Summer Infant, Inc. Announces First Quarter 2007 Results

  
    
  
  
    
      Summer Infant, Inc. (“Company”)(Nasdaq: 
      SUMR, SUMRU, SUMRW), formerly KBL Healthcare Acquisition Corp. II (“KBL”), 
      today announced financial results for the first quarter ended March 31, 
      2007 for Summer Infant (USA), Inc., Summer Infant Europe Limited and 
      Summer Infant Asia Ltd (collectively, the “Summer 
      Operating Companies”). The Company consummated 
      its acquisition of the Summer Operating Companies on March 6, 2007. The 
      Company’s reported GAAP results of operations 
      for the three months ended March 31, 2007 includes the combined activity 
      of KBL from January 1, 2007 through March 6, 2007 and the activity of 
      Summer Infant from March 6, 2007 through March 31, 2007. Therefore, the 
      Company has included and refers below solely to the Pro Forma operating 
      performance of the Summer Operating Companies on a stand alone basis 
      (excluding the combination with KBL) for the first quarter of 2007 and 
      for the first quarter of 2006, as this is the clearest comparison of the 
      underlying operations year over year. The full year 2006 results for 
      both the Summer Operating Companies and KBL may be found in the Form 8-K 
      filing of Summer Infant, Inc. dated March 12, 2007.
    
    
      The Summer Operating Companies’ net revenues 
      for the first quarter of 2007 were $17.170 million, a 29.2% increase 
      from $13.288 million in the first quarter of 2006. This growth was 
      driven primarily by additional penetration at existing customers due to 
      increased product listings and penetration into a larger numbers of 
      stores within customers’ networks. Growth was 
      also driven by strength in the UK which grew 46% year over year. New 
      product introductions and the addition of new customers also contributed 
      to the revenue growth in the quarter. The category that showed the 
      strongest growth was video monitors. In addition, the company generated 
      sales in new categories such as baby gear, which includes strollers, 
      highchairs and swings.
    
    
      The Summer Operating Companies’ gross profit 
      for the first quarter of 2007 was $6.563 million, a 33.2% increase 
      compared to $4.928 million in the first quarter of 2006. Gross margins 
      for the first quarter of 2007 increased approximately 110 basis points 
      to 38.2% from 37.1% in the first quarter of 2006. This increase is 
      primarily attributable to the continued emphasis on cost reduction 
      programs related to our best selling items and a number of quality 
      improvement initiatives that resulted in reduced product returns.
    
    
      The Summer Operating Companies’ selling, 
      general and administrative (“SG&A”) 
      expenses excluding depreciation and amortization for the first quarter 
      of 2007 were $4.907 million, or 28.6% of net revenues, compared to 
      $3.683 million, or 27.7% of net revenues, in the first quarter of 2006. 
      The year-over-year increase was due primarily to an increase in variable 
      selling costs, the addition of employees to support future growth, costs 
      related to the development of the soft goods division and continued 
      investment in new product development. The increase in SG&A as a 
      percentage of revenue was driven by costs associated with the soft goods 
      and baby gear teams, which were not in place in the prior year’s 
      quarter and which are expected to start generating revenue in the second 
      quarter of this year.
    
    
      The Summer Operating Companies’ earnings 
      before interest, taxes, depreciation and amortization (“EBITDA”) 
      for the first quarter of 2007 was $1.656 million, representing a 33.0% 
      increase from the $1.245 million reported in the first quarter of 2006. 
      The EBITDA margin in the quarter increased to 9.6% of sales compared to 
      9.4% in the year ago quarter.
    
    
      “The Summer Operating Companies’ 
      strong growth continued in the first quarter of 2007,” 
      commented Jason Macari, Chief Executive Officer of the Company and the 
      Summer Operating Companies. “We have 
      organically grown revenues from just over $13 million in the first 
      quarter of 2006 to more than $17 million in the first quarter of 2007 by 
      continuing to develop innovative products in all of our core categories, 
      as well as new ones. In addition, we continue to broaden our 
      relationships with existing and new customers. We have just returned 
      from the JPMA tradeshow where we received positive feedback from our 
      customers on our new and existing product lines.”
    
