ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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33-1022198
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2013
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2012
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2013
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2012
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||||||||
Net sales
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$
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735.5
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$
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347.9
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$
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1,786.2
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$
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1,061.8
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Cost of sales
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436.8
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176.8
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1,044.2
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517.8
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Gross profit
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298.7
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171.1
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742.0
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544.0
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Selling and marketing expenses
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150.9
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76.2
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377.1
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243.2
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General, administrative and other expenses
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71.9
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31.5
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206.9
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103.8
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Equity income in earnings of unconsolidated affiliates
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(1.2
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)
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—
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(2.5
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)
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—
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Royalty income, net of royalty expense
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(4.1
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)
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—
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(9.2
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)
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—
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Operating income
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81.2
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63.4
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169.7
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197.0
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Other expense, net:
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Interest expense, net
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24.6
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4.8
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88.2
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13.0
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Other expense (income), net
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0.9
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(0.4
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)
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4.0
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(0.4
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)
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||||
Total other expense
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25.5
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4.4
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92.2
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12.6
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Income before income taxes
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55.7
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59.0
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77.5
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184.4
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Income tax provision
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(15.5
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)
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(61.0
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)
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(26.9
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)
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(101.1
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)
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Net income (loss) before non-controlling interest
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40.2
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(2.0
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)
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50.6
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83.3
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Less: Net (loss) attributable to non-controlling interest
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—
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—
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(0.5
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)
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—
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Net income (loss) attributable to Tempur Sealy International, Inc.
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$
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40.2
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$
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(2.0
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)
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$
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51.1
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$
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83.3
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Earnings (loss) per common share:
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Basic
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$
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0.66
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$
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(0.03
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)
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$
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0.85
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$
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1.34
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Diluted
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$
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0.65
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$
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(0.03
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)
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$
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0.83
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$
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1.31
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Weighted average common shares outstanding:
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Basic
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60.5
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59.6
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60.3
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62.1
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Diluted
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61.6
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59.6
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61.6
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63.6
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2013
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2012
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2013
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2012
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Net income (loss) including non-controlling interest
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$
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40.2
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$
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(2.0
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)
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$
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50.6
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$
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83.3
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Other comprehensive income (loss), net of tax:
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Foreign currency translation adjustments
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9.4
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5.5
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(8.3
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)
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1.0
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Net change in unrecognized gain (loss) on interest rate swap
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—
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(0.5
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)
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1.1
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(1.4
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)
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Other comprehensive income, net of tax
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9.4
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5.0
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(7.2
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)
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(0.4
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)
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Comprehensive income
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49.6
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3.0
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43.4
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82.9
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Less: Comprehensive loss attributable to non-controlling interest
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—
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—
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(0.5
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)
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—
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Comprehensive income attributable to Tempur Sealy International, Inc.
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$
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49.6
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$
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3.0
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$
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43.9
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$
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82.9
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September 30,
2013 |
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December 31,
2012 |
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(Unaudited)
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$
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126.6
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$
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179.3
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Accounts receivable, net
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349.3
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129.8
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Inventories, net
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182.8
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93.0
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Receivable from escrow
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—
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375.0
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Prepaid expenses and other current assets
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52.7
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41.4
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Deferred income taxes
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39.2
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2.6
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Total Current Assets
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750.6
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821.1
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Property, plant and equipment, net
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411.6
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186.0
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Goodwill
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756.4
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216.1
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Other intangible assets, net
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758.2
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63.1
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Deferred income taxes
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9.7
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10.4
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Other non-current assets
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75.0
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16.3
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Total Assets
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$
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2,761.5
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$
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1,313.0
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities:
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Accounts payable
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$
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181.7
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$
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85.8
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Accrued expenses and other current liabilities
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220.4
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|
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81.4
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|
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Deferred income taxes
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0.5
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26.5
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Income taxes payable
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33.0
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15.5
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Current portion of long-term debt
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39.7
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—
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Total Current Liabilities
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475.3
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209.2
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Long-term debt
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1,820.4
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1,025.0
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Deferred income taxes
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287.2
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31.4
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Other non-current liabilities
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85.2
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25.1
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Total Liabilities
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2,668.1
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1,290.7
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Commitments and contingencies—see Note 12
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Redeemable non-controlling interest
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10.9
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—
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||
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||||
Total Stockholders’ Equity
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82.5
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22.3
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Total Liabilities and Stockholders’ Equity
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$
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2,761.5
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$
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1,313.0
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Nine Months Ended
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||||||
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September 30,
|
||||||
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2013
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|
2012
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
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|
||||
Net income before non-controlling interest
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$
|
50.6
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$
|
83.3
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
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Depreciation and amortization
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52.5
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26.9
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|
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Amortization of stock-based compensation
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13.8
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3.7
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|
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Amortization of deferred financing costs
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5.0
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1.0
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Write-off of deferred financing costs
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4.7
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|
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—
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|
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Bad debt expense
|
0.1
|
|
|
1.7
|
|
||
Deferred income taxes
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(56.4
|
)
|
|
36.6
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|
||
Equity income in earnings of unconsolidated affiliates
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(2.3
|
)
|
|
—
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|
||
Non cash interest expense on convertible notes
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2.4
|
|
|
—
|
|
||
Loss on sale of assets
|
0.6
|
|
|
—
|
|
||
Foreign currency adjustments and other
|
—
|
|
|
1.6
|
|
||
Changes in operating assets and liabilities
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33.8
|
|
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(1.2
|
)
|
||
Net cash provided by operating activities
|
104.8
|
|
|
153.6
|
|
||
|
|
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|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Acquisition of business, net of cash acquired
|
(1,172.9
|
)
|
|
(3.9
|
)
|
||
Purchases of property, plant and equipment
|
(28.4
|
)
|
|
(38.4
|
)
|
||
Other
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0.9
|
|
|
—
|
|
||
Net cash used in investing activities
|
(1,200.4
|
)
|
|
(42.3
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Proceeds from 2012 Credit Agreement
|
2,917.6
|
|
|
—
|
|
||
Repayments of 2012 Credit Agreement
|
(1,559.1
|
)
|
|
—
|
|
||
Proceeds from issuance of Senior Notes
|
375.0
|
|
|
—
|
|
||
Proceeds from 2011 Credit Facility
|
46.5
|
|
|
284.5
|
|
||
Repayments of 2011 Credit Facility
|
(696.5
|
)
|
|
(220.0
|
)
|
||
Proceeds from issuance of common stock
|
6.0
|
|
|
10.6
|
|
||
Excess tax benefit from stock based compensation
|
3.7
|
|
|
9.7
|
|
||
Treasury shares repurchased
|
—
|
|
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(152.6
|
)
|
||
Payments of deferred financing costs
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(52.0
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)
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(0.1
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)
|
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Other
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(0.7
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)
|
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(2.5
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)
|
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Net cash provided by (used in) financing activities
|
1,040.5
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(70.4
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)
|
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NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
2.4
|
|
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(0.6
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
(52.7
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)
|
|
40.3
|
|
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CASH AND CASH EQUIVALENTS, beginning of period
|
179.3
|
|
|
111.4
|
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CASH AND CASH EQUIVALENTS, end of period
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$
|
126.6
|
|
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$
|
151.7
|
|
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|
||||
Supplemental cash flow information:
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Cash paid during the period for:
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Interest
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$
|
65.9
|
|
|
$
|
11.9
|
|
Income taxes, net of refunds
|
$
|
33.1
|
|
|
$
|
56.6
|
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(in millions)
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Finished goods
|
$
|
118.9
|
|
|
$
|
68.5
|
|
Work-in-process
|
10.8
|
|
|
7.9
|
|
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Raw materials and supplies
|
53.1
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|
|
16.6
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$
|
182.8
|
|
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$
|
93.0
|
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Segment
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Product/Brand
|
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Warranty Term
(in years)
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Tempur North America
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Mattresses
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25, prorated
(1)
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Tempur North America
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Pillows
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3
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Tempur International
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Mattresses
|
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15, prorated
(1)
|
Tempur International
|
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Pillows
|
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3
|
Sealy
|
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Mattresses
|
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10 - 25, prorated
(2)
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(1)
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The last
10
years of warranty period are prorated on a straight-line basis.
