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Mattress Firm Announces Fourth Fiscal Quarter and Full Fiscal Year Financial Results



  Mattress Firm Announces Fourth Fiscal Quarter and Full Fiscal Year Financial
  Results

          — Net Sales Increased 37.0% in the Fourth Fiscal Quarter —

  — Fourth Fiscal Quarter Earnings per Diluted Share of $0.30 on an Adjusted
                        Basis, $0.22 on a GAAP Basis —

             — Provides Financial Guidance for Fiscal Year 2013 —

Business Wire

HOUSTON -- March 26, 2013

Mattress Firm Holding Corp. (NASDAQ: MFRM) today announced its financial
results for the fourth fiscal quarter (13 weeks) and full fiscal year (52
weeks) ended January 29, 2013. Net sales for the fourth fiscal quarter
increased 37.0% to $258.2 million, reflecting incremental sales from new and
acquired stores, offset by a comparable-store sales decline of 1.6%. For the
full fiscal year, net sales increased 43.1% to $1,007.3 million and
comparable-store sales increased 6.1%. The Company reported fourth fiscal
quarter earnings per diluted share (“EPS”) on a generally accepted accounting
principles (“GAAP”) basis of $0.22, and EPS on a non-GAAP adjusted basis,
excluding acquisition-related, noncash impairment and other costs
(“Adjusted”), of $0.30. Diluted EPS on a GAAP basis and Adjusted basis are
reconciled in the table below:

                                                           
Fourth Fiscal Quarter Reconciliation of GAAP to Adjusted EPS

See “Reconciliation of Reported (GAAP) to Adjusted Statements of Operations
Data” for Notes
                                                              
                                      Thirteen Weeks         Fifty-Two Weeks
                                      Ended                  Ended
                                      January 29, 2013       January 29, 2013
GAAP EPS                              $       0.22           $       1.18
Acquisition-related costs (2)                 0.03                   0.23
Secondary offering costs (3)                  0.00                   0.04
Impairment and other expenses                 0.04                   0.04
(4)(5)
Adjusted EPS *                        $       0.30           $       1.49
                                                              

* Due to rounding to the nearest cent, totals may not equal the sum of the
lines in the table above.

“We achieved significant growth in 2012, unprecedented in our industry, as we
drove net sales by 43.1% to above the $1 billion mark and increased our store
base by 45.0% to over 1,000 store units. We also delivered meaningful
year-over-year increases across key financial metrics, including a 50.6%
increase in Adjusted operating income and 6.1% comparable-store sales growth
during our first full year as a public company,” remarked Steve Stagner,
Mattress Firm’s president and chief executive officer. “Overall, fiscal 2012
was a record year for Mattress Firm; an impressive accomplishment in light of
the challenges associated with adding 328 stores, including 242 stores through
accretive acquisitions. Looking to 2013, with the integration of the acquired
stores substantially complete, we expect to drive sales and operating margin
expansion from the ongoing sales growth of acquired stores, which will be
enhanced as we pass the anniversary dates of our 2012 acquisitions. We
envision that this growth, combined with a third consecutive year of opening
more than 100 organic new stores in line with the continued execution of our
relative market share strategy of penetrating markets, will further strengthen
and fortify our leadership positions. We are extremely excited about our
potential for fiscal 2013 and believe we are well positioned to drive
additional value for our shareholders as we move through the year.”

