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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 1, 2003
or
THE SECURITIES EXCHANGE ACT OF 1934
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to _____
Commission file number 1-9681
JENNIFER CONVERTIBLES, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2824646
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
419 Crossways Park Drive, Woodbury, New York 11797
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 496-1900
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
Indicate by check mark whether registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes __ No _X__
As of April 11, 2003 5,712,058 shares of the issuer's common
stock, par value $0.01, were
outstanding.
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Index
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Consolidated Balance Sheets at March 1, 2003 (Unaudited)
and August 31, 2002 ............................................ 2
Comparative Consolidated Statements of Operations
(Unaudited) for the thirteen and twenty-six weeks ended
March 1, 2003 and February 23, 2002 .............................. 3
Comparative Consolidated Statements of Cash Flows
(Unaudited) for the twenty-six weeks ended
March 1, 2003 and February 23, 2002 .............................. 4
Notes to Unaudited Consolidated Financial Statements.............. 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ 10
Item 3 - Quantitative and Qualitative Disclosures about
Market Risk.................................................. 13
Item 4 - Controls and Procedures................................. 13
Part II - Other Information .......................................... 14
Item 1 - Legal Proceedings........................................ 14
Item 2 - Changes in Securities and Use of Proceeds................ 14
Item 3 - Defaults Upon Senior Securities.......................... 14
Item 4 - Submission of Matters to a Vote of Security Holders...... 14
Item 5 - Other Information........................................ 14
Item 6 - Exhibits and Reports Filed on Form 8-K................... 14
Signatures ............................................................ 16
Exhibit Index ........................................................ 17
Form of Non-Qualified Stock Option Agreement with certain
directors and officers ...... ......................................... 18
Form of Non-Qualified Stock Option Agreement with certain
employees and consultants ............................................ 25
Certification of Chief Executive Officer ............................. 32
Certification of Chief Financial Officer .............................. 33
Certification Pursuant to Section 906 ................................ 34
PART I - FINANCIAL INFORMATION
Item I - Financial Statements
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
ASSETS March 1, 2003
(Unaudited) August 31, 2002
Current assets:
Cash and cash equivalents $11,628 $15,973
Accounts receivable 383 475
Merchandise inventories 14,529 13,348
Due from private company,
net of reserves of $4,732
and $4,754 at March 1, 2003 and August 31,
2002, respectively 2,807 3,696
Deferred tax asset 1,950 1,950
Prepaid expenses and other current assets 1,671 801
Total current assets 32,968 36,243
Store fixtures, equipment and leasehold
improvements, at cost, net 4,124 4,231
Deferred lease costs and other
intangibles, net 141 195
Goodwill, at cost, net 1,796 1,796
Deferred tax asset 412 412
Other assets (primarily security deposits) 712 748
$40,153 $43,625
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $12,901 $14,037
Customer deposits 7,783 7,689
Accrued expenses and other current
liabilities 4,779 6,955
Due to Private Company 700 500
Total current liabilities 26,163 29,181
Deferred rent and allowances 4,207 4,358
Total liabilities 30,370 33,539
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $.01 per share,
authorized 1,000,000 shares
Series A convertible preferred - 10,000
shares issued and outstanding (liquidation
preference $5,000)
Series B convertible preferred - 26,664
shares issued and outstanding (liquidation
preference $133)
Common stock, par value $.01 per share,
authorized 10,000,000 shares;
issued and outstanding, 5,712,058 shares and
5,704,058 shares at March 1, 2003 and at
August 31, 2002, respectively 57 57
Additional paid in capital 27,497 27,482
Accumulated (deficit) (17,771) (17,453)
9,783 10,086
$40,153 $43,625
See notes to the consolidated financial statements.
2
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)
Thirteen weeks ended Twenty-six weeks ended
March 1, February 23, March 1, February 23,
2003 2002 2003 2002
Revenue:
Net sales $27,419 $30,653 $62,117 $64,771
Revenue from service contracts 1,943 506 4,320 824
29,362 31,159 66,437 65,595
Cost of sales, including store
occupancy, warehousing, delivery and
service costs 20,145 21,960 44,700 45,691
Selling, general and administrative
expenses 9,831 9,802 21,371 20,480
Depreciation and amortization 433 410 857 828
30,409 32,172 66,928 66,999
Operating loss (1,047) (1,013) (491) (1,404)
Interest income 42 38 83 96
Interest expense - 1 - 7
Loss before income taxes (1,005) (976) (408) (1,315)
Income tax (benefit) expense (184) (34) (90) 50
Net loss $(821) $(942) $(318) $(1,365)
Basic and diluted loss per common share $(0.14) $(0.17) $(0.06) $(0.24)
Weighted average common shares
outstanding basic and diluted loss
per share 5,710,426 5,704,058 5,707,242 5,704,058
See notes to the consolidated financial statements.
3
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Twenty-six weeks ended
March 1, February 23,
2003 2002
Cash flows from operating activities:
Net loss ($318) ($1,365)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Depreciation and amortization 857 828
Loss on disposal of equipment 0 16
Deferred rent (151) (236)
Deferred tax benefit 0 (301)
Recovery of amounts due from Private
Company (22) (26)
Deferred income 0 3,342
Changes in operating assets and
liabilities:
Merchandise inventories (1,182) 25
Prepaid expenses and other current
assets (870) (385)
Accounts receivable 93 305
Due from Private Company, net 1,112 64
Other assets, net 35 15
Accounts payable trade (1,136) (4,669)
Customer deposits 93 1,765
Accrued expenses and other payables (2,175) (5)
Net cash (used in) operating activities (3,664) (627)
Cash flows from investing activities:
Purchase of short-term corporate bonds (993) 0
Proceeds from maturity of short-term
corporate bonds 993 0
Capital expenditures (697) (318)
Net cash (used in) investing activities (697) (318)
Cash flows provided by financing activities:
Proceeds from exercise of stock options 16 0
Net cash provided by financing activities 16 0
Net (decrease) in cash and cash equivalents (4,345) (945)
Cash and cash equivalents at beginning of
period 15,973 11,155
Cash and cash equivalents at end of period $11,628 $10,210
Supplemental disclosure of cash flow
information:
Income taxes paid during the period $573 $393
Interest paid 0 $7
See notes to consolidated financial statements.