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(2)
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Products have various warranty terms, generally non-prorated for the first 10 to 15 years and then prorated for the balance of the warranty term.
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(1)
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The cash consideration for outstanding shares of Sealy common stock is the product of the agreed-upon cash per share price of
$2.20
and total Sealy shares of
105.1 million
.
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(2)
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The cash consideration for share-based awards is the product of the agreed-upon cash per share price of
$2.20
and the total number of restricted stock units (“RSUs”) and deferred stock units (“DSUs”) outstanding and the “in the money” stock options net of the weighted average exercise price.
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(3)
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The cash consideration for Sealy’s
8.0%
Senior Secured Third Lien Convertible Notes due 2016 (“
8.0%
Sealy Notes”) is the result of applying the adjusted equity conversion rate to the
8.0%
Sealy Notes tendered for conversion and multiplying the result by the agreed-upon cash per share price of
$2.20
. The
8.0%
Sealy Notes that were converted represented the right to receive the same merger consideration that would have been payable to a holder of
201.0 million
shares of Sealy common stock, subject to adjustment in accordance with the terms of the supplemental indenture governing the
8.0%
Sealy Notes.
|
(4)
|
The cash consideration for Sealy’s
10.875%
Senior Notes due 2016 (“Sealy Senior Notes”) reflects the repayment of the outstanding obligation.
|
(5)
|
The cash consideration for Sealy’s
8.25%
Senior Subordinated Notes due 2014 (“Sealy 2014 Notes”) reflects the repayment of the outstanding obligation.
|
(6)
|
Represents the Sealy cash balance acquired at acquisition.
|
(in millions)
|
|
||
Accounts receivable
|
$
|
186.1
|
|
Inventory
|
75.1
|
|
|
Prepaid expenses and other current assets
|
39.3
|
|
|
Accounts payable
|
(77.9
|
)
|
|
Accrued expenses
|
(134.2
|
)
|
|
Property, plant and equipment
|
242.3
|
|
|
Other assets
|
36.9
|
|
|
Identifiable intangible assets:
|
|
|
|
Indefinite-lived trade names
|
521.2
|
|
|
Contractual retailer/distributer relationships
|
91.1
|
|
|
Developed technology, including patents
|
87.1
|
|
|
Customer databases
|
3.9
|
|
|
Optimum™ trade name
|
2.3
|
|
|
Deferred income taxes, net
|
(246.9
|
)
|
|
Sealy 8.0% Notes
|
(96.2
|
)
|
|
Redeemable non-controlling interest
|
(11.3
|
)
|
|
Other liabilities
|
(87.1
|
)
|
|
Goodwill
|
541.2
|
|
|
Net consideration transferred
|
$
|
1,172.9
|
|
($ in millions)
|
|
|
|
||
|
Preliminary
Valuation
|
|
Amortization Period
|
||
Identifiable intangible assets:
|
|
|
|
||
Trade names
|
$
|
521.2
|
|
|
Indefinite
|
Contractual retailer/distributor relationships
|
91.1
|
|
|
15 years
|
|
Developed technology, including patents
|
87.1
|
|
|
10 years
|
|
Customer databases
|
3.9
|
|
|
5 years
|
|
Optimum™ trade name
|
2.3
|
|
|
5 years
|
|
Total
|
$
|
705.6
|
|
|
|
(in millions, except earnings per common share)
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2012
|
|
2013
|
|
2012
|
||||||
Net sales
|
$
|
713.4
|
|
|
$
|
2,079.1
|
|
|
$
|
2,051.6
|
|
Net (loss) income
|
$
|
(1.8
|
)
|
|
$
|
62.7
|
|
|
$
|
52.5
|
|
(Loss) earnings from continuing operations per common share – Diluted
|
$
|
(0.03
|
)
|
|
$
|
1.02
|
|
|
$
|
0.86
|
|
(in millions)
|
Total
|
|
Tempur
North America
|
|
Tempur
International
|
|
Sealy
|
||||||||
Balance as of December 31, 2012
|
$
|
216.1
|
|
|
$
|
108.9
|
|
|
$
|
107.2
|
|
|
$
|
—
|
|
Goodwill resulting from acquisitions
|
541.2
|
|
|
—
|
|
|
—
|
|
|
541.2
|
|
||||
Foreign currency translation adjustments
|
(0.9
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
|
—
|
|
||||
Balance as of September 30, 2013
|
$
|
756.4
|
|
|
$
|
108.3
|
|
|
$
|
106.9
|
|
|
$
|
541.2
|
|
(in millions)
|
September 30,
2013 |
|
December 31,
2012 |
||||
Debt:
|
|
|
|
||||
$375.0 million Senior Notes, interest at 6.875%, due December 15, 2020
|
$
|
375.0
|
|
|
$
|
375.0
|
|