Fourth Quarter Financial Summary

  * Net sales for the fourth fiscal quarter increased 37.0% to $258.2 million,
    reflecting incremental sales from new and acquired stores, offset by a
    comparable-store sales decline of 1.6%.
  * Opened 30 new stores, closed 11, and acquired 27 former Mattress Source
    stores in December 2012, bringing the total number of Company-operated
    stores to 1,057 as of the end of the fiscal year.
  * Income from operations was $17.2 million. Excluding $4.3 million of
    acquisition-related costs, impairment charges and debt amendment expenses,
    Adjusted income from operations was $21.5 million, representing an
    increase of $5.8 million, or 37.0%, over Adjusted income from operations
    for the comparable prior year period. Please refer to “Reconciliation of
    Reported (GAAP) to Adjusted Statements of Operations Data” for a
    reconciliation of income from operations to Adjusted income from
    operations and other information.
  * Adjusted operating margin remained unchanged at 8.3% of net sales as
    compared to the same quarter of fiscal 2011, and consisted of a 230
    basis-point improvement in general and administrative expense leverage,
    offset by a 200 basis-point decrease in gross margin from lower sales
    productivity of acquired stores, a 20 basis point decline in franchise
    fees due to the Company growing its sales at a rate faster than the
    franchise base, and 10 basis-points of deleverage in other expense
    categories.
  * Net income was $7.6 million and GAAP EPS was $0.22. Excluding $2.4
    million, net of income taxes, of acquisition-related costs and impairment
    charges and other costs, Adjusted net income was $10.0 million and
    Adjusted EPS was $0.30, representing increases of approximately 43.0% over
    Adjusted net income and Adjusted EPS for the comparable prior year period.
    Please refer to “Reconciliation of Reported (GAAP) to Adjusted Statements
    of Operations Data” for a reconciliation net income and GAAP EPS to
    Adjusted net income and Adjusted EPS, respectively, and other information.

Acquisitions

In December 2012, the Company completed the acquisition of the assets and
operations of Factory Mattress & Water Bed Outlet of Charlotte, Inc. (dba
“Mattress Source”), including 27 mattress specialty stores in North Carolina
and South Carolina, for approximately $11.4 million. The Company has commenced
rebranding of the former Mattress Source stores as Mattress Firm, with
completion anticipated to occur in the first half of fiscal 2013.

Consistent with our core relative market share strategy, the Mattress Source
acquisition added stores in markets where Company-operated Mattress Firm
stores were already established. The addition of the acquired stores, once
rebranded, is expected to drive advertising efficiency and improve
market-level profitability in those markets.

With respect to the acquisitions of former Mattress Giant stores in November
2011 and May 2012, the rebranding of the acquired stores was substantially
complete by the end of fiscal 2012. The per store sales results of those
stores both prior to and subsequent to their rebranding is demonstrated by the
charts accompanying this release.

Full Fiscal Year Financial Summary (52 weeks ended January 29, 2013)

  * Net sales increased $303.4 million, or 43.1%, to $1,007.3 million as a
    result of incremental sales from new and acquired stores and
    comparable-store sales growth of 6.1%.
  * Company-operated stores increased 328, or 45.0%, to 1,057 at year end, as
    a result of opening 118 new stores, while closing 32 stores, and
    acquisitions that added 242 stores.
  * Net income for fiscal 2012 was $39.9 million and GAAP EPS was $1.18.
    Excluding $10.5 million, net of income taxes, of acquisition-related
    costs, secondary offering costs and impairment charges and other costs,
    Adjusted net income was $50.4 million and Adjusted EPS was $1.49,
    representing an increase of approximately 60.0% over prior year Adjusted
    net income and 58.5% over prior year Adjusted EPS, respectively. Please
    refer to “Reconciliation of Reported (GAAP) to Adjusted Statements of
    Operations Data” for a reconciliation net income and GAAP EPS to Adjusted
    net income and Adjusted EPS, respectively, and other information.
  * The Company had cash and cash equivalents of $14.6 million at the end of
    fiscal 2012. Net cash provided by operating activities was $78.7 million
    for fiscal 2012. As of January 29, 2013, there was $21.0 million of
    borrowings under the revolving portion of the 2012 Senior Credit Facility
    and approximately $1.4 million in outstanding letters of credit, with
    additional borrowing capacity of $77.6 million.

Senior Credit Facility Amendment

On November 5, 2012, the Company completed a restatement amendment of its
senior credit facility (“2012 Senior Credit Facility”). As a result of the
restatement amendment, the maturity of term loan borrowings in the aggregate
amount of $200 million was extended by two years to January 18, 2016, the
maturity of the revolving loan facility was extended by two years to January
18, 2015 and the revolving loan commitment was increased from $35 million to
$100 million. The interest rate on the extended term loan borrowings was
revised to LIBOR plus a margin of 3.5%, representing a 1.25% increase over the
previous interest rate. Furthermore, the annual amount of permitted capital
expenditures was increased to $80 million from the previous annual amount of
$40 million, beginning with fiscal 2012.

Financial Guidance

The Company is issuing guidance for the fiscal year (52 weeks) ending January
28, 2014 (“fiscal year 2013”).