305:
306:
4
JENNIFER CONVERTIBLES, INC.
For the Twenty-Six Weeks Ended March 1, 2003
(In thousands except for share amount)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Jennifer Convertibles, Inc. and its subsidiaries (the "Company")
have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim
financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting
principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The
operating results for the thirteen and twenty-six week periods
ended March 1, 2003 are not necessarily indicative of the results
that may be expected for the fiscal year ending August 30, 2003.
The balance sheet as of August 31, 2002 has been derived from the
audited financial statements at such date but does not include
all of the information and footnotes required by accounting
principles generally accepted in the United States of America for
complete financial statements.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual
Report on Form 10-K/A for the fiscal year ended August 31, 2002.
In December 2002, the FASB issued SFAS 148, Accounting for Stock-
Based Compensation - Transition and Disclosure. SFAS 148 amends
SFAS 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition to the SFAS 123 fair value method
of accounting for stock-based employee compensation. In addition,
SFAS 148 requires disclosure of the effects of an entity's
accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim
financial statements. As permitted under SFAS 148, we are adopting
only the disclosure provisions of that accounting standard
beginning with our third quarter of fiscal 2003.
5
JENNIFER CONVERTIBLES, INC.
For the Twenty-Six Weeks Ended March 1, 2003
(In thousands except for share amount)
NOTE 2: MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost
(determined on the first-in, first-out method) or market and are
physically located, as follows:
3/01/03 8/31/02
Showrooms $ 6,569 $ 6,553
Warehouses 7,960 6,795
$14,529 $13,348
Vendor discounts and allowances in respect to merchandise
purchased by the Company are included as a reduction of inventory
and cost of sales.
NOTE 3: REVENUE RECOGNITION
Sales are recognized upon delivery of the merchandise to the
customer. A minimum deposit of 50% is typically required upon
placing a non-financed sales order. The Company also finances
sales and sells financed receivables on a non-recourse basis to a
finance company. The Company neither retains any interests in nor
services the sold receivables. The selling price of the
receivables represents the amount due from the customer less a
fee. Fees paid to the finance company are included in selling,
general and administrative expenses.
The Company also derives revenues from the sale of service
contracts related to lifetime protection plans. Prior to an
amendment to the Company's Warehouse Agreement with a related
private company (the "Private Company"), as described below, the
Company was responsible for providing services related to
separately priced fabric protection plans. Accordingly, in the
Consolidated Statement of Operations for the thirteen and twenty-
six weeks ended February 23, 2002, fabric protection revenue was
deferred and amortized into income in proportion to the costs
expected to be incurred.
6
JENNIFER CONVERTIBLES, INC.
For the Twenty-Six Weeks Ended March 1, 2003
(In thousands except for share amount)
The Company has amended its Warehouse Agreement with the Private
Company, whereby, effective June 23, 2002, the Private Company
became the sole obligor on all lifetime fabric and leather
protection plans sold by the Company or the Private Company on
and after such date through August 28, 2004 and assumed all
performance obligations and risk of loss thereunder. The Company
has no obligation with respect to such plans. The Private
Company receives a monthly payment of $50 subject to an
adjustment based on the volume of sales of the plans. In
addition, for a payment of $400 (payable $50 per month beginning
three months after the date of the agreement) to be made by the
Company, the Private Company also assumed responsibility to
service and pay any claims related to sales made by the Company
or the Private Company prior to June 23, 2002. Accordingly, the
Company has no obligations for any claims filed under such plans
after June 23, 2002 and revenue from the sale of fabric
protection plans after such date is recognized upon delivery of
the merchandise.
NOTE 4: GOODWILL
Goodwill consists of the excess of cost of the Company's
investments in certain subsidiaries over the fair value of net
assets acquired. The Company has performed the required
impairment tests and has determined that there is no impairment
of the Company's goodwill.
NOTE 5: CONTINGENCIES
The Derivative Litigation
Beginning in December 1994, a series of six actions were
commenced as derivative actions on the Company's behalf against
certain present and former officers and directors of the Company,
the Private Company and others.
The complaints in each of these actions assert various acts of
wrongdoing by the defendants, as well as claims of breach of
fiduciary duty by the Company's present and former officers and
directors. The Company had entered into settlement agreements
with respect to the derivative litigation, subject, in the case
of certain of those agreements, to court approval of the
settlement by a certain date. Such court approval was not
obtained by such date, and in July 1998, the Private Company
exercised its option to withdraw from the settlement.
7
JENNIFER CONVERTIBLES, INC.
