Leather Living Room Furniture

Jennifer Convertibles Inc. (AMEX: JEN) is the owner and licensor of sofabed specialty retail stores and leather specialty retail stores in the United States, with stores located throughout the Eastern seaboard, in the Midwest, on the West Coast and in the Southwest. As of August 26, 2006, the Company's stores included 175 Jennifer Convertibles stores and 16 Jennifer Leather stores. Of these 191 stores, the Company owned 167 and licensed 24, including 23 owned and operated by a related private company and one owned by other third parties operated by the private company. Jennifer Convertibles stores specialize in the retail sale of a complete line of sofabeds. In addition, the Company sells sofas and companion pieces, such as loveseats, chairs and recliners, in both fabric and leather. The Company is a dealer of Sealy sofabeds in the United States. Jennifer Leather stores specialize in the retail sale of leather living room furniture. During the fiscal year ended August 26, 2006, the Company closed three stores, of which one was located in Las Vegas, NV, and two were located in Indianapolis, IN.

The Company's stores are open seven days per week. The Company displays a variety of sofabeds and companion pieces at each Jennifer Convertibles retail location with cocktail tables and other accessories. Jennifer Convertibles offer a line of sofabeds made by a number of manufacturers in a variety of styles at prices ranging from approximately $299 to $2,200. The Jennifer Leather stores similarly offer a line of leather living room furniture in a variety of styles and colors at prices ranging from approximately $599 to $5,000. The Company also offers merchandise at its Jennifer Convertibles and Jennifer Leather stores under the Bellissimo Collection brand name for leather merchandise.

A related private company, the private company, operates 24 Jennifer Convertibles stores, 23 of which it owns and one of which it licenses or manages. The Company does not own or collect any royalties from the 21-private company owned stores, which are located in New York.

On July 29, 2004 New York State Attorney General Eliot Spitzer announced a consent order and judgment that will significantly reform the sales practices of Jennifer Convertibles and provide restitution to consumers. The judgment permanently enjoined Jennifer Convertibles from engaging in deceptive, fraudulent or illegal business practices, and requires the company to make substantial reforms to its sales practices and customer service operations. The judgment also requires Jennifer Convertibles to make restitution to consumers for its failure to replace or repair defective goods. In addition, Jennifer Convertibles agreed to pay $275,000 in penalties, and $2,000 in costs.

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