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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 November 29, 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 January 9, 2004 5,713,058 shares of the issuer's common
stock, par value $.01, were outstanding.
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Index
Part I - Financial Information
Item 1. - Financial Statements (Unaudited)
Consolidated Balance Sheets at November 29, 2003
(Unaudited) and August 30, 2003.................................... 2
Comparative Consolidated Statements of Operations
(Unaudited) for the thirteen weeks ended
November 29, 2003 and November 30, 2002 .......................... 3
Comparative Consolidated Statements of Cash Flows
(Unaudited) for the thirteen weeks ended
November 29, 2003 and November 30, 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......................................... 15
Item 6 - Exhibits and Reports on Form 8-K.......................... 15
Signatures ............................................................. 16
Exhibit Index .......................................................... 17
Certification of Chief Executive Officer ............................... 18
Certification of Chief Financial Officer ............................... 20
Certification of Chief Executive Officer ............................... 22
Certification of Chief Financial Officer .............................. 23
PART I - FINANCIAL INFORMATION
Item I - Financial Statements
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
ASSETS
November 29,
2003 August
(Unaudited) 30, 2003
Current assets:
Cash and cash equivalents $16,658 $12,761
Accounts receivable 291 408
Merchandise inventories, net 14,538 12,721
Due from private company,
net of reserves of $4,745 and $4,754 at
November 29, 2003 and August 30, 2003,
respectively 4,980 3,150
Deferred tax asset 2,895 2,895
Prepaid expenses and other current assets 1,045 1,398
Total current assets 40,407 33,333
Store fixtures, equipment and leasehold
improvements, at cost, net 3,552 3,854
Deferred lease costs and other intangibles, net 77 98
Goodwill, at cost, net 1,796 1,796
Other assets (primarily security deposits) 618 626
$46,450 $39,707
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $16,242 $15,049
Customer deposits 14,890 9,203
Accrued expenses and other current liabilities 5,624 4,135
Due to Private Company 550 500
Deferred rent and allowances current portion 774 821
Total current liabilities 38,080 29,708
Deferred rent and allowances, net of current portion 3,105 3,155
Total liabilities 41,185 32,863
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 - 57,381
shares issued and outstanding (liquidation
preference $287) at November 29, 2003
and 26,664 shares issued and outstanding at
August 30, 2003 (liquidation preference $133) 1 -
Common stock, par value $.01 per share,
authorized 12,000,000 shares at November 29,
2003 and 10,000,000 at August 30, 2003; issued
and outstanding 5,713,058 at November 29,
2003 and August 30, 2003 57 57
Additional paid in capital 27,728 27,617
Accumulated deficit (22,521) (20,830)
5,265 6,844
$46,450 $39,707
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
November 29, November 30,
2003 2002
Revenue:
Net sales $ 31,771 $ 34,865
Revenue from service contracts 2,244 2,210
34,015 37,075
Cost of sales, including store occupancy,
warehousing, delivery and service costs 23,814 24,555
Selling, general and administrative
expenses 11,434 11,540
Depreciation and amortization 453 424
35,701 36,519
Operating (loss) income (1,686) 556
Interest income 27 41
Income (loss) before income taxes (1,659) 597
Income taxes 32 94
Net (loss) income $(1,691) $503
Basic income (loss) per common share $(0.30) $0.09
Diluted income (loss) per common share $(0.30) $0.06
Weighted average common shares outstanding
basic income (loss) per share 5,713,058 5,704,058
Effect of potential common share issuance:
Stock options - 647,077
Convertible preferred stock - 1,443,164
Weighted average common shares outstanding
diluted income (loss) per share 5,713,058 7,794,299
See notes to consolidated financial statements.
3
JENNIFER CONVERTIBLES INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Thirteen weeks ended
November 29, November 30,
2003 2002
Cash flows from operating activities:
Net (loss) income $(1,691) $ 503
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 453 424
Deferred rent (97) (119)
Deferred tax benefit - (270)
Recovery of amounts due from Private Company - (9)
Changes in operating assets and liabilities:
Merchandise inventories (1,817) (587)
Prepaid expenses and other current assets 353 89
Accounts receivables 117 (307)
Due from Private Company, net (1,780) (20)
Other assets, net 8 14
Accounts payable trade 1,193 738
Customer deposits 5,687 642
Accrued expenses and other current liabilities 1,490 (339)
Net cash provided by operating activities 3,916 759
Cash flows from investing activities:
Investments - (993)
Capital expenditures (130) (340)
Net cash (used in) investing activities (130) (1,333)
Cash flows from financing activities:
Proceeds from issuance of preferred stock 128 -
Preferred stock dividends paid (17) -
Net cash provided by financing activities 111 -
Net increase (decrease) in cash and cash equivalents 3,897 (574)
Cash and cash equivalents at beginning of period 12,761 15,973
Cash and cash equivalents at end of period $16,658 $15,399
Supplemental disclosure of cash flow
information:
Income taxes paid during the period $53 $510
Interest paid $- $-
See notes to consolidated financial statements.