For the Twenty-Six Weeks Ended March 1, 2003
(In thousands except for share amount)
On July 6, 2001, the Private Company and the Company entered into
a series of agreements designed to settle the derivative action
among the Private Company, certain of our current and former
officers and directors and certain of our former accounting firms
and the Company. Effectiveness of the agreements is subject to
certain conditions, including court approval. The Company also
entered into an Interim Operating Agreement designed to
implement certain of the provisions of the settlement agreement
prior to court approval. However, there can be no assurance that
the court will approve the settlement or that a settlement will
occur. Please see the Company's Annual Report on Form 10-K/A for
the year ended August 31, 2002 for a more complete description
of the terms of the proposed settlement.
8
JENNIFER CONVERTIBLES, INC.
For the Twenty-Six Weeks Ended March 1, 2003
(In thousands except for share amount)
NOTE 6: TRANSACTIONS WITH THE PRIVATE COMPANY
Included in the Consolidated Statements of Operations are the
following amounts charged by and to the Private Company. The
amounts listed under "Net sales" show the amounts charged to the
Private Company that are included in such Statements of
Operations under the caption "Net sales". The amounts listed
under "Revenue from service contracts", for the thirteen and
twenty-six week period ended March 1, 2003, show net amounts
charged by the Private Company to the Company that are included
in such Statements of Operations under the caption, "Revenue from
service contracts". The amounts listed under "Revenue from
service contracts", for the thirteen and twenty-six week period
ended February 23, 2002 show net amounts charged to the Private
Company that are included in such Statements of Operations under
the caption "Revenue from service contracts". The amounts listed
under "Selling, general and administrative expenses" show the net
amounts charged to the Private Company (except for "Royalty
expense", which shows amounts charged by the Private Company)
that are included in such Statements of Operations under the
caption, "Selling, general and administrative expenses".
Thirteen weeks ended Twenty-six weeks ended
March 1, February 23, March 1, February 23,
2003 2002 2003 2002
Net sales:
Royalty income $22 $24 $53 $58
Warehouse income, net 95 121 271 280
Delivery charges 378 423 849 841
Total charged to the
Private Company $495 $568 $1,173 $1,179
Revenue from service contracts:
Fabric protection fees, net ($32) $30 ($65) $49
Net charged (by) to the
Private Company ($32) $30 ($65) $49
Selling, general and
administrative expenses:
Advertising reimbursement $208 $231 $574 $602
Royalty expense ( 100) (100) (200) (200)
Net charged to the Private
Company $108 $131 $374 $402
Net charged to Private
Company $571 $729 $1,482 $1,630
9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis should be read in
conjunction with the consolidated financial statements and
accompanying notes filed as part of this report.
Forward-Looking Information
Except for historical information contained herein, this
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act
of 1995, as amended. These statements involve known and unknown
risks and uncertainties that may cause our actual results or
outcome to be materially different from any future results,
performance or achievements expressed or implied by such forward
looking statements. Factors that might cause such differences
include, but are not limited to the risk factors set forth under
the caption "Risk Factors" in our Annual Report on Form 10-K/A
for the fiscal year ended August 31, 2002. In addition to
statements, which explicitly describe such risks and
uncertainties, investors are urged to consider statements labeled
with the terms "believes," "belief," "expects," "intends,"
"plans" or "anticipates" to be uncertain and forward-looking.
Results of Operations
Prior to an amendment to our warehouse agreement with a related
private company, we were responsible for providing services
related to separately priced fabric protection plans.
Accordingly, in the Consolidated Statements of Operations for the
thirteen and twenty-six weeks ended February 23, 2002, fabric
protection revenue was deferred and amortized into income in
proportion to the costs expected to be incurred.
We have amended our warehouse agreement with the private company
whereby, effective June 23, 2002, the private company became the
sole obligor on all lifetime fabric and leather protection plans
sold by us or the private company on or after such date through
August 28, 2004 and assumed all performance obligations and risk
of loss thereunder. We have no obligation with respect to such
plans. The private company receives a monthly payment of $50,000
subject to an adjustment based on the volume of sales of the
plans. In addition, for a payment of $400,000 (payable $50,000
per month beginning three months after the date of the agreement)
to be made by us, the private company also assumed responsibility
to service and pay any claims related to sales made by us or the
private company prior to June 23, 2002. Accordingly, we have no
obligations for any claims filed under such plans after June 23,
2002 and revenue from the sale of fabric protection plans after
such date is recognized upon delivery of the merchandise.
10
Net sales inclusive of merchandise sales and home delivery income
were $26,924,000 and $30,085,000 for the thirteen weeks ended
March 1, 2003 and February 23, 2002, respectively. Revenue from
the private company was $495,000 and $568,000 for the same
thirteen-week periods, respectively. Net sales of merchandise and
home delivery income decreased by 10.5%, or $3,161,000 in the
current thirteen-week period compared to the thirteen-week period
ended February 23, 2002, primarily due to overall softness of the
economy. Revenue from service contracts increased 284.0% in the
thirteen-week period ended March 1, 2003 to $1,943,000, from
$506,000 for the thirteen-week period ended February 23, 2002 due
to the warehouse agreement amendment.
Net sales for the twenty-six weeks ended March 1, 2003 inclusive
of merchandise sales and home delivery income were $60,944,000 a
decrease of 4.2% compared to $63,593,000 for the twenty-six weeks
ended February 23, 2002. Revenue from the private company was
$1,173,000 for the current period compared to $1,178,000 for the
same period one year ago.
Although we have opened 11 stores since the twenty-six week
period ended February 23, 2002, sales have decreased due to the
present economic conditions in the United States.
Cost of sales, as a percentage of revenue for the thirteen week
and twenty-six week periods ended March 1, 2003 was 68.6% and
67.3% respectively, compared to 70.5% and 69.7% for those periods
ended February 23, 2002. This decrease is primarily a result of
the change in recognition of fabric protection revenue as
described above.
