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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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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New York Stock Exchange
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Page
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•
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Tempur-Pedic
® - Founded in 1991, the Tempur brand is our specialty innovation category leader designed to provide life changing sleep for our wellness-seeking consumers. Our proprietary Tempur material precisely adapts to the shape, weight and temperature of the consumer and creates fewer pressure points, reduces motion transfer and provides personalized comfort and support.
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•
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Stearns & Foster
® - The Stearns & Foster brand offers our consumers high quality mattresses built by certified craftsmen who have been specially trained. Founded in 1846, the brand is designed and built with precise engineering and relentless attention to detail and fuses new innovative technologies with time-honored techniques, creating supremely comfortable beds.
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•
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Sealy
® featuring Posturepedic® Technology - The Sealy brand originated in 1881 in Sealy, Texas, and for over a century has focused on offering trusted comfort, durability and excellent value while maintaining contemporary styles and great support. The Sealy Posturepedic brand, introduced in 1950, was engineered to provide all-over support and body alignment to allow full relaxation and deliver a comfortable night's sleep. In 2017, Sealy Posturepedic no longer represented its own separate brand as we united all of our Sealy products under one masterbrand, which features the Posturepedic Technology™ in the Sealy Performance™ and Sealy Premium™ collections.
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•
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Cocoon by Sealy
TM
-
The Cocoon by Sealy brand, introduced in 2016, is our offering in the below $1,000 e-commerce space, made with the high quality materials that consumers expect from Sealy, sold online
at www.cocoonbysealy.com and delivered in a box directly to consumers' doorsteps.
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•
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our ability to continuously improve our products to offer new and enhanced consumer benefits and better quality;
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•
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the ability of our future product launches to increase net sales;
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•
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the effectiveness of our advertising campaigns and other marketing programs in building product and brand awareness, driving traffic to our distribution channels and increasing sales;
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•
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our ability to expand into new distribution channels and grow our existing channels;
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•
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our ability to continue to successfully execute our strategic initiatives;
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•
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the level of consumer acceptance of our products; and
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•
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general economic factors that impact consumer confidence, disposable income or the availability of consumer financing.
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•
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increasing our vulnerability to adverse economic, industry or competitive developments;
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•
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requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and other business opportunities;
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•
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making it more difficult for us to satisfy our obligations with respect to our indebtedness;
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•
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restricting us from making strategic acquisitions or investments or causing us to make non-strategic divestitures;
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•
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limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes;
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•
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limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate, placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting;
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•
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exposing us to variability in interest rates, as a substantial portion of our indebtedness is and will be at variable rates; and
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•
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limiting our ability to return capital to our stockholders, including through share repurchases.
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•
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general economic conditions in the markets in which we sell our products and the impact on consumers and retailers;
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•
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the level of competition in the mattress and pillow industry;
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•
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our ability to successfully identify and respond to emerging trends in the mattress and pillow industry;
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•
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our ability to successfully launch new products;
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•
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our ability to effectively sell our products through our distribution channels in volumes sufficient to drive growth and leverage our cost structure and advertising spending;
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•
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our ability to reduce costs, including our ability to align our cost structure with sales in the existing economic environment;
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•
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our ability to successfully manage our relationships with our major customers;
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•
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our ability to absorb fluctuations in commodity costs;
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•
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our ability to maintain efficient, timely and cost-effective production and utilization of our manufacturing capacity; and
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•
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our ability to maintain efficient, timely and cost-effective delivery of our products, and our ability to maintain public recognition of our brands.
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•
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actual or anticipated variations in our quarterly and annual operating results, including those resulting from seasonal variations in our business;
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•
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general economic conditions, such as unemployment, changes in short-term and long-term interest rates and fluctuations in both debt and equity capital markets;
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•
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introductions or announcements of technological innovations or new products by us or our competitors;
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•
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disputes or other developments relating to proprietary rights, including patents, litigation matters, and our ability to patent, or otherwise protect, our products and technologies;
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•
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changes in estimates by securities analysts of our financial performance or the financial performance of our competitors or major customers or statements by others in the investment community relating to such performance;
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•
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stock repurchase programs;
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•
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bankruptcies of any of our major customers;
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•
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loss of any of our major customers;
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•
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conditions or trends in the mattress industry generally;
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•
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additions or departures of key personnel;
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•
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announcements by us or our competitors or significant retailer customers of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
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•
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announcements by our competitors or our major customers of their quarterly operating results or announcements by our competitors or our major customers of their views on trends in the bedding industry;
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regulatory developments in the U.S. and abroad;
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•
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economic and political factors;
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public announcements or filings with the SEC indicating that significant stockholders, directors or officers are buying or selling shares of our common stock; and
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•
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the declaration or suspension of a cash dividend.
