche A term loan of $57,500,000 and a Tranche B
term loan of $75,000,000 (the "Third Amended and Restated Credit Facility").
Similar to the prior credit facility, the revolving credit facility includes a
sublimit for letters of credit of $25.0 million. At June 30, 2000, the Company
had approximately $17.4 million available under its revolving credit facility
with letters of credit issued totaling approximately $18.6 million.
19
<PAGE> 21
Management believes that cash flows generated from operations, together
with its borrowing capacity, are sufficient to support the Company's operations
and general business and liquidity requirements for the foreseeable future.
YEAR 2000
In order to minimize or eliminate the effect of the Year 2000 risk on
the Company's business systems and applications, the Company identified,
evaluated, implemented and tested changes to its computer systems,
applications and software necessary to achieve Year 2000 compliance. The
computer systems and equipment successfully transitioned to the Year 2000 with
no significant issues. The Company continues to keep its Year 2000 project
management in place to monitor latent problems that could surface at key dates
or events in the future. Management does not anticipate any significant
problems related to these events. The total cost of the Year 2000 compliance
program was approximately $650,000 and was incurred principally during the
first two quarters of 1999. The Company expensed and capitalized the costs to
complete its compliance plan in accordance with appropriate accounting
policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from fluctuations in interest
rates, which could impact its consolidated financial position, results of
operations and cash flows. The Company manages its exposure to market risk
through its regular operating and financing activities. The Company does not
use derivative financial instruments for speculative or trading purposes and
does not maintain such instruments that may expose the Company to significant
market risk.
The Company's earnings are sensitive to changes in short-term
interest rates as a result of its borrowings under the amended and
restated credit facility. The Company also manages its portfolio of
fixed-rate debt to reduce its exposure to interest rate changes. The
fair value of the Company's fixed-rate long-term debt is sensitive to
interest rate changes. Interest rate changes would result in gains or losses
in the fair value of this debt due to differences between market interest
rates and rates at the inception of the obligation. Management does not
foresee nor expect any significant changes in its exposure to interest rate
fluctuations, or in how such exposure is managed in the near future.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This document contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Although the Company believes its plans are based
upon reasonable assumptions as of the current date, it can give no
assurance that such expectations can be attained. Factors that could cause
actual results to differ materially from the Company's expectations
include; general business and economic conditions; competitive factors;
raw materials availability and pricing; fluctuations in demand; and
retention and availability of qualified employees.
20
<PAGE> 22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is, from time to time, a party to litigation arising in the
normal course of business, most of which involves claims for personal injury and
property damage incurred in connection with its operations. Management believes
that none of these actions will have a material adverse effect on the financial
position, results of operations or cash flows, of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
Report on Form 8-K/A, filed September 13, 2000, concerning
the Company's acquisition of Crescent Sleep Products Company.
Report on Form 8-K/A, filed on July 12, 2000, concerning the
Company's acquisition of Simon Mattress Manufacturing Company.
21
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Linden,
State of New Jersey.
SLEEPMASTER L.L.C.
By: /s/ Charles Schweitzer
--------------------------------------
President and Chief Executive Officer
Dated: September 21, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
<S> <C> <C>
/s/ Charles Schweitzer President and Chief Executive September 21 , 2000
---------------------------
Charles Schweitzer Officer, Advisor
/s/ James P. Koscica Executive Vice President and Chief September 21 , 2000
---------------------------
James P. Koscica Financial Officer, Advisor
</TABLE>
22
