Summer Infant, Inc. (formerly KBL Healthcare Acquisition Corp. II) Announces Year-End 2006 Results for Recently Acquired Compani

  
    
  
  
    
      Summer Infant, Inc.(“Company”)(Nasdaq: 
      SUMR, SUMRU, SUMRW), today announced financial results for the year 
      ended December 31, 2006 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. 
      Accordingly, the financial results set forth herein do not include the 
      financial results of the Company for 2006. Further, the financial 
      results of the Summer Operating Companies for 2006 were not included in 
      the financial results for 2006 reported in the Company’s 
      Annual Report on Form 10-KSB that was filed with the Securities and 
      Exchange Commission on March 5, 2007. The Company and the Summer 
      Operating Companies will being reporting combined financial results for 
      the fiscal quarter ending March 31, 2007.
    
    
      The Summer Operating Companies’ net revenues 
      for the year were $52.197 million, a 47% increase from $35.535 million 
      in 2005. This growth was driven primarily by additional penetration at 
      existing customers due to increased product listings and penetration 
      into larger numbers of stores within our customers’ 
      networks. New product introductions, the addition of new customers and 
      international growth also contributed to the revenue growth in the 
      quarter.
    
    
      The Summer Operating Companies’ gross profit 
      for 2006 was $20.324 million, a 62% increase as compared to $12.527 
      million in 2005. Gross margins for 2006 increased approximately 360 
      basis points to 38.9% from 35.3% in 2005. This increase is primarily 
      attributable to the implementation of cost reduction programs, a number 
      of quality improvement initiatives that resulted in reduced product 
      returns and a shift in the product mix towards higher margin products.
    
    
      The Summer Operating Companies’ selling, 
      general and administrative (“SG&A”) 
      expenses for 2006 were $17.172 million, or 32.9% of net revenues, as 
      compared to $10.559 million, or 29.7% of net revenues, in 2005. During 
      2006, the company hired additional senior-level employees to support 
      future growth, added a team to develop products in the Soft Goods 
      division, continued to invest heavily in new product development and 
      experienced higher selling costs as a result of the rapid growth in 
      sales. In addition, the Summer Operating Companies incurred significant 
      professional fees in connection with their acquisition by the Company 
      and litigation related to the hiring of certain employees for the Soft 
      Goods division. These professional fees are considered to be 
      non-recurring. Excluding these non-recurring items, the Summer Operating 
      Companies’ adjusted SG&A expenses were 
      $15.942 million, or 30.5% of net revenues, in 2006. The Company expects 
      to reduce SG&A as a percent of sales in 2007 and beyond by leveraging 
      its fixed cost structure over a larger sales base.
    
    
      The Summer Operating Companies’ earnings 
      before interest, taxes, depreciation and amortization (“EBITDA”) 
      for 2006 was $3.820 million, representing more than a 60% increase from 
      the $2.379 million reported in 2005. After adjusting for the 
      non-recurring items mentioned above, adjusted EBITDA was $5.050 million, 
      which represents over a 110% increase from 2005. Net income for the year 
      ended December 31, 2006 increased 46% to $1.929 million as compared to 
      $1.325 million for the same period in 2005.
    
    
      “The Summer Operating Companies’ 
      growth continued to be strong in 2006,” 
      commented, Jason Macari, Chief Executive Officer of the Company and the 
      Summer Operating Companies. “We have 
      organically grown revenues from just over $20 million in 2004 to more 
      than $52 million in 2006 by continuing to develop innovative products in 
      all our core categories and broaden our relationships with existing and 
      new customers. We experienced solid sales performance across all product 
      categories and all customer classes. Thanks to our expanding product 
      line and increasing mindshare among consumers, we believe Summer Infant 
      is rapidly becoming a critical supplier to a larger group of retail 
      customers.”
    
    
      The Summer Operating Companies’ balance sheet 
      as of December 31, 2006 reflects the increased working capital 
      requirements associated with the significant growth in net revenues. The 
      investment in working capital was funded through increased borrowings on 
      an existing line of credit as well as cash generated from operations. 
      The balance sheet also reflects an investment of approximately $2.7 
      million related to the construction of the previously announced new 
      headquarters and distribution center scheduled to be completed in March 
      2007, all of which was financed by the Summer Operating Companies’ 
      primary lender.
    
    
      Based on customer commitments to date and updated budget assumptions, 
      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 acquisitions. Mr. Macari stated, “We 
      expect to continue our track record of strong organic growth during 
      2007. In addition, the acquisition of the Summer Operating Companies by 
      the Company provides the capital to expand even more aggressively, 
      including pursuing attractive acquisition opportunities. I’ve 
      never been more excited about the opportunities available to us.”
    
    
      About Summer Infant, Inc.
    
    
      Based in North Smithfield, 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 has over sixty proprietary 
      products, including nursery audio/video monitors, safety gates, durable 
      bath products, bed rails, infant thermometers and related health and 
      safety products, booster and potty seats, bouncers, soft goods, bedding, 
      strollers and large furniture.
    