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our ability to issue preferred stock with rights senior to those of the common stock without any further vote or action by the holders of our common stock;
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•
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the requirements that our stockholders provide advance notice when nominating our directors; and
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•
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the inability of our stockholders to convene a stockholders’ meeting without the chairperson of the Board of Directors, the president, or a majority of the Board of Directors first calling the meeting.
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Name
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Location
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Approximate Square Footage
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Title
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Type of Facility
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North America
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Tempur Production USA, LLC
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Albuquerque, New Mexico
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800,000
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Leased
(a)
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Hagerstown, Maryland
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615,600
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Plainfield, Indiana
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614,000
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Leased
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Manufacturing
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Tempur Production USA, LLC
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Duffield, Virginia
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581,000
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Owned
(a)
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Conyers, Georgia
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300,000
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Owned
(a)
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Green Island, New York
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257,000
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Richmond, California
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241,000
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Owned
(a)
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Orlando, Florida
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225,050
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Brenham, Texas
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220,500
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Owned
(a)
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Manufacturing
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Tempur Production USA, LLC
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Mountain Top, Pennsylvania
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210,000
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Trinity, North Carolina
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180,000
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Owned
(a)
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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South Gate, California
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172,000
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Leased
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Manufacturing
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Sealy Canada, Ltd
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Alberta, Canada
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144,500
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Owned
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Medina, Ohio
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140,000
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Owned
(a)
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Lacey, Washington
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134,000
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Kansas City, Kansas
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122,000
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Phoenix, Arizona
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120,000
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Leased
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Manufacturing
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Sealy Canada, Ltd
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Toronto, Canada
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120,000
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Leased
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Manufacturing
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Sealy, Inc.
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Trinity, North Carolina
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105,500
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Owned
(a)
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Office
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Sealy Mattress Manufacturing Co., LLC
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St. Paul, Minnesota
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93,600
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Owned
(a)
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Manufacturing
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Sealy Canada, Ltd
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Quebec, Canada
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88,000
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Owned
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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Denver, Colorado
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82,000
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Owned
(a)
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Manufacturing
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Tempur-Pedic Management, LLC
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Lexington, Kentucky
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77,400
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Owned
(a)
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Office
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Sealy Mattress Company of Puerto Rico
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Carolina, Puerto Rico
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44,000
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Owned
|
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Manufacturing
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Tempur Retail Stores, LLC
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Irving, Texas
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10,225
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Leased
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Office
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International
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Dan-Foam ApS
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Aarup, Denmark
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523,000
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Owned
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Manufacturing
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Sealy Argentina SRL
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Buenos Aires, Argentina
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144,000
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Owned
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Manufacturing
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Tempur Deutschland GmbH
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Steinhagen, Germany
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143,500
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Owned
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Warehouse
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Sealy Mattress Company Mexico, S. de R.L. de C.V.
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Toluca, Mexico
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130,500
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Owned
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Manufacturing
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Tempur UK Ltd
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Middlesex, United Kingdom
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61,000
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Leased
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Warehouse
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Tempur France
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Ile de France, France
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53,800
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Leased
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Warehouse
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(a)
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We have granted a mortgage or otherwise encumbered our interest in this facility as collateral for secured indebtedness.