Revolving credit facility, interest at Base Rate plus applicable margin, 2.25% or LIBOR plus applicable margin, 3.25% as of September 30, 2013, commitment through and due March 18, 2018
|
90.0
|
|
|
—
|
|
||
Term A Facility, interest at Base Rate plus applicable margin 1.5%, or LIBOR plus applicable margin, 2.5% as of September 30, 2013, commitment through and due March 18, 2018
|
529.4
|
|
|
—
|
|
||
Term B Facility, interest at Base Rate plus applicable margin 1.75%, or LIBOR plus applicable margin, 2.75% as of September 30, 2013, commitment through and due March 18, 2020
|
739.1
|
|
|
—
|
|
||
8.0% Sealy Notes, due July 15, 2016
|
98.4
|
|
|
—
|
|
||
Capital lease obligations and other
|
28.2
|
|
|
—
|
|
||
2011 Domestic long-term revolving credit facility payable to lenders, interest at Base Rate or LIBOR plus applicable margin (2.05% as of December 31, 2012), extinguished as of March 18, 2013
|
—
|
|
|
650.0
|
|
||
|
$
|
1,860.1
|
|
|
$
|
1,025.0
|
|
Less current portion
|
(39.7
|
)
|
|
—
|
|
||
|
$
|
1,820.4
|
|
|
$
|
1,025.0
|
|
(in millions)
|
|
|
Fair Value Measurements at
September 30, 2013 Using:
|
||||||||||||
|
September 30, 2013
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
(in millions)
|
|
|
Fair Value Measurements at
December 31, 2012 Using:
|
||||||||||||
|
December 31, 2012
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
|
$
|
—
|
|
(in millions)
|
|
|
|
||||
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Land and buildings
|
$
|
263.6
|
|
|
$
|
138.0
|
|
Machinery and equipment
|
259.9
|
|
|
160.9
|
|
||
Computer equipment and software
|
69.8
|
|
|
52.5
|
|
||
Furniture and fixtures
|
56.6
|
|
|
40.8
|
|
||
Construction in progress
|
23.5
|
|
|
17.3
|
|
||
|
673.4
|
|
|
409.5
|
|
||
Accumulated depreciation
|
(261.8
|
)
|
|
(223.5
|
)
|
||
|
$
|
411.6
|
|
|
$
|
186.0
|
|
(1)
|
In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.
|
(2)
|
These amounts were included in the income tax provision on the accompanying Condensed Consolidated Statements of Income.
|
(3)
|
This amount was included in interest expense, net on the accompanying Condensed Consolidated Statements of Income.
|
(in millions)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
PRSU expense (benefit)
|
$
|
1.6
|
|
|
$
|
(5.2
|
)
|
|
$
|
3.6
|
|
|
$
|
(1.1
|
)
|
Option expense
|
2.1
|
|
|
1.0
|
|
|
6.3
|
|
|
3.2
|
|
||||
RSU/DSU Expense
|
1.9
|
|
|
0.5
|
|
|
3.9
|
|
|
1.6
|
|
||||
Total stock based compensation expense (benefit)
|
$
|
5.6
|
|
|
$
|
(3.7
|
)
|
|
$
|
13.8
|
|
|
$
|
3.7
|
|
(shares in millions)
|
|
|
|
|
|
|||||
|
Number of
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|
Aggregate
Intrinsic Value
|
|||||
Awards outstanding at December 31, 2012
|
0.3
|
|
|
$
|
58.52
|
|
|
|
|
|
Granted
|
0.3
|
|
|
39.34
|
|
|
|
|
||
Vested
|
—
|
|
|
—
|
|
|
|
|
||
Forfeited
|
(0.3
|
)
|
|
56.92
|
|
|
|
|
||
Awards outstanding at September 30, 2013
|
0.3
|
|
|
$
|
39.04
|
|
|
$
|
11.0
|
|
(shares in millions)
|
|
|
|
|
|
|
|
|||||
|
Number
of Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic Value
|
|||||
Options outstanding December 31, 2012
|
2.9
|
|
|
$
|
17.00
|
|
|
|
|
|
||
Granted
|
0.6
|
|
|
39.71
|
|
|
|
|
|
|||
Forfeited
|
(0.1
|
)
|
|
39.38
|
|
|
|
|
|
|||
Exercised
|
(0.5
|
)
|
|
13.14
|
|
|
|
|
|
|||
Options outstanding at September 30, 2013
|
2.9
|
|
|
$
|
21.60
|
|
|
6.20
|
|
$
|
60.4
|
|
Options exercisable at September 30, 2013
|
2.0
|
|
|
$
|
14.51
|
|
|
4.70
|
|
$
|
59.7
|
|
(shares in millions)
|
|
|
|
|
|
|||||
|
Number of
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|
Aggregate
Intrinsic Value
|
|||||
Awards outstanding at December 31, 2012
|
0.2
|
|
|
$
|
32.03
|
|
|
|
|
|
Granted
|
0.2
|
|
|
45.56
|
|
|
|
|
||
Vested
|
(0.2
|
)
|
|
29.59
|
|
|
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
||
Awards outstanding at September 30, 2013
|
0.2
|
|
|
$
|
46.98
|
|
|
$
|
9.1
|
|
($ in millions)
|
|
|
|
||
|
September 30, 2013
|
|
Weighted
Average
Remaining
Vesting Period
(Years)
|
||
Unrecognized PRSU expense
|
$
|
6.3
|
|
|
0.73
|
Unrecognized stock option expense
|
6.3
|
|
|
1.39
|
|
Unrecognized RSU/DSU expense
|
4.7
|
|
|
1.01
|
|
Total unrecognized stock-based compensation expense
|
$
|
17.3
|
|
|
1.04
|
(in millions, except per common share amounts)
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Tempur Sealy International, Inc.