..
Selling, general and administrative expenses were $9,831,000 and
21,371,000, respectively, for the thirteen and twenty-six week
periods ended March 1, 2003 as compared to $9,802,000 and
20,480,000, respectively, for the thirteen and twenty-six week
periods ended February 23, 2002. Selling, general and
administrative expenses as a percentage of revenue were 33.5% and
32.2%, respectively, for the thirteen and twenty-six week periods
ended March 1, 2003 compared to 31.5% and 31.2%, respectively,
for the thirteen and twenty-six week periods ended February 23,
2002. The increase is primarily attributed to an increase in
advertising expenses as well as an increase in promotional costs
associated with our private label card business. The percentage
increase for the thirteen weeks ended March 1, 2003 can also be
attributed to the decrease in sales revenue for that period, as
compared to the sales revenue for the thirteen-week period one
year earlier.
Net loss for the thirteen-week period ended March 1, 2003 was
$821,000 compared to a net loss of $942,000 for the thirteen-week
period ended February 23, 2002. Net loss for the twenty-six week
period ended March 1, 2003 was $318,000 compared to a net loss of
$1,365,000 for the twenty-six week period ended February 23,
2002. Revenue from service contracts was positively impacted
in the current period as a result of the change in how we recognize
revenue from the sale of fabric protection as described above.
However, such benefit was offset by a decrease in net sales.
We believe that concerns over the economy, the equity markets and
current world affairs, including the war in Iraq, have adversely
affected retail sales and currently continue to materially
adversely effect our business, operating results and financial
condition.
11
Liquidity and Capital Resources
As of March 1, 2003, we had an aggregate working capital of
$6,805,000 compared to an aggregate working capital of $7,062,000
as of August 31, 2002 and had available cash and cash equivalents
of $11,628,000 compared to $15,973,000 as of August 31, 2002.
The 27.2% decrease in cash and cash equivalents is a result of
$3,664,000 used in operating activities and $697,000 in capital
expenditures partially offset by $16,000 provided by financing
activities
We continue to fund the operations of certain of our limited
partnership licensees whose results are included in our
consolidated financial statements, some of which continue to
generate operating losses. Any such losses have been consolidated
in our consolidated financial statements. It is our intention to
continue to fund these operations in the future and, if the new
settlement agreements discussed in our Annual Report on Form 10-
K/A for the year ended August 31, 2002, are approved by the
court, we will acquire 100% of these limited partnerships. Our
receivables from the Private Company and the unconsolidated
licensees had been substantially reserved in prior years and
continue to be reserved. There can be no assurance that the
reserved amount of such receivables a total of $4,732,000 as of
March 1, 2003, will be collected.
Starting in 1995, we entered into agreements with the private
company that permits us to offset our current monthly obligations
to one another in an amount up to $1,000,000. Amounts in excess
of $1,000,000 are paid in cash. Based on the payment terms of these
offset agreements, current obligations of the private company and
the unconsolidated licensees as of March 1, 2003, were paid.
Additionally, as part of such agreements, the private company, in
November 1995, agreed to assume certain liabilities owed to us by
the unconsolidated licensees. Our receivables from the private
company and the unconsolidated licensees, which arose in fiscal
1996 and prior years, had been reserved.
In March 1996, we executed a Credit and Security Agreement with
our principal supplier, Klaussner Furniture Industries, Inc.,
which extended the payment terms for merchandise shipped from 60
days to 81 days. Since February 1999, we have not exceeded these
81-day payment terms. As of March 1, 2003, there were no amounts
owed to Klaussner that violated these extended terms. On December
11, 1997, the Credit and Security Agreement was modified to
include a late fee of .67% per month for invoices paid by us
beyond the normal 60-day terms. This provision became effective
in January 1998. As part of the Credit and Security Agreement,
we granted to Klaussner a security interest in all of our assets
including the collateral assignment of our leasehold interests,
our trademarks and a licensee agreement to operate our business
in the event of our default. We expect, as a result of our
positive performance, that this security interest will be
released in fiscal 2003.
We opened seven stores, and had no store closings during the
twenty-six weeks ended March 1, 2003. We spent $697,000 for
capital expenditures during the twenty-six week period and we
anticipate capital expenditures approximating $450,000 during the
balance of fiscal 2003 to support the opening of new stores. As
previously disclosed, Klaussner has agreed to lend us up to
$150,000 per new store, for up to 10 new stores. To date, we
have not borrowed pursuant to this arrangement and we currently
intend to fund any expansion with internally generated capital.
We anticipate that this borrowing facility will be terminated in
connection with the release of Klaussner's liens on our assets
referred to above.
12
Although, general trends in the economy have adversely affected
retail sales and our operating cash flow, in the opinion of
management, cash flow will be adequate to fund operations during
the current and next fiscal year.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Our principal
executive officer and principal financial officer, after
evaluating the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-
14(c)) within 90 days prior to the filing of this report, have
concluded that, based on such evaluation, our disclosure controls
and procedures were adequate and effective to ensure that
material information relating to us, including our consolidated
subsidiaries, was made known to them by others within those
entities, particularly during the period in which this Quarterly
Report on Form 10-Q was being prepared.
Changes in Internal Controls. There were no significant changes
in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of
their evaluation, nor were there any significant deficiencies or
material weaknesses in our internal controls. Accordingly, no
corrective actions were required or undertaken.
13
JENNIFER CONVERTIBLES, INC.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports Filed on Form 8-K
(a) Exhibits filed with this report:
4.1 Form of Non-Qualified Stock Option Agreement with certain
directors and officers.