    
      The balance sheet as of March 31, 2007 reflects the injection of capital 
      as a result of the acquisition by KBL Healthcare, which was completed on 
      March 6, 2007. As of March 31, 2007, the Company had approximately $7.9 
      million of cash on the balance sheet, having used approximately $15 
      million of cash to pay down the outstanding balance on its line of 
      credit. The Company now has an untapped $17 million line of credit.
    
    
      Based on customer commitments to date and updated sales data at the 
      retail level, the Company is affirming previously issued guidance for 
      the full year 2007, which calls for net revenues of $70 to $75 million 
      and EBITDA of $7.5 to $8.0 million, before any acquisitions.
    
    
      Mr. Macari stated, “We are very pleased to 
      report that our performance was on plan in the first quarter. Looking 
      ahead, we expect sales in the second and third quarters to increase 
      sequentially from the first quarter due to mid-year product 
      introductions, including the initial shipments of soft goods.”
    
    
      Summer Infant, Inc will host a conference call today to discuss 
      financial results for its first quarter ended March 31, 2007 at 4:30 
      p.m. Eastern Time Monday May 7, 2007. This call is being web cast and 
      can be accessed by visiting the Investor section of our website at www.summerinfant.com. 
      Investors may also listen to the call via the phone by dialing (913) 
      312-1234. In addition, a telephone replay will be available by dialing 
      [phone] (pass code 6349501) through May 21, 2007, at 11:59 p.m. 
      Eastern Time
    
    
      About Summer Infant, Inc.
    
    
      Based in Woonsocket, Rhode Island, the Company is a designer, marketer 
      and distributor of branded durable juvenile health, safety and wellness 
      products (for ages 0-3 years), which are sold principally to large U.S. 
      retailers. The Company currently sells proprietary products in a number 
      of different categories, including nursery audio/video monitors, safety 
      gates, durable bath products, bed rails, infant thermometers and related 
      health and safety products, booster and potty seats, soft goods, 
      bouncers, strollers, highchairs and swings.
    
    
      This release includes certain financial information (EBITDA) not derived 
      in accordance with generally accepted accounting principles (“GAAP”). 
      The Company believes that the presentation of this non-GAAP measure 
      provides information that is useful to investors as it indicates more 
      clearly the ability of Summer’s assets to 
      generate cash sufficient to pay interest on its indebtedness, meet 
      capital expenditure and working capital requirements and otherwise meet 
      its obligations as they become due. We have included a reconciliation of 
      this information to the most comparable GAAP measures in a table below 
      the Statement of Operations.
    
    
      Forward Looking Statements
    
    
      This press release includes forward-looking statements made pursuant to 
      the safe harbor provisions of the Private Securities Litigation Reform 
      Act of 1995 that involve risks and uncertainties. Forward-looking 
      statements are statements that are not historical facts. Such 
      forward-looking statements, based upon the current beliefs and 
      expectations of the Company’s management, are 
      subject to risks and uncertainties, which could cause actual results to 
      differ from the forward-looking statements.
    
    
      
        
          Summer Operating Companies

          
            Pro Forma Consolidated Statements of Operations
          
          
            (in thousands of US dollars)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          For the three months ended March 31,
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net revenues
        
        
        
        
          $ 17,170 
        
        
        
        
          $ 13,288 
        
      
      
        
          Cost of goods sold
        
        
        
        
          10,607 
        
        
        
        
          8,360 
        
      
      
        
          Gross profit
        
        
        
        
          6,563 
        
        
        
        
          4,928 
        
      
      
        
          Selling, general & administrative expenses
        
        
          4,907 
        
        
        
        
          3,683 
        
      
      
        
          Depreciation & amortization
        
        
        
        
          280 
        
        
        
        
          130 
        
      
      
        
          Income before interest
        
        
        
        
          1,376 
        
        
        
        
          1,115 
        
      
      
        
          Interest expense
        
        
        
        
          157 
        
        
        
        
          170 
        
      
      
        
          Income before taxes
        
        
        
        
          $ 1,219 
        
        
        
        
          $ 945 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          EBITDA Reconciliation:
        
        
        
        
        
        
        
        
        
      
      
        
          Income before interest
        
        
        
        
          1,376 
        
        
        
        
          1,115 
        
      
      
        
          Plus: depreciation & amortization
        
        
        
        
          280 
        
        
        
        
          130 
        
      
      
        
          EBITDA
        
        
        