Full Fiscal Year Ending January 28, 2014     Range
                                              
Net sales (in billions)                      $1.237 to $1.250
New stores                                   110 to 120
Net store unit increase                      90 to 95
GAAP EPS                                     $1.81 to $1.89
Acquisition-related costs                    $0.01
ERP system implementation costs              $0.07 to $0.09
Adjusted EPS                                 $1.90 to $1.98
Comparable-store sales growth                low single digit
                                              

Call Information

A conference call to discuss fourth fiscal quarter and full fiscal year
results is scheduled for today, March 26, 2013, at 5:00 p.m. Eastern Time. The
call will be hosted by Steve Stagner, president and chief executive officer,
and Jim Black, chief financial officer.

The conference call will be accessible by telephone and the Internet. To
access the call, participants from within the U.S. may dial (877) 407-3982,
and participants from outside the U.S. may dial (201) 493-6780. Participants
may also access the call via live webcast by visiting the Company’s investor
relations Web site at http://www.mattressfirm.com.

The replay of the call will be available from approximately 8:00 p.m. Eastern
Time on March 26, 2013 through midnight Eastern Time on April 9, 2013. To
access the replay, the domestic dial-in number is (877) 870-5176, the
international dial-in number is (858) 384-5517, and the passcode is 410722.
The archive of the webcast will be available on the Company’s Web site for a
limited time.

Net Sales and Store Unit Information

The components of the net sales increase were as follows (in millions):

                           Increase (Decrease) in Net Sales
                           Thirteen Weeks       Fifty-Two Weeks
                           Ended                Ended
                           January 29, 2013     January 29, 2013
Comparable-store sales     $     (2.9   )       $    41.9
New stores                       27.0                120.8
Acquired stores                  47.5                148.8
Closed stores                    (1.9   )            (8.1    )
                           $     69.7           $    303.4    
                                                              

The composition of net sales by major category of product and services were as
follows (in millions):

                 Thirteen Weeks Ended                            Fifty-Two Weeks Ended
                 January     % of        January     % of        January     % of        January       % of
                 31,                     29,                     31,                     29,
                 2012        Total       2013        Total       2012        Total       2013          Total
Specialty        $ 93.8      49.7  %     $ 126.2     48.9  %     $ 318.9     45.3  %     $ 504.9       50.1  %
mattresses
Conventional       78.4      41.6  %       110.8     42.9  %       323.4     45.9  %       418.0       41.5  %
mattresses
Furniture
and                12.6      6.7   %       16.5      6.4   %       46.4      6.6   %       65.7        6.5   %
accessories
Total
product            184.8     98.0  %       253.5     98.2  %       688.7     97.8  %       988.6       98.1  %
sales
Delivery
service            3.8       2.0   %       4.7       1.8   %       15.2      2.2   %       18.7        1.9   %
revenues
Total net        $ 188.6     100.0 %     $ 258.2     100.0 %     $ 703.9     100.0 %     $ 1,007.3     100.0 %
sales
                                                                                                              

Prior-year components of the Company’s net sales have been reallocated between
specialty mattresses and conventional mattresses to be consistent with
current-year presentation.

The activity with respect to the number of Company-operated store units was as
follows:

                                     Thirteen Weeks       Fifty-Two Weeks
                                     Ended                Ended
                                     January 29, 2013     January 29, 2013
Store units, beginning of period     1,011                729
New stores                           30                   118
Acquired stores                      27                   242
Closed stores                        (11        )         (32        )
Store units, end of period           1,057                1,057       
                                                                      