4.2 Form of Non-Qualified Stock Option Agreement with certain
employees and consultants.
99.1 Certifications pursuant to Rule 13a-14 of the Securities and
Exchange Act of 1934 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 for the quarterly period ended March
1, 2003.
99.2 Certifications pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
for the quarterly period ended March 1, 2003.
14
(b) Reports on Form 8-K:
(1) On January 8, 2003 we filed a current report on Form 8-K
containing the certification required by Section 906 of the
Sarbanes-Oxley Act of 2002 with respect to the Amendment to our
Annual Report on Form 10-K for the fiscal year ended August 31,
2002.
(2) On January 14, 2003, we filed a current report on Form 8-K
containing the certification required by Section 906 of the
Sarbanes-Oxley Act of 2002 with respect to our Quarterly Report
on Form 10-Q for the quarter ended November 30, 2002.
15
JENNIFER CONVERTIBLES, INC.
SIGNATURES
Pursuant to the requirements 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.
JENNIFER CONVERTIBLES, INC.
April 15, 2003 By: /s/ Harley J. Greenfield
Harley J. Greenfield, Chairman of
the Board and Chief Executive
Officer
April 15, 2003 By: /s/ Rami Abada
Rami Abada, Chief Financial Officer
And Chief Operating Officer
16
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Form of Non-Qualified Stock Option Agreement with
certain directors and officers.
4.2 Form of Non-Qualified Stock Option Agreement with
certain employees and consultants.
99.1 Certifications pursuant to Rule 13(a-)14 of the
Securities and Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 for the quarterly period ended March 1,
2003.
99.2 Certifications pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 for the quarterly period
ended March 1, 2003.
17
Exhibit 4.1
JENNIFER CONVERTIBLES, INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of [GRANT DATE], between JENNIFER
CONVERTIBLES, INC. (the "Company") and [NAME] (the "Optionee"),
an employee, director or consultant of the Company.
The Board of Directors of the Company, on [DATE], granted to
the Optionee an option to purchase shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"), as
hereinafter set forth and authorized the execution and delivery
of this Agreement.
Accordingly, the parties hereto agree as follows:
1. The Optionee is granted the option to purchase from the
Company, subject to and under the terms and conditions set forth
in this Agreement, all or any part of [NUMBER] shares of Common
Stock of the Company, at an exercise price of $[PRICE] per share.
All such options shall be treated as non-qualified stock options.
Although this option is not granted pursuant to the Company's
1991 Amended and Restated Incentive and Non-Qualified Stock
Option Plan, a copy of which is annexed hereto as Exhibit A (the
"Plan"), it shall, except as otherwise provided herein, be
governed by the terms and conditions of such Plan.
2. The shares underlying this option shall become
purchasable by the Optionee in installments as follows: options
to purchase [NUMBER] shares shall become exercisable on [1 YR.
FROM GRANT DATE]; options to purchase [NUMBER] shares shall
become exercisable on [2 YRS. FROM GRANT DATE]; options to
purchase [NUMBER] shares shall become exercisable on [3 YRS. FROM
GRANT DATE]; provided, however, all options shall become
immediately exercisable in the event there is a "Change of
Control of the Company." For purposes of the Agreement, a Change
of Control of the Company shall be deemed to have occurred if (1)
any changes occur which would be required to be reported under
item 1 on Form 8-K, promulgated under the Securities Exchange Act
of 1934, (2) the Company is merged with or consolidated into any
other company, other than one controlled by the Optionee, or (3)
18
all or substantially all of the assets of the Company are sold,
leased, exchanged or otherwise transferred to another entity,
other than one controlled by the Optionee.
The shares underlying the exercisable options may be
purchased by Optionee in whole or in part at any time after such
shares become purchasable until the termination of this option.
This option shall terminate on [10 YRS. FROM GRANT DATE] or such
earlier date as is provided in Section 5 hereof, and any shares
not purchased on or before such termination date may not
thereafter be purchased hereunder.
3. Stock purchased pursuant to this Agreement shall be
paid for in full at the time of purchase. Payment may be made
with cash, or, with the express written permission of the
Company, Common Stock of the Company, or a combination of the
two. Upon receipt of written notice of exercise and payment and
delivery of any other required documentation, the Company shall
deliver to the person exercising the option a certificate or
certificates for such shares. It shall be a condition to the
performance of the Company's obligation to issue or transfer
Common Stock upon exercise of this option that the Optionee pay,
or make provision satisfactory to the Company for the payment of,
any taxes which the Company is obligated to collect with respect
to the issue or transfer of Common Stock upon exercise.
If payment is made with Common Stock of the Company,
the fair market value of the stock shall be determined as follows:
If the stock is traded on the Over-the-Counter market except for
the National Market System, fair market value shall be the mean of
the high bid and low asked prices of the stock as reported by the National
Association of Securities Dealers, Inc. on its Automated
Quotation System on the day prior to the date of exercise. If
the stock listed on a national securities exchange or traded in
the National Market System, fair market value shall be the
closing trading price on the day prior to the date of exercise.
If there is no closing trading price or high bid and low asked
prices on the applicable valuation date, the applicable prices on
the most recent day preceding the date of exercise on which such
prices are available shall be used.
4. This option is not transferable otherwise than by will
or the laws of descent and distribution and is exercisable,
during the lifetime of the Optionee, only by the Optionee.