|
$
|
40.2
|
|
|
$
|
(2.0
|
)
|
|
$
|
51.1
|
|
|
$
|
83.3
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator for basic earnings per common share-weighted average shares
|
60.5
|
|
|
59.6
|
|
|
60.3
|
|
|
62.1
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee stock-based compensation
|
1.1
|
|
|
—
|
|
|
1.3
|
|
|
1.5
|
|
||||
Denominator for diluted earnings per common share-adjusted weighted average shares
|
61.6
|
|
|
59.6
|
|
|
61.6
|
|
|
63.6
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per common share
|
$
|
0.66
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.85
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per common share
|
$
|
0.65
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.83
|
|
|
$
|
1.31
|
|
(in millions)
|
|
|
|
||||
|
September 30,
2013 |
|
December 31,
2012 |
||||
Total assets:
|
|
|
|
||||
Tempur North America
|
$
|
2,098.5
|
|
|
$
|
1,160.4
|
|
Tempur International
|
536.7
|
|
|
504.1
|
|
||
Sealy
|
1,901.7
|
|
|
—
|
|
||
Investment in subsidiaries
|
(991.2
|
)
|
|
(347.6
|
)
|
||
Other intercompany eliminations
|
(784.2
|
)
|
|
(3.9
|
)
|
||
|
$
|
2,761.5
|
|
|
$
|
1,313.0
|
|
(in millions)
|
|
|
|
||||
|
September 30,
|
|
December 31,
|
||||
Long-lived assets:
|
2013
|
|
2012
|
||||
Tempur North America
|
$
|
391.2
|
|
|
$
|
395.7
|
|
Tempur International
|
68.0
|
|
|
69.5
|
|
||
Sealy
|
1,467.0
|
|
|
—
|
|
||
|
$
|
1,926.2
|
|
|
$
|
465.2
|
|
(in millions)
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
United States
|
$
|
537.5
|
|
|
$
|
228.0
|
|
|
$
|
1,264.9
|
|
|
$
|
705.0
|
|
Canada
|
64.1
|
|
|
12.9
|
|
|
135.2
|
|
|
31.5
|
|
||||
Other International
|
133.9
|
|
|
107.0
|
|
|
386.1
|
|
|
325.3
|
|
||||
|
$
|
735.5
|
|
|
$
|
347.9
|
|
|
$
|
1,786.2
|
|
|
$
|
1,061.8
|
|
Total International
|
$
|
198.0
|
|
|
$
|
119.9
|
|
|
$
|
521.3
|
|
|
$
|
356.8
|
|
Tempur North America
|
$
|
17.9
|
|
|
$
|
34.9
|
|
|
$
|
44.0
|
|
|
$
|
120.3
|
|
Tempur International
|
22.9
|
|
|
28.5
|
|
|
78.1
|
|
|
76.7
|
|
||||
Sealy
|
40.4
|
|
|
—
|
|
|
47.6
|
|
|
—
|
|
||||
|
$
|
81.2
|
|
|
$
|
63.4
|
|
|
$
|
169.7
|
|
|
$
|
197.0
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tempur North America
|
$
|
(3.3
|
)
|
|
$
|
30.4
|
|
|
$
|
(37.9
|
)
|
|
$
|
107.8
|
|
Tempur International
|
22.3
|
|
|
28.6
|
|
|
75.0
|
|
|
76.6
|
|
||||
Sealy
|
36.7
|
|
|
—
|
|
|
40.4
|
|
|
—
|
|
||||
|
$
|
55.7
|
|
|
$
|
59.0
|
|
|
$
|
77.5
|
|
|
$
|
184.4
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization (including stock-based compensation amortization):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tempur North America
|
$
|
11.8
|
|
|
$
|
2.7
|
|
|
$
|
32.4
|
|
|
$
|
22.4
|
|
Tempur International
|
3.2
|
|
|
2.9
|
|
|
9.4
|
|
|
8.2
|
|
||||
Sealy
|
11.7
|
|
|
—
|
|
|
24.5
|
|
|
—
|
|
||||
|
$
|
26.7
|
|
|
$
|
5.6
|
|
|
$
|
66.3
|
|
|
$
|
30.6
|
|
|
|
|
|
|
|
|
|
||||||||
Intercompany royalties:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tempur North America
|
$
|
1.6
|
|
|
$
|
3.0
|
|
|
$
|
4.3
|
|
|
$
|
9.4
|
|
Tempur International
|
(1.6
|
)
|
|
(3.0
|
)
|
|
(4.3
|
)
|
|
(9.4
|
)
|
||||
Sealy
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tempur North America
|
$
|
2.9
|
|
|
$
|
14.6
|
|
|
$
|
13.8
|
|
|
$
|
27.7
|
|
Tempur International
|
2.6
|
|
|
3.1
|
|
|
7.3
|
|
|
10.7
|
|
||||
Sealy
|
3.6
|
|
|
—
|
|
|
7.3
|
|
|
—
|
|
||||
|
$
|
9.1
|
|
|
$
|
17.7
|
|
|
$
|
28.4
|
|
|
$
|
38.4
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
543.0
|
|
|
$
|
198.4
|
|
|
$
|
(5.9
|
)
|
|
$
|
735.5
|
|
Cost of sales
|
—
|
|
|
339.1
|
|
|
103.6
|
|
|
(5.9
|
)
|
|
436.8
|
|
|||||
Gross profit
|
—
|
|
|
203.9
|
|
|
94.8
|
|
|
—
|
|
|
298.7
|
|
|||||
Selling and marketing expenses
|
0.7
|
|
|
111.6
|
|
|
38.6
|
|
|
—
|
|
|
150.9
|
|
|||||
General, administrative and other expenses
|
5.5
|
|
|
45.8
|
|
|
20.6
|
|
|
—
|
|
|
71.9
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
(1.2
|
)
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|||||
Operating (loss) income
|
(6.2
|
)
|
|
50.6
|
|
|
36.8
|
|
|
—
|
|
|
81.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net
|
14.7
|
|
|
8.9
|
|
|
1.0
|
|
|
—
|
|
|
24.6
|
|
|||||
Other expense (income), net
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|||||
Total other expense
|
14.7
|
|
|
8.9
|
|
|
1.9
|
|
|
—
|
|
|
25.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
52.8
|
|
|
25.3
|
|
|
—
|
|
|
(78.1
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
31.9
|
|
|
67.0
|
|
|
34.9
|
|
|
(78.1
|
)
|
|
55.7
|
|
|||||
Income tax benefit (provision)
|
8.3
|
|
|
(14.2
|
)
|
|
(9.6
|
)
|
|
—
|
|
|
(15.5
|
)
|
|||||
Net income
|
40.2
|
|
|
52.8
|
|
|
25.3
|
|
|
(78.1
|
)
|
|
40.2
|
|
|||||
Less: net income attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
40.2
|
|
|
$
|
52.8
|
|
|
$
|
25.3
|
|
|
$
|
(78.1
|
)
|
|
$
|
40.2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
49.6
|
|
|
$
|
52.8
|
|
|
$
|
34.6
|
|
|
$
|
(87.4
|
)
|
|
$
|
49.6
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,281.8
|
|
|
$
|
521.8
|
|
|
$
|
(17.4
|
)
|
|
$
|
1,786.2
|
|