4
JENNIFER CONVERTIBLES, INC.
For the Thirteen Weeks Ended November 29, 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 plus other
adjustments referred to in Note 3) considered necessary for a
fair presentation have been included. The operating results for
the thirteen-week period ended November 29, 2003 are not
necessarily indicative of the results that may be expected for
the fiscal year ending August 28, 2004.
The balance sheet as of August 30, 2003 has been derived from the
audited financial statements as 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, please refer to the consolidated
financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended August
30, 2003.
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:
11/29/03 8/30/03
Showrooms $6,845 $6,811
Warehouses 7,693 5,910
$14,538 $12,721
Vendor discounts and allowances in respect of 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 when a
non-financed sales order is placed. 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.
5
JENNIFER CONVERTIBLES, INC.
For the Thirteen Weeks Ended November 29, 2003
(In thousands except for share amount)
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.
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 payable by the Company 11 months after the month of
sale 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 after June 23,
2002 and revenue from the sale of fabric protection plans 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.
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 and receipt by the
Company of a fairness opinion or appraisal. The Company also
entered into an Interim Operating Agreement designed to implement
certain of the provisions of the settlement agreement prior to
court approval. While the Company expects the proposed
6
JENNIFER CONVERTIBLES, INC.
For the Thirteen Weeks Ended November 29, 2003
(In thousands except for share amount)
settlement to be presented to the court soon, 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 for the year ended August 30, 2003 for a more complete
description of the terms of the proposed settlement.
In connection with the class action litigation the Company issued
on November 7, 2003 an additional 30,717 shares of Series B
Preferred Stock, convertible into 21,501 shares of the Company's
Common Stock based on valid proofs of claims. The Series B
Preferred Stock shares are non-voting, have a liquidation value
of $5.00 per share and accrue dividends at a rate of $.35 per
share per annum. Accumulated unpaid dividends for the period
from May 1, 2003 through November 29, 2003 on the 57,381 Series B
Preferred Stock outstanding amounted to $12. The preferred stock
is convertible at the option of the Company at any time after the
Common Stock trades at a price of at least $7.00 per share.
Other Matters
The Company is also subject to other litigation including a claim
for $10 million for assault and battery, conversion of identity,
defamation, consumer fraud, and infliction of emotional distress,
and another claim for unspecified damages for sexual harassment,
discrimination, retaliation, mental infliction of emotional
stress, false imprisonment and collateral claims. The matters
are in early stages and the Company denies liability and does not
believe that these matters will have significant impact on its
financial position or results of operations.
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:
Thirteen weeks ended
November 29, November 30,
2003 2002
Net Sales:
Royalty income $30 $31
Warehouse fees 355 343
Delivery charges 610 471
$995 $845
Revenue from Service Contracts:
Fabric protection fees charged by the
Private Company ($150) ($200)
Selling, General and Administrative Expenses:
Advertising reimbursement paid to the Private
Company ($363) ($366)
Royalty expense paid to the Private Company 100 100
Expenses related to shortfall payments
charged by the Private Company 355 0
$92 ($266)
7
JENNIFER CONVERTIBLES, INC.
For the Thirteen Weeks Ended November 29, 2003
(In thousands except for share amount)
NOTE 7: STOCK OPTION PLANS
In December 2002, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure," which
amends the disclosure requirements of SFAS 123, "Accounting for
Stock-Based Compensation" and provides alternative methods of
transition for a voluntary change to the fair value method of
accounting for stock-based employee compensation. As permitted
by SFAS 148, the Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees' (APB 25) and related interpretations in accounting for
its employee stock options. Under APB 25, in the event that the
exercise price of the Company's employee stock options is less
than the market price of the underlying stock on the date of the
grant, compensation expense is recognized. No stock-based
employee compensation cost is reflected in net (loss) income, as
all options granted under the Company's employee stock option
plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following
table illustrates the effect on net (loss) income and (loss)
income per share if the Company had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee
compensation.
Thirteen weeks ended
November 29, November 30,
2003 2002
Net (loss) income, as reported ($1,691) $503
Deduct: Total stock-based
employee compensation
expense determined
under the fair value
based method, net of
related tax effects (134) (39)
Pro forma net (loss) income ($1,825) $464
Basic (loss) income per share:
As reported ($0.30) $0.09
Pro forma ($0.32) $0.08
Diluted (loss) income per
share:
As reported ($0.30) $0.06
Pro forma ($0.32) $0.06
8
JENNIFER CONVERTIBLES, INC.