19
5. Except as provided in Section 2 hereof with respect to
a Change in Control, this option shall terminate one year after
the date the Optionee is no longer an employee, director or
consultant of the Company or any parent or subsidiary of the
Company unless he is no longer an employee, director or
consultant by reason of death or disability (as defined in the
Plan); provided, however, the Committee may provide for the
exercise of options which would otherwise terminate, upon such
terms and conditions as the Committee deems appropriate. In the
event of the death of the Optionee, this option or unexercised
portion hereof which is otherwise exercisable on the date of
death shall expire, unless exercised within one year from the
date of death; provided, however, that if in the event of
disability of Optionee, as defined in the Plan, then the
aforementioned right to exercise this option shall exist for one
year from the date of disability. In no event, however, shall
this option or any part hereof be exercisable after [10 YRS. FROM
GRANT DATE]. Nothing in the Plan or in this Agreement shall
confer on the Optionee any right to continue to remain as an
employee, director or consultant of the Company or any parent or
subsidiary of the Company.
6. In the event that dividends payable in Common Stock
during any fiscal year of the Company exceed the aggregate 5% of
the Common Stock issued and outstanding at the beginning of the
year, or in the event there is during any fiscal year of the
Company one or more splits, subdivisions, or combinations of
shares of Common Stock resulting in an increase or decrease by
more than 5% of the shares outstanding at the beginning of the
year, the number of shares deliverable upon the exercise
thereafter of this option shall be increased or decreased
proportionately, as the case may be, without change in the
aggregate purchase price. Common Stock dividends, splits,
subdivisions, or combinations during any fiscal year which do not
exceed in the aggregate 5% of the Common Stock issued and
outstanding at the beginning of such year shall be ignored for
purposes of this Agreement. All adjustments for the fiscal year
shall be made as of the day such action necessitating such
adjustment becomes effective.
7. In case the Company is merged or consolidated with
another corporation, or in case the property or stock of the Company
is acquired by another corporation, or in the case of a separation,
reorganization, or liquidation of the Company, the Board of Directors of the
20
Company, or the Board of Directors of any corporation assuming
the obligations of the Company hereunder, shall either (i) make
appropriate provisions for the protection of this option by the
substitution on an equitable basis of appropriate stock of the
Company, or appropriate stock of the merged, consolidated, or
otherwise reorganized corporation, provided only that such
substitution of options complies with the requirements of Section
425 of the Internal Revenue Code of 1986, as amended, or (ii)
give written notice to the Optionee that this option, which will
become immediately exercisable notwithstanding any waiting period
prescribed, must be exercised within 60 days of the date of such
notice or this option will be terminated. In any such case, the
Board of Directors may, in its discretion, waive the applicable
waiting period before this option becomes exercisable.
8. If the Optionee is granted an approved leave of absence, the
Committee may, if it determines that to do so would be in the best interests
of the Company, provided for continuation of this option during such
leave of absence, such continuation to be on such terms and
conditions as the Committee determines to be appropriate, except
that in no event shall this option be exercisable after [10 YRS.
FROM THE DATE].
9. If at any time the Board of Directors of the Committee
shall determine, in its discretion, that the listing,
registration, or qualification of any of the shares subject to
this option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of this option or the issue or
purchase of shares hereunder, this option may not be exercised in
whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Board or
Directors or the Committee. In addition, the Board or Directors
or the Committee may at any time require as a condition to the
exercise of this option that the shares issuable upon exercise of
this option be acquired for investment purposes only.
10. All notices hereunder shall be in writing, and if to
the Company, shall be delivered personally to the Secretary of the
Company or mailed to its principal office, addressed to the attention
of the Secretary, and if to the Optionee, shall be delivered personally or
mailed to the Optionee at the address noted below. Such addresses may
be changed at any time by notice from one party to the other.
21
11. All decisions or interpretations made by the Board or
any Stock Option Committee with regards to any question arising
hereunder or under the Plan shall be binding and conclusive on
the Company and the Optionee.
12. This Agreement shall bind and inure to the benefit of
the parties hereto and the successors and assigns of the Company
and, to the extent provided in Paragraph 5, the executors,
administrators, legatees, and heirs of the Optionee.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
JENNIFER CONVERTIBLES, INC.
By: _____________________________________
Harley J. Greenfield, Chief Executive Officer
____________________________________
22
SUBSCRIPTION NOTICE
The undersigned, pursuant to an option agreement between the
undersigned and Jennifer Convertibles, Inc. (the "Company"),
hereby irrevocably elects to exercise purchase rights represented
by said option agreement for, and to purchase thereunder
___________ [PLEASE NOTE THAT THIS SHOULD BE LEFT BLANK IN ALL
OPTIONS UNTIL EXERCISED] shares of the Common Stock (the
"Shares") of the Company covered by said option agreement and
herewith makes payment on full therefor pursuant to Section 3 of
such option agreement.
1. If the sale of the Shares and the resale thereof has
not, prior to the date hereof, been registered pursuant to a registration
statement filed and declared effective under the Securities
Act of 1933 (the "Act"), the undersigned hereby agrees,
represents, and warrants that:
(a) I am acquiring the Shares for my own account (and
not for the account of others) for investment and not with a view to the
distribution or resale thereof;
(b) By virtue of my position, I have access to the
same kind of information which would be available in a registration statement
filed under the Act;
(c) I am a sophisticated investor;
(d) I understand that I may not sell or otherwise dispose of such
shares in the absence of either a registration statement under the Act or an
exemption from the registration provisions of the Act; and
(e) The certificates representing such shares may contain a legend
to the effect of (d) above.
2. If the sale of the Shares and the resale thereof has been registered
under the Act, the undersigned hereby represents and warrants that I have
received the applicable prospectus and a copy of the most recent annual
report, as well as all other material sent to stockholders generally.