Cost of sales
|
—
|
|
|
805.7
|
|
|
255.9
|
|
|
(17.4
|
)
|
|
1,044.2
|
|
|||||
Gross profit
|
—
|
|
|
476.1
|
|
|
265.9
|
|
|
—
|
|
|
742.0
|
|
|||||
Selling and marketing expenses
|
2.1
|
|
|
264.3
|
|
|
110.7
|
|
|
—
|
|
|
377.1
|
|
|||||
General, administrative and other expenses
|
13.7
|
|
|
137.9
|
|
|
55.3
|
|
|
—
|
|
|
206.9
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
(2.5
|
)
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
(9.2
|
)
|
|
—
|
|
|
—
|
|
|
(9.2
|
)
|
|||||
Operating (loss) income
|
(15.8
|
)
|
|
83.1
|
|
|
102.4
|
|
|
—
|
|
|
169.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net
|
45.4
|
|
|
40.6
|
|
|
2.2
|
|
|
—
|
|
|
88.2
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(0.3
|
)
|
|
4.3
|
|
|
—
|
|
|
4.0
|
|
|||||
Total other expense
|
45.4
|
|
|
40.3
|
|
|
6.5
|
|
|
—
|
|
|
92.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
91.3
|
|
|
71.6
|
|
|
—
|
|
|
(162.9
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
30.1
|
|
|
114.4
|
|
|
95.9
|
|
|
(162.9
|
)
|
|
77.5
|
|
|||||
Income tax (provision) benefit
|
20.5
|
|
|
(23.1
|
)
|
|
(24.3
|
)
|
|
—
|
|
|
(26.9
|
)
|
|||||
Net income
|
50.6
|
|
|
91.3
|
|
|
71.6
|
|
|
(162.9
|
)
|
|
50.6
|
|
|||||
Less: net income attributable to non-controlling interest
|
(0.5
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
0.5
|
|
|
(0.5
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
51.1
|
|
|
$
|
91.8
|
|
|
$
|
71.6
|
|
|
$
|
(163.4
|
)
|
|
$
|
51.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
43.9
|
|
|
$
|
92.4
|
|
|
$
|
66.4
|
|
|
$
|
(158.8
|
)
|
|
$
|
43.9
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
234.4
|
|
|
$
|
120.6
|
|
|
$
|
(7.1
|
)
|
|
$
|
347.9
|
|
Cost of sales
|
—
|
|
|
132.4
|
|
|
51.5
|
|
|
(7.1
|
)
|
|
176.8
|
|
|||||
Gross profit
|
—
|
|
|
102.0
|
|
|
69.1
|
|
|
—
|
|
|
171.1
|
|
|||||
Selling and marketing expenses
|
(0.5
|
)
|
|
47.3
|
|
|
29.4
|
|
|
—
|
|
|
76.2
|
|
|||||
General, administrative and other expenses
|
(2.8
|
)
|
|
23.2
|
|
|
11.1
|
|
|
—
|
|
|
31.5
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating income
|
3.3
|
|
|
31.5
|
|
|
28.6
|
|
|
—
|
|
|
63.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense (income), net
|
8.3
|
|
|
(3.7
|
)
|
|
0.2
|
|
|
—
|
|
|
4.8
|
|
|||||
Other (income), net
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||||
Total other expense (income)
|
8.3
|
|
|
(3.7
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
4.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
1.2
|
|
|
21.7
|
|
|
—
|
|
|
(22.9
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
(3.8
|
)
|
|
56.9
|
|
|
28.8
|
|
|
(22.9
|
)
|
|
59.0
|
|
|||||
Income tax benefit (provision)
|
1.8
|
|
|
(55.7
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
(61.0
|
)
|
|||||
Net (loss) income
|
(2.0
|
)
|
|
1.2
|
|
|
21.7
|
|
|
(22.9
|
)
|
|
(2.0
|
)
|
|||||
Less: net income attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net (loss) income attributable to Tempur Sealy International, Inc.
|
$
|
(2.0
|
)
|
|
$
|
1.2
|
|
|
$
|
21.7
|
|
|
$
|
(22.9
|
)
|
|
$
|
(2.0
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
3.0
|
|
|
$
|
0.7
|
|
|
$
|
27.2
|
|
|
$
|
(27.9
|
)
|
|
$
|
3.0
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
723.6
|
|
|
$
|
358.2
|
|
|
$
|
(20.0
|
)
|
|
$
|
1,061.8
|
|
Cost of sales
|
—
|
|
|
383.4
|
|
|
154.4
|
|
|
(20.0
|
)
|
|
517.8
|
|
|||||
Gross profit
|
—
|
|
|
340.2
|
|
|
203.8
|
|
|
—
|
|
|
544.0
|
|
|||||
Selling and marketing expenses
|
1.4
|
|
|
148.8
|
|
|
93.0
|
|
|
—
|
|
|
243.2
|
|
|||||
General, administrative and other expenses
|
3.5
|
|
|
67.8
|
|
|
32.5
|
|
|
—
|
|
|
103.8
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating (loss) income
|
(4.9
|
)
|
|
123.6
|
|
|
78.3
|
|
|
—
|
|
|
197.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense (income), net
|
23.1
|
|
|
(10.5
|
)
|
|
0.4
|
|
|
—
|
|
|
13.0
|
|
|||||
Other (income), net
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||||
Total other expense (income)
|
23.1
|
|
|
(10.5
|
)
|
|
—
|
|
|
—
|
|
|
12.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
103.8
|
|
|
62.7
|
|
|
—
|
|
|
(166.5
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
75.8
|
|
|
196.8
|
|
|
78.3
|
|
|
(166.5
|
)
|
|
184.4
|
|
|||||
Income tax (provision) benefit
|
7.5
|
|
|
(93.0
|
)
|
|
(15.6
|
)
|
|
—
|
|
|
(101.1
|
)
|
|||||
Net income
|
83.3
|
|
|
103.8
|
|
|
62.7
|
|
|
(166.5
|
)
|
|
83.3
|
|
|||||
Less: net income attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
83.3
|
|
|
$
|
103.8
|
|
|
$
|
62.7
|
|
|
$
|
(166.5
|
)
|
|
$
|
83.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
82.9
|
|
|
$
|
102.4
|
|
|
$
|
75.2
|
|
|
$
|
(177.6
|
)
|
|
$
|
82.9
|
|
•
|
An overview of our business, including the acquisition of Sealy Corporation and its historical subsidiaries (“Sealy”);
|
•
|
Our net sales and costs in the periods presented as well as changes between periods;
|
•
|
Expected sources of liquidity for future operations; and
|
•
|
The effect of the foregoing on our overall financial performance and condition.