        
          $ 1,656 
        
        
        
        
          $ 1,245 
        
      
      
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
           
        
      
      
        
        
        
        
        
           
        
      
      
        
          
            The above condensed income statement reflects the unaudited 
            operating performance of Summer Operating Companies on a stand 
            alone basis for Q1 of 2007 versus 2006. This is the clearest 
            comparison of the underlying operations year over year, as it 
            excludes the impacts of the combination with KBL. This is a pro 
            forma comparison for informational purposes only. The actual 
            quarterly reporting in Form 10Q will contain the three months of 
            activity of KBL Healthcare plus the 25 days of Summer operating 
            performance subsequent to the merger (March 6, 2007 through March 
            31, 2007).
          
        
      
    
    
      
        
          Summer Infant Inc 

          
            GAAP Condensed Consolidated Statements of Operations
          
          
            (in thousands of US dollars except per share amounts)
          
          
            Unaudited
          
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
            For the three months ended March 31, 2007
          
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Net revenues
        
        
        
        
        
        
          $ 4,771 
        
      
      
        
          Cost of goods sold
        
        
        
        
        
        
          2,925 
        
      
      
        
          Gross profit
        
        
        
        
        
        
          1,846 
        
      
      
        
          Selling, general & administrative expenses
        
        
        
        
          1,863 
        
      
      
        
          Stock option and amortization expense
        
        
        
        
        
        
          182 
        
      
      
        
          Operating loss before interest
        
        
        
        
        
        
          (199)
        
      
      
        
          Interest income (expense)
        
        
        
        
        
        
          532 
        
      
      
        
          Income before taxes
        
        
          333 
        
      
      
        
          Income tax expense
        
        
        
        
        
        
          133 
        
      
      
        
          Net income
        
        
          $ 200 
        
      
      
        
        
        
           
        
      
      
        
          Net income per share- basic and diluted
        
        
        
        
        
        
          $ 0.02 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average shares outstanding
        
        
        
        
        
        
          11,944,000 
        
      
      
        
        
        
        
        
          
             
          
        
        
        
      
      
        
          The results of operations for the three months ended March 31, 2007 
          represents the combined activity of KBL Healthcare from January 1, 
          2007 through March 6, 2007 (which represents general and 
          administrative expenses of KBL Healthcare, net of interest income 
          generated by the $52 million cash balance prior to the acquisition 
          of Summer Infant on March 6, 2007) and the activity of Summer Infant 
          from March 6, 2007 through March 31, 2007.
        
      
    
    
      
        
          Summer Infant, Inc.

          
            Consolidated Balance Sheet
          
          
            (in thousands of US dollars)
          
        
      
      
        
        
        
           
        
      
      
        
        
        
          Unaudited

          
            March 31, 2007
          
        
      
      
        
        
        
           
        
      
      
        
          Cash and cash equivalents
        
        
          $ 7,865 
        
      
      
        
          Trade receivables
        
        
          10,845 
        
      
      
        
          Inventory
        
        
          10,248 
        
      
      
        
          Prepaids and other current assets
        
        
          582 
        
      
      
        
          Total current assets
        
        
          29,540 
        
      
      
        
          Property and equipment, net
        
        
          7,098 
        
      
      
        
          Goodwill and other intangibles
        
        
          39,240 
        
      
      
        
          Other assets
        
        
          509 
        
      
      
        
          Total assets
        
        
          $ 76,387 
        
      
      
        
        
        
           
        
      
      
        
          Line of credit
        
        
          $ 0 
        
      
      
        
          Accounts payable and accrued expenses
        
        
          7,918 
        
      
      
        
          Current portion of long term liabilities
        
        
          3,222 
        
      
      
        
          Total current liabilities
        
        
          11,140 
        
      
      
        
          Long term liabilities, less current portion
        
        
          113 
        
      
      
        
          Total liabilities
        
        
          11,253 
        
      
      
        
        
        
           
        
      
      
        
        
        
           
        
      
      
        
          Total stockholders equity
        
        
          65,134 
        
      
      
        
          Total liabilities & stockholders equity
        
        
          $ 76,387 
        
      
      
        
        
        
           
        
      
      
        
          The March 31, 2007 amounts include the effects of the merger between 
          KBL Healthcare and Summer Infant which occurred on March 6, 2007.