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Price Range
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||||||
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High
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Low
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||||
Fiscal 2017
|
|
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||||
First Quarter
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$
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69.50
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$
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42.20
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Second Quarter
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53.39
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40.58
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Third Quarter
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64.52
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50.11
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Fourth Quarter
|
67.63
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|
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51.32
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||||
Fiscal 2016
|
|
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||||
First Quarter
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$
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69.32
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|
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$
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52.51
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Second Quarter
|
62.76
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|
|
53.95
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Third Quarter
|
82.04
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53.95
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Fourth Quarter
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68.99
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50.94
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Period
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(a) Total number of shares purchased
|
|
(b) Average price paid per share
|
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(c) Total number of shares purchased as part of publicly announced plans or programs
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(d) Maximum number of shares (or approximate dollar value of shares) that may yet be purchased under the plans or programs
(in millions)
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October 1, 2017 - October 31, 2017
|
|
—
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$—
|
|
—
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|
$226.9
|
November 1, 2017 - November 30, 2017
|
|
—
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|
$—
|
|
—
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|
$226.9
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December 1, 2017 - December 31, 2017
|
|
—
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|
$—
|
|
—
|
|
$226.9
|
Total
|
|
—
|
|
|
|
—
|
|
|
Brunswick Corporation (BC)
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La-Z-Boy Incorporated (LZB)
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Steelcase Inc. (SCS)
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Carter's, Inc. (CRI)
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Leggett & Platt, Incorporated (LEG)
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Tupperware Brands Corporation (TUP)
|
Columbia Sportswear Company (COLM)
|
lululemon athletica inc. (LULU)
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Under Armour, Inc. (UA)
|
Deckers Outdoor Corporation (DECK)
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Herman Miller, Inc. (MLHR)
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Williams-Sonoma, Inc. (WSM)
|
Gildan Activewear Inc. (DII/A)
|
Polaris Industries Inc. (PII)
|
Wolverine World Wide, Inc. (WWW)
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Hanesbrands Inc. (HBI)
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RH (RH)
|
|
Hasbro, Inc. (HAS)
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Sleep Number Corporation (SNBR)
|
|
Brunswick Corporation (BC)
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Harman International Industries,Inc.(HAR)
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Polaris Industries Inc. (PII)
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Carter's, Inc. (CRI)
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Hasbro, Inc. (HAS)
|
Sleep Number Corporation (SNBR)
|
Columbia Sportswear Company (COLM)
|
La-Z-Boy Incorporated (LZB)
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Steelcase Inc. (SCS)
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Deckers Outdoor Corporation (DECK)
|
Leggett & Platt, Incorporated (LEG)
|
Tupperware Brands Corporation (TUP)
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Dorel Industries Inc. (DII/A)
|
Lexmark International, Inc. (LXK)
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Under Armour, Inc. (UA)
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Fossil Group, Inc. (FOSL)
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lululemon athletica inc. (LULU)
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Williams-Sonoma, Inc. (WSM)
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Gildan Activewear Inc. (GIL)
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Herman Miller, Inc. (MLHR)
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Wolverine World Wide, Inc. (WWW)
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Hanesbrands Inc. (HBI)
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Mohawk Industries, Inc. (MHK)
|
|
|
|
12/31/2012
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|
12/31/2013
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12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
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||||||||||||
Tempur Sealy International, Inc.