    
      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 Infant, Inc.

          
            Consolidated Statements of Operations
          
          
            (in thousands of US dollars)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
          
            For the year ended
          
          
            December 31,
          
        
      
      
        
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net revenues
        
        
        
        
        
        
          $ 52,197 
        
        
        
        
          $ 35,535 
        
      
      
        
          Cost of goods sold
        
        
        
        
        
        
          31,873 
        
        
        
        
          23,008 
        
      
      
        
          Gross profit
        
        
        
        
        
        
          20,324 
        
        
        
        
          12,527 
        
      
      
        
          Selling, general & administrative expenses
        
        
        
        
        
        
          17,172 
        
        
        
        
          10,559 
        
      
      
        
          Income before interest
        
        
        
        
        
        
          3,152 
        
        
        
        
          1,968 
        
      
      
        
          Interest expense
        
        
        
        
        
        
          938 
        
        
        
        
          451 
        
      
      
        
          Income before taxes and minority interest
        
        
        
        
        
        
          2,214 
        
        
        
        
          1,517 
        
      
      
        
          Income tax expense
        
        
        
        
        
        
          26 
        
        
        
        
          31 
        
      
      
        
          Net income before minority interest
        
        
        
        
        
        
          $ 2,188 
        
        
        
        
          $ 1,486 
        
      
      
        
          Minority Interest in net income of affiliates
        
        
        
        
        
        
          259 
        
        
        
        
          161 
        
      
      
        
          Net income
        
        
        
        
        
        
          $ 1,929 
        
        
        
        
          $ 1,325 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          EBITDA Reconciliation:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Income before interest
        
        
        
        
        
        
          3,152 
        
        
        
        
          1,968 
        
      
      
        
          Plus: depreciation & amortization
        
        
        
        
        
        
          668 
        
        
        
        
          411 
        
      
      
        
          EBITDA
        
        
        
        
           
        
        
          $ 3,820 
        
        
        
        
          $ 2,379 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Plus: deal-related fees
        
        
        
        
        
        
          731 
        
        
        
        
          0 
        
      
      
        
          Plus: litigation fees
        
        
        
        
        
        
          499 
        
        
        
        
          0 
        
      
      
        
          Adjusted EBITDA
        
        
        
        
        
        
          $ 5,050 
        
        
        
        
          $ 2,379 
        
      
    
    
    
    
      
        
          Summer Infant, Inc. and Affiliates

          
            Consolidated Balance Sheets
          
          
            (in thousands of US dollars)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
            December 31, 2006
          
        
        
        
        
          
            December 31, 2005
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $ 715 
        
        
        
        
          $ 1,115 
        
      
      
        
          Trade receivables
        
        
        
        
          8,915 
        
        
        
        
          6,210 
        
      
      
        
          Inventory
        
        
        
        
          11,075 
        
        
        
        
          7,860 
        
      
      
        
          Prepaids and other current assets
        
        
        
        
          252 
        
        
        
        
          199 
        
      
      
        
          Total current assets
        
        
        
        
          20,957 
        
        
        
        
          15,384 
        
      
      
        
          Property and equipment, net
        
        
        
        
          6,139 
        
        
        
        
          2,440 
        
      
      
        
          Goodwill
        
        
        
        
          92 
        
        
        
        
          92 
        
      
      
        
          Goodwill and intangibles, net
        
        
        
        
          75 
        
        
        
        
          91 
        
      
      
        
          Total assets
        
        
        
        
          $ 27,263 
        
        
        
        
          $ 18,007 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Line of credit
        
        
        
        
          $ 11,342 
        
        
        
        
          $ 7,087 
        
      
      
        
          Accounts payable
        
        
        
        
          6,959 
        
        
        
        
          6,713 
        
      
      
        
          Accrued expenses
        
        
        
        
          1,574 
        
        
        
        
          902 
        
      
      
        
          Current portion of long term liabilities
        
        
        
        
          3,211 
        
        
        
        
          280 
        
      
      
        
          Total current liabilities
        
        
        
        
          23,086 
        
        
        
        
          14,982 
        
      
      
        
          Long term liabilities, less current portion
        
        
        
        
          195 
        
        
        
        
          560 
        
      
      
        
          Total liabilities
        
        
        
        
          23,281 
        
        
        
        
          15,542 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Minority interest
        
        
        
        
          629 
        
        
        
        
          370 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Common stock & paid in capital
        
        
        
        
          220 
        
        
        
        
          220 
        
      
      
        
          Retained earnings
        
        
        
        
          3,008 
        
        
        
        
          1,884 
        
      
      
        
          Accumulated other comprehensive income (loss)
        
        
        
        
          125 
        
        
        
        
          (9)
        
      
      
        
          Total stockholders equity
        
        
        
        
          3,353 
        
        
        
        
          2,095 
        
      
      
        
          Total liabilities & stockholders equity
        
        
        
        
          $ 27,263 
        
        
        
        
          $ 18,007