For the Thirteen Weeks Ended November 29, 2003
(In thousands except for share amount)
The fair value of each option grant on the date of grant is
estimated using the Black-Scholes option-pricing model based on a
weighted average volatility of 49.4% for thirteen-week period
ended November 30, 2002, expected life of options of five years,
weighted average risk free interest rate of 3.12% and a dividend
yield of 0%. The weighted average fair value of options granted
during the thirteen-week period ended November 30, 2002 was
$1.80. No options were granted during the thirteen-week period
ended November 29, 2003.
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 for
the fiscal year ended August 30, 2003. 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
We have amended our warehouse agreement with a related 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 payable by us
11 months after the month of sale 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 after
June 23, 2002 and revenue from the sale of fabric protection
plans is recognized upon delivery of the merchandise.
Net sales include merchandise sales and home delivery income of
$30,776,000 and $34,020,000 and revenue from the private company
of $995,000 and $845,000 for the thirteen-week periods ended
November 29, 2003 and November 30, 2002, respectively. Net sales
of merchandise and home delivery income decreased 9.5% in the
thirteen-week period ended November 29, 2003, down $3,244,000
from the thirteen-week period ended November 30, 2002. Revenue
from service contracts increased 1.5% in the thirteen-week period
ended November 29, 2003 to $2,244,000, from $2,210,000 for the
thirteen-week period ended November 30, 2002.
For the thirteen-week period ended November 29, 2003, we have
$19,048,000 of sales that have not been delivered, compared to
$12,683,000 for the thirteen-week period ended November 30, 2002.
Sales have been delayed as a result of ordering more products
overseas, which results in increased time to deliver and
manufacture the products to our customers. Since sales are
recorded when goods are delivered to the customers, those delayed
sales may be recognized in the second quarter. These
undelivered sales are expected to sell at lower gross margins.
10
Historically, the Company has not experienced significant
difference between written and delivered sales.
Cost of sales, as a percentage of revenue was 70.0% for the
thirteen week period ended November 29, 2003 as compared to 66.2%
for the thirteen-week period ended November 30, 2002. The
increase of 3.8% as a percentage of revenue is primarily
attributable to an increase in store occupancy costs and has the
effect of lowering our gross margins on certain products.
Selling, general and administrative expenses were $11,434,000
(33.6% as a percentage of revenue) during the thirteen-week
period ended November 29, 2003, compared to $11,540,000 (31.1% as
a percentage of revenue) for the thirteen-week period ended
November 30, 2002. Although costs decreased by approximately
$106,000, selling, general and administrative expenses as a
percentage of revenue increased due to the reduction in revenue.
The most significant reason for the decrease in overall expenses
can be attributed to a reduction in compensation to officers and
sales staff of $152,000, a reduction in legal fees of $160,000
and a reduction of fees associated with our private label card
business of $875,000. This was partially offset by the $355,000
charged to us by the private company pursuant to the Interim
Operating Agreement, which includes a requirement that we pay the
private company specified amounts based on decreases in its sales
volume. We also increased our advertising costs by $556,000.
Net loss for the thirteen weeks ended November 29, 2003 was
$1,691,000 compared to net income of $503,000 for the thirteen-
week period ended November 30, 2002. The principal reason for
the variance is a delay in delivering our booked sales as
described above.
Liquidity and Capital Resources
As of November 29, 2003, we had an aggregate working capital of
$2,327,000 compared to an aggregate working capital of $3,625,000
at August 30, 2003 and had available cash and cash equivalents of
$16,658,000 compared to $12,761,000 at August 30, 2003. The
increase in cash and cash equivalents is a result of much fewer
private label card transactions, which require only tax and
delivery at the time of purchase compared to 50% deposit for all
other transactions. The decrease in working capital is a result
of a decrease in delivered sales volume during the thirteen-week
period ended November 29, 2003. Unless the U.S. economy
continues to worsen, we anticipate achieving positive operating
cash flow for fiscal 2004.
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
for the year ended August 30, 2003, are approved, we will acquire
100% of such 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 $4,745,000 as of November 29, 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
11
offset agreements, current obligations of the private company and
the unconsolidated licensees as of November 30, 2002, 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. As described above,
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 November 30, 2002, 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. In May 2003, as a result of our
improved financial condition, we executed a Termination Agreement
and Release whereby Klaussner released the liens on our assets.
In connection with the release, a $1.5 million credit line which
Klaussner had made available to us in 1999 was also terminated.
The credit line had never been drawn upon.