|
•
|
Product Innovation:
We will continue to invest in research and development to leverage the combined technologies of our comprehensive portfolio of products to deliver a stream of innovative products. Our goal is to provide consumers the best bed and best sleep of their life and to provide our retailers a complete and optimal offering across brands, products, and prices to drive growth. We will also pursue opportunities to enter or develop new product categories.
|
•
|
Marketing:
We will increase our investment in advertising to increase consumer awareness, preference and loyalty for each of our key brands. We will also invest in in-store marketing and direct sales to maximize our sales opportunity driven from national brand and retailer advertising.
|
•
|
New Market Expansion:
We will pursue opportunities to expand into new international markets and over time into non-consolidated markets where our brands are currently represented under licensee, joint venture or third party distributor agreements.
|
•
|
Supply Chain (“Easier To Do Business With”):
We are committed to building a world-class supply chain that is “easier to do business with.” Our goal is to significantly improve efficiencies related to purchasing and delivery, as well as inventory management to drive sales growth.
|
(in millions)
|
|
|
||
Cash consideration for stock
|
$
|
231.2
|
|
(1)
|
Cash consideration for share-based awards
|
14.2
|
|
(2)
|
|
Cash consideration for 8.0% Sealy Notes
|
442.1
|
|
(3)
|
|
Cash consideration for repayment of Sealy Senior Notes
|
260.7
|
|
(4)
|
|
Cash consideration for repayment of Sealy 2014 Notes
|
276.9
|
|
(5)
|
|
Total consideration
|
1,225.1
|
|
|
|
Cash acquired
|
(52.2
|
)
|
(6)
|
|
Net consideration given
|
$
|
1,172.9
|
|
|
(1)
|
The cash consideration for outstanding shares of Sealy common stock is the product of the agreed-upon cash per share price of $2.20 and total Sealy shares of 105.1 million.
|
(2)
|
The cash consideration for share-based awards is the product of the agreed-upon cash per share price of $2.20 and the total number of restricted stock units and deferred stock units outstanding and the “in the money” stock options net of the weighted average exercise price.
|
(3)
|
The cash consideration for Sealy’s 8.0% Senior Secured Third Lien Convertible Notes due 2016 (“8.0% Sealy Notes”) is the result of applying the adjusted equity conversion rate to the 8.0% Sealy Notes tendered for conversion and multiplying the result by the agreed-upon cash per share price of $2.20. The 8.0% Sealy Notes that were converted represented the right to receive the same merger consideration that would have been payable to a holder of 201.0 million shares of Sealy common stock, subject to adjustment in accordance with the terms of the supplemental indenture governing the 8.0% Sealy Notes.
|
(4)
|
The cash consideration for Sealy’s 10.875% Senior Notes due 2016 (“Sealy Senior Notes”) reflects the repayment of the outstanding obligation.
|
(5)
|
The cash consideration for Sealy’s 8.25% Senior Subordinated Notes due 2014 (“Sealy 2014 Notes”) reflects the repayment of the outstanding obligation.
|
(6)
|
Represents the Sealy cash balance acquired at acquisition.
|
•
|
Net sales for the three months ended
September 30,
2013
increased
to
$735.5 million
from
$347.9 million
for the same period in 2012. Net sales for the
nine
months ended
September 30, 2013
increased
to
$1,786.2 million
from
$1,061.8 million
for the same period in 2012.
|
•
|
Earnings per diluted common share (EPS) was
$0.65
for the three months ended
September 30, 2013
compared to loss per diluted common share of
$0.03
for the three months ended
September 30, 2012
. For the
nine
months ended
September 30, 2013
EPS were
$0.83
compared to
$1.31
for the same period in 2012.
|
(In millions, except per common share amounts)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
|||||||||||||||||||||||||||
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
|
||||||||||||
Net sales
|
$
|
735.5
|
|
|
100.0
|
%
|
|
$
|
347.9
|
|
|
100.0
|
%
|
|
$
|
1,786.2
|
|
|
100.0
|
%
|
|
$
|
1,061.8
|
|
|
100.0
|
%
|
Cost of sales
|
436.8
|
|
|
59.4
|
%
|
|
176.8
|
|
|
50.8
|
%
|
|
1,044.2
|
|
|
58.5
|
%
|
|
517.8
|
|
|
48.8
|
%
|
||||
Gross profit
|
298.7
|
|
|
40.6
|
%
|
|
171.1
|
|
|
49.2
|
%
|
|
742.0
|
|
|
41.5
|
%
|
|
544.0
|
|
|
51.2
|
%
|
||||
Selling and marketing expenses
|
150.9
|
|
|
20.5
|
%
|
|
76.2
|
|
|
21.9
|
%
|
|
377.1
|
|
|
21.1
|
%
|
|
243.2
|
|
|
22.9
|
%
|
||||
General, administrative and other expenses
|
71.9
|
|
|
9.9
|
%
|
|
31.5
|
|
|
9.1
|
%
|
|
206.9
|
|
|
11.5
|
%
|
|
103.8
|
|
|
9.8
|
%
|
||||
Equity income in earnings of unconsolidated affiliates
|
(1.2
|
)
|
|
(0.2
|
)%
|
|
—
|
|
|
—
|
%
|
|
(2.5
|
)
|
|
(0.1
|
)%
|
|
—
|
|
|
—
|
%
|
||||
Royalty income, net of royalty expense
|
(4.1
|
)
|
|
(0.6
|
)%
|
|
—
|
|
|
—
|
%
|
|
(9.2
|
)
|
|
(0.5
|
)%
|
|
—
|
|
|
—
|
%
|
||||
Operating income
|
81.2
|
|
|
11.0
|
%
|
|
63.4
|
|
|
18.2
|
%
|
|
169.7
|
|
|
9.5
|
%
|
|
197.0
|
|
|
18.5
|
%
|
||||
Interest expense, net
|
24.6
|
|
|
3.3
|
%
|
|
4.8
|
|
|
1.4
|
%
|