23
3. I acknowledge that the number of shares hereafter subject to
the option agreement referred to above is hereafter reduced by the number
of shares which I have hereby elected to purchase.
Very truly yours,
Social Security Number:
Address: ______________________________________
______________________________________
24
Exhibit 4.2
JENNIFER CONVERTIBLES, INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of [GRANT DATE], between JENNIFER
CONVERTIBLES, INC. (the "Company") and [NAME] (the "Optionee"),
an employee, director or consultant of the Company.
The Board of Directors of the Company, on [DATE], granted to
the Optionee an option to purchase shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"), as
hereinafter set forth and authorized the execution and delivery
of this Agreement.
Accordingly, the parties hereto agree as follows:
1. The Optionee is granted the option to purchase from the
Company, subject to and under the terms and conditions set forth
in this Agreement, all or any part of [NUMBER] shares of Common
Stock of the Company, at an exercise price of $[PRICE] per share.
All such options shall be treated as non-qualified stock options.
Although this option is not granted pursuant to the Company's
1991 Amended and Restated Incentive and Non-Qualified Stock
Option Plan, a copy of which is annexed hereto as Exhibit A (the
"Plan"), it shall, except as otherwise provided herein, be
governed by the terms and conditions of such Plan.
2. The shares underlying this option shall become
purchasable by the Optionee in installments as follows: options
to purchase [NUMBER] shares shall become exercisable on [1 YR.
FROM GRANT DATE]; options to purchase [NUMBER] shares shall
become exercisable on [2 YRS. FROM GRANT DATE]; options to
purchase [NUMBER] shares shall become exercisable on [3 YRS. FROM
GRANT DATE]; provided, however, all options shall become
immediately exercisable in the event there is a "Change of
Control of the Company." For purposes of the Agreement, a Change
of Control of the Company shall be deemed to have occurred if (1)
any changes occur which would be required to be reported under
item 1 on Form 8-K, promulgated under the Securities Exchange Act
of 1934, (2) the Company is merged with or consolidated into any
other company, other than one controlled by the Optionee, or (3)
25
all or substantially all of the assets of the Company are sold,
leased, exchanged or otherwise transferred to another entity,
other than one controlled by the Optionee.
The shares underlying the exercisable options may be
purchased by Optionee in whole or in part at any time after such
shares become purchasable until the termination of this option.
This option shall terminate on [10 YRS. FROM GRANT DATE] or such
earlier date as is provided in Section 5 hereof, and any shares
not purchased on or before such termination date may not
thereafter be purchased hereunder.
3. Stock purchased pursuant to this Agreement shall be
paid for in full at the time of purchase. Payment may be made
with cash, or, with the express written permission of the
Company, Common Stock of the Company, or a combination of the
two. Upon receipt of written notice of exercise and payment and
delivery of any other required documentation, the Company shall
deliver to the person exercising the option a certificate or
certificates for such shares. It shall be a condition to the
performance of the Company's obligation to issue or transfer
Common Stock upon exercise of this option that the Optionee pay,
or make provision satisfactory to the Company for the payment of,
any taxes which the Company is obligated to collect with respect
to the issue or transfer of Common Stock upon exercise.
If payment is made with Common Stock of the Company,
the fair market value of the stock shall be determined as follows:
If the stock is traded on the Over-the-Counter market except for the
National Market System, fair market value shall be the mean of the high
bid and low asked prices of the stock as reported by the National
Association of Securities Dealers, Inc. on its Automated
Quotation System on the day prior to the date of exercise. If
the stock listed on a national securities exchange or traded in
the National Market System, fair market value shall be the
closing trading price on the day prior to the date of exercise.
If there is no closing trading price or high bid and low asked
prices on the applicable valuation date, the applicable prices on
the most recent day preceding the date of exercise on which such
prices are available shall be used.
4. This option is not transferable otherwise than by will or
the laws of descent and distribution and is exercisable, during
the lifetime of the Optionee, only by the Optionee.
26
5. Except as provided in Section 2 hereof with respect to
a Change in Control, this option shall terminate one year after
the date the Optionee is no longer an employee, director or
consultant of the Company or any parent or subsidiary of the
Company unless he is no longer an employee, director or
consultant by reason of death or disability (as defined in the
Plan); provided, however, the Committee may provide for the
exercise of options which would otherwise terminate, upon such
terms and conditions as the Committee deems appropriate. In the
event of the death of the Optionee, this option or unexercised
portion hereof which is otherwise exercisable on the date of
death shall expire, unless exercised within one year from the
date of death; provided, however, that if in the event of
disability of Optionee, as defined in the Plan, then the
aforementioned right to exercise this option shall exist for one
year from the date of disability. In no event, however, shall
this option or any part hereof be exercisable after [10 YRS. FROM
GRANT DATE]. Nothing in the Plan or in this Agreement shall
confer on the Optionee any right to continue to remain as an
employee, director or consultant of the Company or any parent or
subsidiary of the Company.
6. In the event that dividends payable in Common Stock
during any fiscal year of the Company exceed the aggregate 5% of
the Common Stock issued and outstanding at the beginning of the
year, or in the event there is during any fiscal year of the
Company one or more splits, subdivisions, or combinations of
shares of Common Stock resulting in an increase or decrease by
more than 5% of the shares outstanding at the beginning of the
year, the number of shares deliverable upon the exercise
thereafter of this option shall be increased or decreased
proportionately, as the case may be, without change in the
aggregate purchase price. Common Stock dividends, splits,
subdivisions, or combinations during any fiscal year which do not
exceed in the aggregate 5% of the Common Stock issued and
outstanding at the beginning of such year shall be ignored for
purposes of this Agreement. All adjustments for the fiscal year
shall be made as of the day such action necessitating such
adjustment becomes effective.