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$
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100.00
|
|
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$
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171.36
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|
|
$
|
174.37
|
|
|
$
|
223.75
|
|
|
$
|
216.83
|
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$
|
199.08
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S&P 500
|
|
100.00
|
|
|
132.39
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|
|
150.51
|
|
|
152.59
|
|
|
170.84
|
|
|
208.14
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||||||
2016 Peer Group
|
|
100.00
|
|
|
142.09
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|
155.93
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|
|
143.10
|
|
|
148.25
|
|
|
174.21
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||||||
2017 Peer Group
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|
100.00
|
|
|
142.76
|
|
|
161.75
|
|
|
148.06
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|
149.64
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|
176.40
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(in millions, except per common share amounts)
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||||||||||
Statement of Income Data:
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
(1)
|
||||||||||
Net sales
|
$
|
2,754.4
|
|
|
$
|
3,128.9
|
|
|
$
|
3,154.6
|
|
|
$
|
2,986.0
|
|
|
$
|
2,456.8
|
|
Cost of sales
|
1,613.7
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|
|
1,821.4
|
|
|
1,905.4
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|
|
1,840.4
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1,457.7
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|||||
Gross profit
|
1,140.7
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|
1,307.5
|
|
|
1,249.2
|
|
|
1,145.6
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|
|
999.1
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|||||
Operating expense, net
|
852.3
|
|
|
897.1
|
|
|
942.7
|
|
|
875.5
|
|
|
775.4
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|||||
Operating income
|
288.4
|
|
|
410.4
|
|
|
306.5
|
|
|
270.1
|
|
|
223.7
|
|
|||||
Interest expense, net
|
108.0
|
|
|
91.6
|
|
|
102.5
|
|
|
92.8
|
|
|
110.8
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
47.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss on disposal, net
|
—
|
|
|
—
|
|
|
—
|
|
|
23.2
|
|
|
—
|
|
|||||
Other (income) expense, net
|
(8.0
|
)
|
|
(0.2
|
)
|
|
12.9
|
|
|
(13.7
|
)
|
|
5.0
|
|
|||||
Income before income taxes
|
188.4
|
|
|
271.8
|
|
|
191.1
|
|
|
167.8
|
|
|
107.9
|
|
|||||
Income tax provision
(2)
|
(47.7
|
)
|
|
(86.8
|
)
|
|
(125.4
|
)
|
|
(64.9
|
)
|
|
(49.1
|
)
|
|||||
Net income before non-controlling interests
|
140.7
|
|
|
185.0
|
|
|
65.7
|
|
|
102.9
|
|
|
58.8
|
|
|||||
Less: net (loss) income attributable to non-controlling interests
|
(10.7
|
)
|
|
(5.6
|
)
|
|
1.2
|
|
|
1.1
|
|
|
0.3
|
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
151.4
|
|
|
$
|
190.6
|
|
|
$
|
64.5
|
|
|
$
|
101.8
|
|
|
$
|
58.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
41.9
|
|
|
$
|
65.7
|
|
|
$
|
153.9
|
|
|
$
|
62.5
|
|
|
$
|
81.0
|
|
Total assets
|
2,694.0
|
|
|
2,698.8
|
|
|
2,652.0
|
|
|
2,573.2
|
|
|
2,722.6
|
|
|||||
Total debt, net
|
1,644.6
|
|
|
1,779.0
|
|
|
1,420.8
|
|
|
1,537.0
|
|
|
1,808.9
|
|
|||||
Capital leases and other debt
|
108.5
|
|
|
109.1
|
|
|
34.0
|
|
|
27.7
|
|
|
27.6
|
|
|||||
Redeemable non-controlling interest
|
2.2
|
|
|
7.6
|
|
|
12.4
|
|
|
12.6
|
|
|
11.5
|
|
|||||
Total stockholders' equity (deficit)
|
112.5
|
|
|
(41.9
|
)
|
|
267.8
|
|
|
180.6
|
|
|
99.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial and Operating Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends per common share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Depreciation and amortization
(3)
|
94.6
|
|
|
89.5
|
|
|
93.9
|
|
|
89.7
|
|
|
91.5
|
|
|||||
Net cash provided by operating activities
|
222.9
|
|
|
165.5
|
|
|
234.2
|
|
|
225.2
|
|
|
98.5
|
|
|||||
Net cash used in investing activities
|
(62.1
|
)
|
|
(62.4
|
)
|
|
(59.7
|
)
|
|
(10.4
|
)
|
|
(1,213.0
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(175.2
|
)
|
|
(185.1
|
)
|
|
(90.7
|
)
|
|
(238.1
|
)
|
|
1,013.4
|
|
|||||
Basic earnings per common share
|
2.80
|
|
|
3.23
|
|
|
1.05
|
|
|
1.67
|
|
|
0.97
|
|
|||||
Diluted earnings per common share
|
2.77
|
|
|
3.19
|
|
|
1.03
|
|
|
1.64
|
|
|
0.95
|
|
|||||
Capital expenditures
|
67.0
|
|
|
62.4
|
|
|
65.9
|
|
|
47.5
|
|
|
40.0
|
|
(1)
|
Includes Sealy results of operations from March 18, 2013 through December 31, 2013. Information presented for periods prior to our acquisition of Sealy on March 18, 2013 do not include Sealy and as a result, the information may not be comparable.