We had no store openings and closings during the thirteen weeks
ended November 29, 2003. We spent $130,000 for capital
expenditures during such thirteen-week period and we anticipate
capital expenditures approximating $400,000 during the balance of
fiscal 2004 to support the opening of new stores. We do not
anticipate needing outside financing for such expansion.
Unless the U.S. economy worsens, we anticipate generating
positive operating cash flow for the year ending August 28, 2004.
In the opinion of management, this positive cash flow and cash on
hand will be adequate to fund operations during the current and
next fiscal year.
12
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In response to the requirements of the Sarbanes-Oxley Act
of 2002, as of the end of the period covered by this Quarterly
Report on Form 10-Q (the" Evaluation Date"), our Chief Executive
Officer and Chief Financial Officer carried out an evaluation of
the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e)
and 15d-15(e)). Based on that evaluation, these officers
concluded that, as of the Evaluation Date, our disclosure
controls and procedures were adequate and effective to ensure
that material information relating to us and the our consolidated
subsidiaries was made known to them by others within those
entities, particularly during the period in which this report was
being prepared.
Changes in Internal Controls
There were no changes in our internal controls over
financial reporting identified in connection with the evaluation
of such internal controls that occurred during our last fiscal
quarter that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial
reporting.
13
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
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.
At our annual meeting of stockholders, which was
held on September 9, 2003, our stockholders:
(1) Elected seven nominees for directors to serve for a term
ending in 2004;
(2) Ratified the appointment of Eisner LLP as our independent
auditors and public accountants for the fiscal year ended
August 30, 2003;
(3) Approved an amendment to our certificate of incorporation to
increase the number of authorized shares of common stock
from 10,000,000 to 12,000,000; and
(4) Adopted the Jennifer Convertibles, Inc. 2003 Stock Option Plan.
The following tables show the common stock votes cast with
respect to the proposals identified above:
Election of Directors: For Withheld
Authority
Harley J. Greenfield 4,752,716 151,755
Rami Abada 4,752,716 151,755
Edward Seidner 4,752,716 151,755
Edward Bohn 4,878,716 25,755
Bernard Wincig 4,850,716 53,755
Kevin Coyle 4,878,716 25,755
Mark Berman 4,878,716 25,755
Proposals 2-4: For Against Abstentions
Proposal 2 4,814,671 88,400 1,400
Proposal 3 4,633,508 260,588 10,375
Proposal 4 1,421,594 494,068 13,700
14
Item 5. Other Information.
None.
Item 6. Exhibits and Reports Filed on Form 8-K
(a) Exhibits filed with this report:
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.1 Certification of Principal Executive Officer pursuant to U.S.C. Section
1350
32.2 Certification of Principal Financial Officer pursuant to U.S.C. Section
1350
(b) Reports on Form 8-K:
None.
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.
January 13, 2004 By: /s/ Harley J. Greenfield
Harley J. Greenfield, Chairman of
the Board and Chief Executive
Officer
January 13, 2004 By: /s/ Rami Abada
Rami Abada, Chief Financial Officer
And Chief Operating Officer
16
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
31.1 Certification of Chief Executive Officer *
31.2 Certification of Chief Financial Officer *
32.1 Certification of Principal Executive Officer
pursuant to U.S.C. Section 1350 *
32.2 Certification of Principal Financial Officer
pursuant to U.S.C. Section 1350 *
* Filed herewith.
17
EXHIBIT 31.1
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 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 report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
18
Date: January 13, 2004
/s/ Harley J. Greenfield
Harley J. Greenfield, Chief Executive Officer
19
EXHIBIT 31.2
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 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 report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
20
Date: January 13, 2004
/s/ Rami Abada
Rami Abada, Chief Financial Officer
21
EXHIBIT 32.1
Certification of Principal Executive Officer
Pursuant to U.S.C. Section 1350
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
I, Harley J. Greenfield, Chief Executive Officer of Jennifer
Convertibles, Inc., hereby certify, to my knowledge, that the
quarterly report on Form 10-Q for the period ending November 29,
2003 of Jennifer Convertibles, Inc. (the "Form 10-Q") 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 Jennifer
Convertibles, Inc.
Dated: January 13, 2004 /s/ Harley J. Greenfield
Harley J. Greenfield
Chief Executive Officer
(Principal Executive Officer)
22
EXHIBIT 32.2
Certification of Principal Financial Officer
Pursuant to U.S.C. Section 1350
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
I, Rami Abada, Chief Financial Officer of Jennifer
Convertibles, Inc., hereby certify, to my knowledge, that the
quarterly report on Form 10-Q for the period ending November 29,
2003 of Jennifer Convertibles, Inc. (the "Form 10-Q") 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 Jennifer
Convertibles, Inc.
Dated: January 13, 2004 /s/ Rami Abada
Rami Abada
Chief Financial Officer
(Principal Financial Officer)
23