Forward-Looking Statements

Certain statements contained in this press release are not based on historical
fact and are “forward-looking statements” within the meaning of applicable
federal securities laws and regulations. In many cases, you can identify
forward-looking statements by terminology such as “may,” “would,” “should,”
“could,” “forecast,” “feel,” “project,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the
negative of these terms or other comparable terminology; however, not all
forward-looking statements contain these identifying words. The
forward-looking statements contained in this press release, such as those
relating to our net sales, GAAP and Adjusted EPS and net store unit change for
fiscal year 2013, are subject to various risks and uncertainties, including
but not limited to downturns in the economy; reduction in discretionary
spending by consumers; our ability to execute our key business strategies and
advance our market-level profitability; our ability to profitably open and
operate new stores and capture additional market share; our relationship with
our primary mattress suppliers; our dependence on a few key employees; the
possible impairment of our goodwill or other acquired intangible assets; the
effect of our planned growth and the integration of our acquisitions on our
business infrastructure; the impact of seasonality on our financial results
and comparable-store sales; our ability to raise adequate capital to support
our expansion strategy; our success in pursuing and completing strategic
acquisitions; the effectiveness and efficiency of our advertising
expenditures; our success in keeping warranty claims and comfort exchange
return rates within acceptable levels; our ability to deliver our products in
a timely manner; our status as a holding company with no business operations;
our ability to anticipate consumer trends; risks related to our controlling
stockholder, J.W. Childs Associates, L.P.; heightened competition; changes in
applicable regulations; risks related to our franchises, including our lack of
control over their operation and our liabilities if they default on note or
lease obligations; risks related to our stock and other factors set forth
under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year
ended January 31, 2012 filed with the Securities and Exchange Commission
(“SEC”) on April 20, 2012 (as amended on May 30, 2012) and our other SEC
filings. Forward-looking statements relate to future events or our future
financial performance and reflect management’s expectations or beliefs
concerning future events as of the date of this press release. Actual results
of operations may differ materially from those set forth in any
forward-looking statements, and the inclusion of a projection or
forward-looking statement in this press release should not be regarded as a
representation by us that our plans or objectives will be achieved. We do not
undertake to publicly update or revise any of these forward-looking
statements, whether as a result of new information, future events or
otherwise.

Non-GAAP Financial Measures

Adjusted EBITDA is defined as net income before income tax expense, interest
income, interest expense, depreciation and amortization (“EBITDA”), without
giving effect to non-cash goodwill and intangible asset impairment charges,
gains or losses on store closings and impairment of store assets, gains or
losses related to the early extinguishment of debt, financial sponsor fees and
expenses, non-cash charges related to stock based awards and other items that
are excluded by management in reviewing the results of operations. We have
presented Adjusted EBITDA because we believe that the exclusion of these items
is appropriate to provide additional information to investors about our
ongoing operating performance excluding certain non-cash and other items and
to provide additional information with respect to our ability to comply with
various covenants in documents governing our indebtedness and as a means to
evaluate our period-to-period results. In evaluating Adjusted EBITDA, you
should be aware that in the future we may incur expenses that are the same as
or similar to some of the adjustments in this presentation. Our presentation
of Adjusted EBITDA should not be construed to imply that our future results
will be unaffected by any such adjustments. We have provided this information
to analysts, investors and other third parties to enable them to perform more
meaningful comparisons of past, present and future operating results and as a
means to evaluate the results of our ongoing operations. Management also uses
Adjusted EBITDA to determine executive incentive compensation payment levels.
In addition, our compliance with certain covenants under the credit agreement
between our indirect wholly owned subsidiary, Mattress Holding Corp., certain
lenders, and UBS Securities LLC, as sole arranger and bookrunner and a lender,
are calculated based on similar measures, which differ from Adjusted EBITDA
primarily by the inclusion of pro forma results for acquired businesses in
those similar measures. Other companies in our industry may calculate Adjusted
EBITDA differently than we do. Adjusted EBITDA is not a measure of performance
under U.S. GAAP and should not be considered as a substitute for net income
prepared in accordance with U.S. GAAP. Adjusted EBITDA has significant
limitations as an analytical tool, and you should not consider it in isolation
or as a substitute for analysis of our results as reported under U.S. GAAP.

The following table contains a reconciliation of our net income determined in
accordance with U.S. GAAP to EBITDA and Adjusted EBITDA for the periods
indicated (in thousands):