7. In case the Company is merged or consolidated with another
corporation, or in case the property or stock of the Company is acquired
27
by another corporation, or in the case of a separation, reorganization, or
liquidation of the Company, the Board of Directors of the
Company, or the Board of Directors of any corporation assuming
the obligations of the Company hereunder, shall either (i) make
appropriate provisions for the protection of this option by the
substitution on an equitable basis of appropriate stock of the
Company, or appropriate stock of the merged, consolidated, or
otherwise reorganized corporation, provided only that such
substitution of options complies with the requirements of Section
425 of the Internal Revenue Code of 1986, as amended, or (ii)
give written notice to the Optionee that this option, which will
become immediately exercisable notwithstanding any waiting period
prescribed, must be exercised within 60 days of the date of such
notice or this option will be terminated. In any such case, the
Board of Directors may, in its discretion, waive the applicable
waiting period before this option becomes exercisable.
8. If the Optionee is granted an approved leave of absence, the
Committee may, if it determines that to do so would be in the best interests
of the Company, provided for continuation of this option during such
leave of absence, such continuation to be on such terms and
conditions as the Committee determines to be appropriate, except
that in no event shall this option be exercisable after [10 YRS.
FROM THE DATE].
9. If at any time the Board of Directors of the Committee
shall determine, in its discretion, that the listing,
registration, or qualification of any of the shares subject to
this option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of this option or the issue or
purchase of shares hereunder, this option may not be exercised in
whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Board or
Directors or the Committee. In addition, the Board or Directors
or the Committee may at any time require as a condition to the
exercise of this option that the shares issuable upon exercise of
this option be acquired for investment purposes only.
10. All notices hereunder shall be in writing, and if to the
Company, shall be delivered personally to the Secretary of the Company
28
or mailed to its principal office, addressed to the attention of the
Secretary, and if to the Optionee, shall be delivered personally or mailed
to the Optionee at the address noted below. Such addresses may
be changed at any time by notice from one party to the other.
11. All decisions or interpretations made by the Board or
any Stock Option Committee with regards to any question arising
hereunder or under the Plan shall be binding and conclusive on
the Company and the Optionee.
12. This Agreement shall bind and inure to the benefit of
the parties hereto and the successors and assigns of the Company
and, to the extent provided in Paragraph 5, the executors,
administrators, legatees, and heirs of the Optionee.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day
and year first above written.
JENNIFER CONVERTIBLES, INC.
By: _____________________________________
Harley J. Greenfield, Chief
Executive Officer
____________________________________
29
SUBSCRIPTION NOTICE
The undersigned, pursuant to an option agreement between the
undersigned and Jennifer Convertibles, Inc. (the "Company"),
hereby irrevocably elects to exercise purchase rights represented
by said option agreement for, and to purchase thereunder
___________ [PLEASE NOTE THAT THIS SHOULD BE LEFT BLANK IN ALL
OPTIONS UNTIL EXERCISED] shares of the Common Stock (the
"Shares") of the Company covered by said option agreement and
herewith makes payment on full therefor pursuant to Section 3 of
such option agreement.
1. If the sale of the Shares and the resale thereof has
not, prior to the date hereof, been
registered pursuant to a registration statement filed and
declared effective under the Securities
Act of 1933 (the "Act"), the undersigned hereby agrees,
represents, and warrants that:
(a) I am acquiring the Shares for my own account (and
not for the account of others)
for investment and not with a view to the distribution or resale
thereof;
(b) By virtue of my position, I have access to the
same kind of information which
would be available in a registration statement filed under the
Act;
(c) I am a sophisticated investor;
(d) I understand that I may not sell or otherwise dispose of such
shares in the absence of either a registration statement under the Act or an
exemption from the registration provisions of the Act; and
(e) The certificates representing such shares may contain a legend
to the effect of (d) above.
2. If the sale of the Shares and the resale thereof has
been registered under the Act, the undersigned hereby represents and warrants
that I have received the applicable prospectus and a copy of the most recent
annual report, as well as all other material sent to stockholders generally.
30
I acknowledge that the number of shares hereafter subject to
the option agreement referred to above is hereafter reduced by the number
of shares which I have hereby elected to purchase.
Very truly yours,
Social Security Number:
Address:______________________________________
______________________________________
31
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Harley J. Greenfield, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Jennifer Convertibles, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report.
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
April 15, 2003 /s/ Harley J. Greenfield
Harley J. Greenfield, Chief Executive Officer
32
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Rami Abada, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Jennifer Convertibles, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report.
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
April 15, 2003 /s/ Rami Abada
Rami Abada, Chief Financial Officer and Chief
Operating Officer
33
Exhibit 99.2
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,
United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002
(subsections (a) and (b) of section 1350, chapter 63 of title 18,
United States Code), each of the undersigned officers of Jennifer
Convertibles, Inc. (the "Company"), does hereby certify, to such
officer's knowledge, that:
The Quarterly Report on Form 10-Q for the quarterly period ended
March 1, 2003 (the "Form 10-Q") of the Company fully complies
with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and the information contained in the Form
10-Q fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: April 15, 2003 /s/ Harley J.Greenfield
Chief Executive Officer
Dated: April 15, 2003 /s/ Rami Abada
Chief Financial Officer
A signed original of this written statement required by Section
906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission
or its staff upon request.
34