|
(2)
|
Income tax provision for 2015 includes approximately $60.7 million related to changes in estimate related to the uncertain tax position regarding the Danish Tax Matter, as defined in Note
13
, "
Income Taxes
," in our Consolidated Financial Statements included in Part II, ITEM 8 of this Report. The income tax provision for 2017 includes the provisional impact of the U.S. Tax Reform Act.
|
(3)
|
Includes
$13.3 million
,
$16.2 million
,
$22.5 million
, $13.4 million, $16.9 million in non-cash, stock-based compensation expense related to restricted stock units, performance restricted stock units, deferred stock units and stock options in
2017
,
2016
,
2015
,
2014
, and
2013
, respectively.
|
•
|
an overview of our business and strategy;
|
•
|
factors impacting results of operations;
|
•
|
results of operations including our net sales and costs in the periods presented as well as changes between periods;
|
•
|
expected sources of liquidity for future operations; and
|
•
|
our use of certain non-GAAP financial measures.
|
•
|
Total net sales
decreased
12.0%
to
$2,754.4 million
from
$3,128.9 million
in
2016
.
|
•
|
Gross margin was
41.4%
as compared to
41.8%
in
2016
. Adjusted gross margin, which is a non-GAAP financial measure, was
42.0%
as compared to
41.9%
in
2016
.
|
•
|
Operating income was
$288.4 million
, as compared to
$410.4 million
in
2016
. Adjusted operating income, which is a non-GAAP financial measure, was
$326.5 million
, or
11.9%
of net sales, as compared to
$425.0 million
, or
13.6%
of net sales, in
2016
.
|
•
|
Net income was
$151.4 million
as compared to
$190.6 million
in
2016
. Adjusted net income, which is a non-GAAP financial measure, was
$175.2 million
as compared to
$242.4 million
in
2016
.
|
•
|
Earnings before interest, taxes, depreciation and amortization ("EBITDA"), which is a non-GAAP financial measure, was $401.7 million as compared to $505.7 million in
2016
. Adjusted EBITDA, which is a non-GAAP financial measure, was
$448.5 million
as compared to
$521.6 million
in
2016
.
|
•
|
Earnings per share ("EPS") was
$2.77
as compared to
$3.19
in
2016
. Adjusted EPS, which is a non-GAAP financial measure, was
$3.20
as compared to
$4.05
in
2016
.
|
•
|
Operating cash flow for the full year
2017
was
$222.9 million
as compared to
$165.5 million
in
2016
.
|
(in millions, except percentages and
|
Year Ended December 31,
|
|||||||||||||||||||
per common share amounts)
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Net sales
|
$
|
2,754.4
|
|
|
100.0
|
%
|
|
$
|
3,128.9
|
|
|
100.0
|
%
|
|
$
|
3,154.6
|
|
|
100.0
|
%
|
Cost of sales
|
1,613.7
|
|
|
58.6
|
|
|
1,821.4
|
|
|
58.2
|
|
|
1,905.4
|
|
|
60.4
|
|
|||
Gross profit
|
1,140.7
|
|
|
41.4
|
|
|
1,307.5
|
|
|
41.8
|
|
|
1,249.2
|
|
|
39.6
|
|
|||
Selling and marketing expenses
|
601.3
|
|
|
21.8
|
|
|
648.5
|
|
|
20.7
|
|
|
648.0
|
|
|
20.5
|
|
|||
General, administrative and other expenses
|
273.0
|
|
|
9.9
|
|
|
281.4
|
|
|
9.0
|
|
|
324.9
|
|
|
10.3
|
|
|||
Customer termination charges, net
|
14.4
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Equity income in earnings of unconsolidated affiliates
|
(15.6
|
)
|
|
(0.6
|
)
|
|
(13.3
|
)
|
|
(0.4
|
)
|
|
(11.9
|
)
|
|
(0.4
|
)
|
|||
Royalty income, net of royalty expense
|
(20.8
|
)
|
|
(0.8
|
)
|
|
(19.5
|
)
|
|
(0.6
|
)
|
|
(18.3
|
)
|
|
(0.6
|
)
|
|||