                                                     
                        Thirteen Weeks Ended          Fifty-Two Weeks Ended
                        January        January        January        January 29,
                        31,            29,            31,
                        2012           2013           2012           2013
Net income              $ 17,372       $ 7,594        $ 34,351       $ 39,871
Income tax expense        (9,685 )       6,726          (8,815 )       26,698
Interest income           (5     )       (10    )       (9     )       (11     )
Interest expense          3,831          2,872          29,310         9,258
Depreciation and          4,499          7,075          17,450         23,507
amortization
Intangible assets
and other                 464            534            1,718          1,506    
amortization
EBITDA                    16,476         24,791         74,005         100,829  
Intangible asset          -              2,100          -              2,100
impairment charge
Loss on store
closings and              435            783            759            1,050
impairment of store
assets
Loss from debt            3,831          -              5,704          -
extinguishment
Financial sponsor         350            11             644            74
fees and expenses
Stock-based               465            1,203          523            2,856
compensation
Secondary offering        -              (20    )       -              1,915
costs
Vendor new store          2,396          16             3,169          953
funds (a)
Acquisition-related       708            1,906          886            11,980
costs (b)
Other (c)                 873            107            1,797          (789    )
Adjusted EBITDA         $ 25,534       $ 30,897       $ 87,487       $ 120,968  
                                                                      

          Adjustment to recognize vendor funds received upon the opening of a
(a)       new store in the period opened, rather than over 36-months as
          presented in our financial statements, which is consistent with how
          management has historically reviewed our results of operations.
           
          Consists of noncash purchase accounting adjustments made to
          inventories resulting from acquisitions and other
(b)       acquisition-related cash costs included in net income, such as
          direct acquisition costs and costs related to training and
          integration of acquired businesses.
           
(c)       Consists of various items that management excludes in reviewing the
          results of operations.
           

Adjusted EPS and the other “Adjusted” data provided in this press release are
also considered non-GAAP financial measures. We report our financial results
in accordance with GAAP; however, management believes evaluating our ongoing
operating results may be enhanced if investors have additional non-GAAP basis
financial measures to facilitate year-over-year comparisons. Management
reviews non-GAAP financial measures to assess ongoing operations and considers
them to be effective indicators, for both management and investors, of our
financial performance over time. Our management does not advocate that
investors consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP. For
more information, please refer to “Reconciliation of Reported (GAAP) to
Adjusted Statements of Operations Data” below.

                                                                  
MATTRESS FIRM HOLDING CORP.

Consolidated Balance Sheets

(In thousands, except share amounts)
                                                                    
                                                  January 31,      January 29,
                                                  2012             2013
Assets
Current assets:
Cash and cash equivalents                         $ 47,946         $ 14,556
Accounts receivable, net                            18,607           26,246
Inventories                                         40,961           63,228
Deferred income taxes                               12,574           3,710
Prepaid expenses and other current assets           12,054           18,855   
Total current assets                                132,142          126,595
Property and equipment, net                         95,674           144,612
Intangible assets, net                              84,795           82,479
Goodwill                                            291,141          358,978
Debt issue costs and other, net                     9,729            12,015   
Total assets                                      $ 613,481        $ 724,679  
                                                                    
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of           $ 2,414          $ 33,930
long-term debt
Accounts payable                                    42,396           64,642
Accrued liabilities                                 31,780           41,106
Customer deposits                                   6,294            8,012    
Total current liabilities                           82,884           147,690
Long-term debt, net of current maturities           225,940          219,069
Deferred income taxes                               31,045           26,800
Other noncurrent liabilities                        49,353           63,624   
Total liabilities                                   389,222          457,183  
                                                                    
Commitments and contingencies
                                                                    
Stockholders' equity:
Common stock, $0.01 par value; 120,000,000
shares authorized;
33,768,828 and 33,795,630 shares issued and
outstanding at
January 31, 2012 and January 29, 2013,              338              338
respectively
Additional paid-in capital                          361,717          365,083
Accumulated deficit                                 (137,796 )       (97,925 )
Total stockholders' equity                          224,259          267,496  
Total liabilities and stockholders' equity        $ 613,481        $ 724,679  
                                                                              

                                                                                                                                 
MATTRESS FIRM HOLDING CORP.