|
88.2
|
|
|
4.9
|
%
|
|
13.0
|
|
|
1.1
|
%
|
||||
Other expense (income), net
|
0.9
|
|
|
0.1
|
%
|
|
(0.4
|
)
|
|
(0.1
|
)%
|
|
4.0
|
|
|
0.2
|
%
|
|
(0.4
|
)
|
|
—
|
%
|
||||
Income before income taxes
|
55.7
|
|
|
7.6
|
%
|
|
59.0
|
|
|
16.9
|
%
|
|
77.5
|
|
|
4.4
|
%
|
|
184.4
|
|
|
17.4
|
%
|
||||
Income tax provision
|
(15.5
|
)
|
|
(2.1
|
)%
|
|
(61.0
|
)
|
|
(17.5
|
)%
|
|
(26.9
|
)
|
|
(1.5
|
)%
|
|
(101.1
|
)
|
|
(9.5
|
)%
|
||||
Net income (loss) before non- controlling interest
|
40.2
|
|
|
5.5
|
%
|
|
(2.0
|
)
|
|
(0.6
|
)%
|
|
50.6
|
|
|
2.9
|
%
|
|
83.3
|
|
|
7.9
|
%
|
||||
Less: Net (loss) attributable to non- controlling interest
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(0.5
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||||
Net income (loss) attributable to common stockholders
|
$
|
40.2
|
|
|
5.5
|
%
|
|
$
|
(2.0
|
)
|
|
(0.6
|
)%
|
|
$
|
51.1
|
|
|
2.9
|
%
|
|
$
|
83.3
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.66
|
|
|
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
$
|
0.85
|
|
|
|
|
|
$
|
1.34
|
|
|
|
|
Diluted
|
$
|
0.65
|
|
|
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
$
|
0.83
|
|
|
|
|
|
$
|
1.31
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
60.5
|
|
|
|
|
|
59.6
|
|
|
|
|
|
60.3
|
|
|
|
|
|
62.1
|
|
|
|
|
||||
Diluted
|
61.6
|
|
|
|
|
|
59.6
|
|
|
|
|
|
61.6
|
|
|
|
|
|
63.6
|
|
|
|
|
|
CONSOLIDATED
|
|
TEMPUR
NORTH AMERICA
|
|
TEMPUR
INTERNATIONAL
|
|
SEALY
|
||||||||||||||||||||||||
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
||||||||||||||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||
Retail
|
$
|
669.7
|
|
|
$
|
306.4
|
|
|
$
|
226.5
|
|
|
$
|
221.2
|
|
|
$
|
79.7
|
|
|
$
|
85.2
|
|
|
$
|
363.5
|
|
|
$
|
—
|
|
Direct
|
31.5
|
|
|
27.1
|
|
|
11.6
|
|
|
16.7
|
|
|
12.5
|
|
|
10.4
|
|
|
7.4
|
|
|
—
|
|
||||||||
Other
|
34.3
|
|
|
14.4
|
|
|
4.3
|
|
|
3.0
|
|
|
11.0
|
|
|
11.4
|
|
|
19.0
|
|
|
—
|
|
||||||||
|
$
|
735.5
|
|
|
$
|
347.9
|
|
|
$
|
242.4
|
|
|
$
|
240.9
|
|
|
$
|
103.2
|
|
|
$
|
107.0
|
|
|
$
|
389.9
|
|
|
$
|
—
|
|
|
CONSOLIDATED
|
|
TEMPUR
NORTH AMERICA
|
|
TEMPUR
INTERNATIONAL
|
|
SEALY
|
||||||||||||||||||||||||
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
||||||||||||||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||
Bedding
|
$
|
662.3
|
|
|
$
|
300.4
|
|
|
$
|
220.6
|
|
|
$
|
220.1
|
|
|
$
|
76.5
|
|
|
$
|
80.3
|
|
|
$
|
365.2
|
|
|
$
|
—
|
|
Other products
|
73.2
|
|
|
47.5
|
|
|
21.8
|
|
|
20.8
|
|
|
26.7
|
|
|
26.7
|
|
|
24.7
|
|
|
—
|
|
||||||||
|
$
|
735.5
|
|
|
$
|
347.9
|
|
|
$
|
242.4
|
|
|
$
|
240.9
|
|
|
$
|
103.2
|
|
|
$
|
107.0
|
|
|
$
|
389.9
|
|
|
$
|
—
|
|
|
|
CONSOLIDATED
|
|
TEMPUR
NORTH AMERICA
|
|
TEMPUR
INTERNATIONAL
|
|
SEALY
|
||||||||||||||||||||||||
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||
Retail
|
$
|
1,617.5
|
|
|
$
|
932.3
|
|
|
$
|
635.7
|
|
|
$
|
668.7
|
|
|
$
|
252.3
|
|
|
$
|
263.6
|
|
|
$
|
729.5
|
|
|
$
|
—
|
|
Direct
|
88.8
|
|
|
83.4
|
|
|
36.6
|
|
|
58.7
|
|
|
35.2
|
|
|
24.7
|
|
|
17.0
|
|
|
—
|
|
||||||||
Other
|
79.9
|
|
|
46.1
|
|
|
11.5
|
|
|
9.1
|
|
|
33.7
|
|
|
37.0
|
|
|
34.7
|
|
|
—
|
|
||||||||
|
$
|
1,786.2
|
|
|
$
|
1,061.8
|
|
|
$
|
683.8
|
|
|
$
|
736.5
|
|
|
$
|
321.2
|
|
|
$
|
325.3
|
|
|
$
|
781.2
|
|
|
$
|
—
|
|
|
CONSOLIDATED
|
|
TEMPUR
NORTH AMERICA
|
|
TEMPUR
INTERNATIONAL
|
|
SEALY
|
||||||||||||||||||||||||
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||
Bedding
|
$
|
1,599.4
|
|
|
$
|
923.3
|
|
|
$
|
624.7
|
|
|
$
|
675.1
|
|
|
$
|
239.7
|
|
|
$
|
248.2
|
|
|
$
|
735.0
|
|
|
$
|
—
|
|
Other products
|
186.8
|
|
|
138.5
|
|
|
59.1
|
|
|
61.4
|
|
|
81.5
|
|
|
77.1
|
|
|
46.2
|
|
|
—
|
|
||||||||
|
$
|
1,786.2
|
|
|
$
|
1,061.8
|
|
|
$
|
683.8
|
|
|
$
|
736.5
|
|
|
$
|
321.2
|
|
|
$
|
325.3
|
|
|
$
|
781.2
|
|
|
$
|
—
|
|
|
(in millions, except per share amounts)
|
Three Months Ended September 30, 2013
|
|
Three Months Ended September 30, 2012
|
||||
GAAP net income (loss)
|
$
|
40.2
|
|
|
$
|
(2.0
|
)
|
Plus:
|
|
|
|
|
|
||
Transaction costs, net of tax
(1)
|
1.0
|
|
|
2.4
|
|
||
Integration costs, net of tax
(1)
|
5.1
|
|
|
—
|
|
||
Long term debt refinance, net of tax
(2)
|
0.5
|
|
|
—
|
|
||
Adjustment of taxes to normalized rate
(3)
|
(1.9
|
)
|
|
—
|
|
||
Tax provision related to repatriation of foreign earnings
(4)
|
—
|
|
|
41.9
|
|
||
Adjusted net income
|
$
|
44.9
|
|
|
$
|
42.3
|
|
|
|
|
|
|
|||
GAAP earnings (loss) per share, diluted
|
$
|
0.65
|
|
|
$
|
(0.03
|
)
|
Transaction costs, net of tax
(1)
|
0.02
|
|
|
0.04
|
|
||
Integration costs, net of tax
(1)
|
0.08
|
|
|
—
|
|
||
Long term debt refinance, net of tax
(2)
|
0.01
|
|
|
—
|
|
||
Adjustment of taxes to normalize rate
(4)
|
(0.03
|
)
|
|
—
|
|
||
Tax provision related to repatriation of foreign earnings
(4)
|
—
|
|
|
0.69
|
|
||
Adjusted earnings per share, diluted
|
$
|
0.73
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
||
Diluted shares outstanding
|
61.6
|
|
|
60.8
|
|
(1)
|
Transaction and integration represent costs, including legal fees, professional fees and other charges to align the businesses related to the Sealy Acquisition.