Operating income
|
288.4
|
|
|
10.5
|
|
|
410.4
|
|
|
13.1
|
|
|
306.5
|
|
|
9.7
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense, net
|
108.0
|
|
|
3.9
|
|
|
91.6
|
|
|
2.9
|
|
|
102.5
|
|
|
3.3
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
47.2
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|||
Other (income) expense, net
|
(8.0
|
)
|
|
(0.3
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
12.9
|
|
|
0.4
|
|
|||
Total other expense. net
|
100.0
|
|
|
3.6
|
|
|
138.6
|
|
|
4.4
|
|
|
115.4
|
|
|
3.7
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes
|
188.4
|
|
|
6.8
|
|
|
271.8
|
|
|
8.7
|
|
|
191.1
|
|
|
6.1
|
|
|||
Income tax provision
|
(47.7
|
)
|
|
(1.7
|
)
|
|
(86.8
|
)
|
|
(2.8
|
)
|
|
(125.4
|
)
|
|
(4.0
|
)
|
|||
Net income before non-controlling interests
|
140.7
|
|
|
5.1
|
|
|
185.0
|
|
|
5.9
|
|
|
65.7
|
|
|
2.1
|
|
|||
Less: Net (loss) income attributable to non-controlling interests
|
(10.7
|
)
|
|
(0.4
|
)
|
|
(5.6
|
)
|
|
(0.2
|
)
|
|
1.2
|
|
|
—
|
|
|||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
151.4
|
|
|
5.5
|
%
|
|
$
|
190.6
|
|
|
6.1
|
%
|
|
$
|
64.5
|
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
$
|
2.77
|
|
|
|
|
$
|
3.19
|
|
|
|
|
$
|
1.03
|
|
|
|
|||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
54.7
|
|
|
|
|
59.8
|
|
|
|
|
62.6
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
Consolidated
|
|
North America
|
|
International
|
||||||||||||||||||||||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
Net sales by channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Wholesale
|
$
|
2,524.5
|
|
|
$
|
2,964.2
|
|
|
$
|
3,004.1
|
|
|
$
|
2,052.6
|
|
|
$
|
2,511.7
|
|
|
$
|
2,531.4
|
|
|
$
|
471.9
|
|
|
$
|
452.5
|
|
|
$
|
472.7
|
|
Direct
|
229.9
|
|
|
164.7
|
|
|
150.5
|
|
|
121.2
|
|
|
58.4
|
|
|
45.8
|
|
|
108.7
|
|
|
106.3
|
|
|
104.7
|
|
|||||||||
Total net sales
|
$
|
2,754.4
|
|
|
$
|
3,128.9
|
|
|
$
|
3,154.6
|
|
|
$
|
2,173.8
|
|
|
$
|
2,570.1
|
|
|
$
|
2,577.2
|
|
|
$
|
580.6
|
|
|
$
|
558.8
|
|
|
$
|
577.4
|
|
•
|
North America
net sales
decreased
$396.3 million
, or
15.4%
. Net sales to Mattress Firm were
$95.7 million
prior to the termination of our contract at the beginning of the second quarter of 2017, as compared to
$668.6 million
for 2016, which resulted in a net sales
decrease
of
$572.9 million
. Excluding Mattress Firm, North America net sales
increased
$176.6 million
or
9.3%
, driven by growth across all of our brands. Net sales in the Wholesale channel
decreased
$459.1 million
, or
18.3%
, driven primarily by the termination of our contract with Mattress Firm. Excluding sales to Mattress Firm, Wholesale net sales
increased
6.2%
. Additionally, sales to a national department store retailer in the Wholesale channel significantly declined in 2017 as compared to 2016. Net sales in our Direct channel increased
$62.8 million
, or
107.5%
, driven primarily by growth in e-commerce. Canada net sales increased 3.4% on a constant currency basis.
|
•
|
International
net sales
increased
$21.8 million
, or
3.9%
. On a constant currency basis, our International net sales increased 4.6%, driven primarily by growth in Asia-Pacific and Latin America. Net sales in the Wholesale channel increased 4.4% on a constant currency basis. Net sales in the Direct channel increased 5.4% on a constant currency basis.