Consolidated Statements of Operations

(In thousands, except share and per share amounts)
                                                                                                                                   
                     Thirteen Weeks Ended                                        Fifty-Two Weeks Ended
                     January 31,        % of       January 29,        % of       January 31,        % of       January 29,        % of
                     2012               Sales      2013               Sales      2012               Sales      2013               Sales
Net sales            $ 188,558          100  %     $ 258,246          100  %     $ 703,910          100  %     $ 1,007,337        100  %
Cost of sales          112,685          59.8 %       160,273          62.1 %       428,018          60.8 %       614,572          61.0 %
Gross profit
from retail            75,873           40.2 %       97,973           37.9 %       275,892          39.2 %       392,765          39.0 %
operations
Franchise fees
and royalty            1,296            0.7  %       1,374            0.6  %       4,697            0.7  %       5,396            0.5  %
income
                       77,169           40.9 %       99,347           38.5 %       280,589          39.9 %       398,161          39.5 %
Operating
expenses:
Sales and
marketing              45,471           24.2 %       62,388           24.2 %       167,605          23.9 %       245,555          24.4 %
expenses
General and
administrative         15,919           8.4  %       16,894           6.5  %       51,684           7.3  %       73,640           7.3  %
expenses
Intangible asset
impairment             -                0.0  %       2,100            0.8  %       -                0.0  %       2,100            0.2  %
charge
Loss on store
closings and           435              0.2  %       783              0.3  %       759              0.1  %       1,050            0.1  %
impairment of
store assets
Total operating        61,825           32.8 %       82,165           31.8 %       220,048          31.3 %       322,345          32.0 %
expenses
Income from            15,344           8.1  %       17,182           6.7  %       60,541           8.6  %       75,816           7.5  %
operations
Other expense
(income):
Interest income        (5         )     0.0  %       (10        )     0.1  %       (9         )     0.0  %       (11        )     0.0  %
Interest expense       3,831            2.0  %       2,872            1.1  %       29,310           4.2  %       9,258            0.9  %
Loss from debt         3,831            2.0  %       -                0.0  %       5,704            0.8  %       -                0.0  %
extinguishment
                       7,657            4.0  %       2,862            1.2  %       35,005           5.0  %       9,247            0.9  %
Income before          7,687            4.1  %       14,320           5.5  %       25,536           3.6  %       66,569           6.6  %
income taxes
Income tax
expense                (9,685     )     -5.1 %       6,726            2.6  %       (8,815     )     -1.3 %       26,698           2.6  %
(benefit)
Net income           $ 17,372           9.2  %     $ 7,594            2.9  %     $ 34,351           4.9  %     $ 39,871           4.0  %
                                                                                                                                   
Basic net income     $ 0.56                        $ 0.22                        $ 1.40                        $ 1.18
per common share
Diluted net
income per           $ 0.56                        $ 0.22                        $ 1.40                        $ 1.18
common share
                                                                                                                                   
Reconciliation
of
weighted-average
shares
outstanding:
Basic weighted
average shares         31,145,241                    33,776,630                    24,586,274                    33,770,779
outstanding
Effect of
dilutive
securities:
Stock options          -                             17,999                        -                             76,669
Restricted             -                             3,361                         -                             5,828       
shares
Diluted weighted
average shares         31,145,241                    33,797,990                    24,586,274                    33,853,276  
outstanding
                                                                                                                                   

                                                                 
MATTRESS FIRM HOLDING CORP.

Consolidated Statements of Cash Flows

(In thousands)
                                                                   
                                                 Fiscal           Fiscal
Cash flows from operating activities:            2011             2012
Net income                                       $ 34,351         $ 39,871
Adjustments to reconcile net income to cash
flows
provided by operating activities:
Depreciation and amortization                      17,450           23,507
Interest expense accrued and paid-in-kind          20,575           -
Loan fee and other amortization                    2,530            2,361
Loss from debt extinguishment                      5,704            -
Deferred income tax expense (benefit)              (11,271  )       17,131
Stock-based compensation                           523              2,856
Intangible asset impairment charge                 -                2,100
Loss on store closings and impairment of           324              894
store assets
Effects of changes in operating assets and
liabilities,
excluding business acquisitions:
Accounts receivable                                (6,574   )       (4,947   )
Inventories                                        (10,555  )       (15,714  )
Prepaid expenses and other current assets          (1,306   )       (3,616   )
Other assets                                       (2,914   )       (3,219   )
Accounts payable                                   13,159           9,324
Accrued liabilities                                9,333            1,389
Customer deposits                                  1,518            (218     )
Other noncurrent liabilities                       8,828            7,019     
Net cash provided by operating activities          81,675           78,738    
Cash flows from investing activities:
Purchases of property and equipment                (34,356  )       (68,604  )
Business acquisitions, net of cash acquired        (7,958   )       (63,051  )
Net cash used in investing activities              (42,314  )       (131,655 )
Cash flows from financing activities:
Proceeds from issuance of debt                     40,198           56,000
Principal payments of debt                         (145,231 )       (36,983  )
Proceeds from issuance of common stock, net        110,446          -
of costs
Proceeds from exercise of common stock             -                510
options
Debt issuance costs                                (1,273   )       -         
Net cash provided by financing activities          4,140            19,527    
Net increase (decrease) in cash and cash           43,501           (33,390  )
equivalents
Cash and cash equivalents, beginning of            4,445            47,946    
period
Cash and cash equivalents, end of period         $ 47,946         $ 14,556    
                                                                              