|
(2)
|
Refinance costs represent the interest fees incurred in connection with the refinancing of the Term A Facility which occurred in July 2013.
|
(3)
|
Adjustment of taxes to normalize rate represents adjustments associated with the tax impacts of transaction costs.
|
(4)
|
Represents tax provision recorded in connection with the repatriation of foreign earnings related to the Sealy Acquisition.
|
(1)
|
Transaction and integration represent costs related to the Sealy Acquisition, including legal fees, professional fees and costs to align the businesses.
|
(2)
|
Refinancing charges represent costs associated with debt refinanced by Sealy prior to the Sealy Acquisition.
|
(3)
|
Non-cash compensation represents costs associated with various share-based awards.
|
(4)
|
Restructuring and impairment represent costs related to restructuring the Tempur Sealy business and asset impairment costs recognized by Sealy prior to the Sealy Acquisition.
|
(5)
|
Discontinued operations represent losses from Sealy’s divested operations prior to the Sealy Acquisition.
|
(6)
|
Other represents $7.7 million in cost of sales associated with the revaluation of finished goods inventory related to the purchase price allocation and various immaterial costs.
|
|
As of
|
||
(in millions)
|
September 30, 2013
|
||
|
|
||
GAAP basis debt
|
$
|
1,860.1
|
|
Plus:
|
|
||
Letters of credit outstanding
|
22.4
|
|
|
Consolidated funded debt
|
1,882.5
|
|
|
Less:
|
|
|
|
Domestic qualified cash
|
62.0
|
|
|
Foreign qualified cash
|
38.8
|
|
|
Consolidated funded debt less qualified cash
(1)
|
$
|
1,781.7
|
|
(1)
|
Qualified cash as defined in the credit agreement equals 100.0% unrestricted domestic cash plus 60.0% of unrestricted foreign cash. For purposes of calculating leverage ratios, qualified cash is capped at $150.0 million.
|
|
As of
|
||
($ in millions)
|
September 30, 2013
|
||
|
|
||
Consolidated funded debt less qualified cash
|
$
|
1,781.7
|
|
Adjusted EBITDA
|
414.2
|
|
|
|
4.3 times
|
|
(1)
|
The ratio of consolidated debt to adjusted EBITDA was
4.3 times
, within our covenant, which requires this ratio be less than 5.5 times from March 18, 2013 through September 30, 2013, and less than 5.25 times from October 1, 2013 through December 31, 2013.
|
|
TEMPUR SEALY INTERNATIONAL, INC.
|
|
|
|
|
Date: November 8, 2013
|
By:
|
/s/ DALE E. WILLIAMS
|
|
|
Dale E. Williams
|
|
|
Executive Vice President and Chief Financial Officer
|
TEMPUR
SEALY
INTERNATIONAL, INC.
|
|
By:
|
_______________________________
|
Name:
|
_______________________________
|
|
|
OPTIONEE
|
|
_________________________________________
|
|
Name:
|
[Insert Director]
|
Optionee’s Address:
|
|
_________________________________________
|
|
_________________________________________
|
|
_________________________________________
|
|
_________________________________________
|
|
|
Ace
|
AH Beard
|
Auping
|
Ashley Sleep
|
Boyd
|
Carpe Diem
|
Carpenter
|
Carolina Mattress
|
Cauval Group
|
Chaide & Chaide
|
Classic Sleep Products
|
Comforpedic
|
Comfort Solutions
|
COFEL group
|
De Rucci
|
Diamona
|
Doremo Octaspring
|
Dorelan
|
Dunlopillo
|
Duxiana
|
Eastborne
|
Eminflex
|
Englander
|
Flex Group of Companies
|
Foamex
|
France Bed
|
Future Foam
|
Harrisons
|
Hastens
|
Hilding Anders Group
|
Hypnos
|
IBC
|
KayMed
|
King Koil
|
Kingsdown
|
Lady Americana
|
Land and Sky
|
Leggett & Platt
|
Lo Monaco
|
Magniflex
|
Metzler
|
Myers
|
Optimo
|
Ortobom
|
Natura
|
Natures Rest
|
Park Place
|
Permaflex
|
Pikolin Group
|
Recticel Group
|
Relyon
|
Restonic
|
Rosen
|
Rowe
|
Sapsa Bedding
|
Select Comfort
|
Serta
and any direct or indirect parent company
|
Silentnight
|
Simmons Company/Beautyrest and any direct or indirect parent company
|
Sleepmaker
|
Spring Air
|
Sterling
|
Stobel
|
Swiss Comfort
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Swiss Sense
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Therapedic
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Date: November 8, 2013
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By:
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/s/ MARK SARVARY
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Mark Sarvary
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President and Chief Executive Officer
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Date: November 8, 2013
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By:
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/s/ DALE E. WILLIAMS
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Dale E. Williams
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Executive Vice President and Chief Financial Officer
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Date: November 8, 2013
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By:
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/s/ MARK SARVARY
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Mark Sarvary
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President and Chief Executive Officer
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Date: November 8, 2013
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By:
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/s/ DALE E. WILLIAMS
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Dale E. Williams
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Executive Vice President and Chief Financial Officer
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