                                                                                                                                                              
MATTRESS FIRM HOLDING CORP.

Reconciliation of Reported (GAAP) to Adjusted Statements of Operations Data

(In thousands, except share and per share amounts)
                                                                                                                                                                
                        Thirteen Weeks Ended
                        January 31, 2012                                                           January 29, 2013
                        Income         Income                         Diluted                      Income         Income                        Diluted
                        From           Before In-     Net             Weighted       Diluted       From           Before In-     Net            Weighted       Diluted
                        Operations     come Taxes     Income          Shares         EPS*          Operations     come Taxes     Income         Shares         EPS*
As Reported             $ 15,344       $ 7,687        $ 17,372        31,145,241     $ 0.56        $ 17,182       $ 14,320       $ 7,594        33,797,990     $ 0.22
% of sales                8.1    %       4.1    %       9.2     %                                    6.7    %       5.5    %       2.9    %
IPO Pro Forma
Adjustments (1)
Diluted share count                                                   2,623,587        (0.04 )
adjustment
Management fees           350            350            220                            0.01          -              -              -                             -
Interest expense          -              1,746          1,098                          0.03          -              -              -                             -
Loss from debt            -              3,831          2,410                          0.07          -              -              -                             -
extinguishment
Other Adjustments
Acquisition-related       -              -              -                              -             1,906          1,906          937                           0.03
costs (2)
Secondary offering        -              -              -                              -             (20    )       (20    )       (40    )                      (0.00 )
costs (3)
Impairment charges        -              -              -                              -             2,256          2,256          1,386                         0.04
(4)
Other expenses (5)        -              -              -                              -             180            180            111                           0.00
Release of
valuation allowance
on deferred tax           -              -              (14,107 )                      (0.42 )       -              -              -                             -      
assets (6)
Total adjustments         350            5,927          (10,379 )     2,623,587        (0.35 )       4,322          4,322          2,394        -                0.07   
As Adjusted             $ 15,694       $ 13,614       $ 6,993         33,768,828     $ 0.21        $ 21,504       $ 18,642       $ 9,988        33,797,990     $ 0.30   
% of sales                8.3    %       7.2    %       3.7     %                                    8.3    %       7.2    %       3.9    %
                                                                                                                                                                
                         
                        Fiscal Year (Fifty-Two Weeks) Ended
                        January 31, 2012                                                           January 29, 2013
                        Income         Income                         Diluted                      Income         Income                        Diluted
                        From           Before In-     Net             Weighted       Diluted       From           Before In-     Net            Weighted       Diluted
                        Operations     come Taxes     Income          Shares         EPS*          Operations     come Taxes     Income         Shares         EPS*
As Reported             $ 60,541       $ 25,536       $ 34,351        24,586,274     $ 1.40        $ 75,816       $ 66,569       $ 39,871       33,853,276     $ 1.18
% of sales                8.6    %       3.6    %       4.9     %                                    7.5    %       6.6    %       4.0    %
IPO Pro Forma
Adjustments (1)
Diluted share count                                                   9,182,554        (0.38 )
adjustment
Management fees           644            644            405                            0.01          -              -              -                             -
Interest expense          -              21,131         13,291                         0.39          -              -              -                             -
Loss from debt            -              5,688          3,578                          0.11          -              -              -                             -
extinguishment
Other Adjustments
Acquisition-related       -              -              -                              -             11,980         11,980         7,616                         0.23
costs (2)
Secondary offering        -              -              -                              -             1,915          1,915          1,403                         0.04
costs (3)
Impairment charges        -              -              -                              -             2,256          2,256          1,386                         0.04
(4)
Other expenses (5)        -              -              -                              -             180            180            111                           0.00
Release of                                                                                                                         -
valuation allowance
on deferred tax           -              -              (20,050 )                      (0.59 )       -              -              -                             -      
assets (6)
Total adjustments         644            27,463         (2,776  )     9,182,554        (0.46 )       16,331         16,331         10,516       -                0.31   
As Adjusted             $ 61,185       $ 52,999       $ 31,575        33,768,828     $ 0.94        $ 92,147       $ 82,900       $ 50,387       33,853,276     $ 1.49   
% of sales                8.7    %       7.5    %       4.5     %                                    9.1    %       8.2    %       5.0    %
                                                                                                                                                                

_____________________

* Due to rounding to the nearest cent per diluted share, totals may not equal
the sum of the line items in the table above.

(1) IPO Pro Forma Adjustments give effect to the initial public offering that
was completed on November 23, 2011, as if the offering had occurred at the
beginning of fiscal 2011 (February 2, 2011). These pro forma adjustments
reflect the following assumptions: (i) the application of the net proceeds
from the initial public offering to repay debt resulting in a decrease to
interest expense and a loss from debt extinguishment, (ii) the conversion of a
significant portion of convertible debt for which such conversion was elected
into shares of our common stock, resulting in a decrease to interest expense,
a loss from debt extinguishment, (iii) the reduction in management fee expense
in connection with the termination of the management agreement between J.W.
Childs Associates, L.P. and the Company that became effective with the
completion of the initial public offering, and (iv) the effect on diluted EPS
as if the common stock shares outstanding at the completion of the offering
had been outstanding for the entire period presented.

(2) On May 2, 2012, we acquired all of the equity interests of MGHC Holding
Corporation (“Mattress Giant”), including 181 specialty retail stores. On
September 25, 2012, we acquired the leasehold interests, store assets,
distribution center assets and related inventories, and assumption of certain
liabilities of Mattress XPress, Inc. and Mattress XPress of Georgia, Inc.
(collectively, “Mattress X-Press”), including 34 mattress specialty retail
stores. On December 11, 2012, we acquired the assets and operations of Factory
Mattress & Water Bed Outlet of Charlotte, Inc. (“Mattress Source”), including
27 mattress specialty stores. Acquisition-related costs, consisting of direct
transaction costs and integration costs, are included in the results of
operations as incurred. During the thirteen and fifty-two weeks ended January
29, 2013, we incurred $1.9 million and $12.0 million of acquisition-related
costs, respectively.

(3) Reflects $1.9 million of costs that we incurred in connection with a
secondary offering of shares of common stock by certain of our selling
stockholders, which was completed in October 2012.

(4) Reflects an intangible trade name impairment charge in the amount of $2.1
million related to the Mattress Discounters trade name and a $0.2 million
impairment of store assets recorded during the thirteen weeks ended January
29, 2013.

(5) Reflects $0.2 million in expensed legal fees related to our November 2012
debt amendment and extension recorded during the thirteen weeks ended January
29, 2013.

(6) The release of the valuation allowance on deferred tax assets reflects
utilization of net operating loss carryforwards throughout fiscal 2011 and an
expectation of increased future taxable income effective with the completion
of our initial public offering and the resulting elimination of interest
expense, which provided sufficient evidence that it was more-likely-than-not
that deferred tax assets would be realized in future periods and supported the
release of the remaining valuation allowance in the fiscal fourth quarter of
2011.

Our “As Adjusted” data is considered a non-U.S. GAAP financial measure and is
not in accordance with, or preferable to, “As Reported,” or GAAP financial
data. However, we are providing this information as we believe it facilitates
year-over-year comparisons for investors and financial analysts.

About Mattress Firm

Houston-based Mattress Firm is one of the nation’s leading specialty bedding
retailers, offering a broad selection of both traditional and specialty
mattresses from leading manufacturers, including Sealy, Serta, Simmons,
Stearns & Foster and Tempur-Pedic.

Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20130326006409/en/

Multimedia
Available:http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50598121&lang=en

Contact:

Mattress Firm
Investor Relations:
Brad Cohen,  713-343-3652
ir@mattressfirm.com
or
Media:
Sari Martin, 203-682-8345
mattressfirm@icrinc.com
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