|
•
|
North America
net sales
decreased
0.3%
. Net sales in the Wholesale channel were relatively flat. Our sales to Mattress Firm decreased approximately
$80.0 million
as compared to 2015. Excluding Mattress Firm, our sales
increased
4.0%
. Net sales in our Direct channel
increased
$12.6 million
or
27.5%
, driven primarily by growth in e-commerce. Canada net sales increased
2.9%
and, on a constant currency basis, increased 6.2%.
|
•
|
International
net sales
decreased
3.2%
due to unfavorable foreign exchange rates. On a constant currency basis, our International net sales increased 3.7%, primarily driven by the success of new product introductions, an increase in direct sales of our Tempur products in Asia-Pacific and an increase in net sales of our Sealy products in Latin America.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
Margin Change
|
|||||||||||||||||||
(in millions, except percentages)
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
2017 vs 2016
|
|
2016 vs 2015
|
|||||||||||
North America
|
$
|
844.7
|
|
|
38.9
|
%
|
|
$
|
1,017.4
|
|
|
39.6
|
%
|
|
$
|
954.6
|
|
|
37.0
|
%
|
|
(0.7
|
)%
|
|
2.6
|
%
|
International
|
296.0
|
|
|
51.0
|
%
|
|
290.1
|
|
|
51.9
|
%
|
|
294.6
|
|
|
51.0
|
%
|
|
(0.9
|
)%
|
|
0.9
|
%
|
|||
Consolidated
|
$
|
1,140.7
|
|
|
41.4
|
%
|
|
$
|
1,307.5
|
|
|
41.8
|
%
|
|
$
|
1,249.2
|
|
|
39.6
|
%
|
|
(0.4
|
)%
|
|
2.2
|
%
|
•
|
North America
gross margin
declined
70
basis points. The decline was driven primarily by the termination of the Mattress Firm relationship, which resulted in fixed cost deleverage of 120 basis points and unfavorable brand mix of 90 basis points. In 2017, we also recorded charges associated with the Mattress Firm termination for an unfavorable impact of 60 basis points. These charges included a $5.4 million write-off of customer-unique inventory and $6.1 million of increased product obligations. The decline in gross margin was also due to unfavorable commodity costs of 100 basis points, offset by favorable channel mix of 130 basis points, operational productivity of 100 basis points and lower floor model discounts of 60 basis points.
|
•
|
International
gross margin
declined
90
basis points. The decline was driven primarily by new product launch costs and mix.
|
•
|
North America
gross margin
improved
260
basis points. The increase was driven primarily by 180 basis points of operational improvements, including sourcing improvements, 50 basis points due to pricing actions, and 30 basis points from favorable product mix.
|
•
|
International
gross margin
improved
90
basis points. The increase was driven by 60 basis points operational improvements and 50 basis points of favorable channel mix as we expand distribution through more profitable direct-to-consumer channels.
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Advertising
|
$
|
284.1
|
|
|
$
|
352.7
|
|
|
$
|
248.7
|
|
|
$
|
316.5
|
|
|
$
|
35.4
|
|
|
$
|
36.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other selling and marketing
|
317.2
|
|
|
295.8
|
|
|
186.7
|
|
|
169.5
|
|
|
124.8
|
|
|
123.4
|
|
|
5.7
|
|
|
2.9
|
|
||||||||
General, administrative and other
|
273.0
|
|
|
281.4
|
|
|
124.0
|
|
|
127.3
|
|
|
57.7
|
|
|
57.8
|
|
|
91.3
|
|
|
96.3
|
|
||||||||
Customer termination charges, net
|
14.4
|
|
|
—
|
|
|
20.9
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
||||||||
Total operating expense
|
$
|
888.7
|
|
|
$
|
929.9
|
|
|
$
|
580.3
|
|
|
$
|
613.3
|
|
|
$
|
218.7
|
|
|
$
|
217.4
|
|
|
$
|
89.7
|
|
|
$
|
99.2
|
|
•
|
North America
operating expenses
decreased
$33.0 million
and
increased
280
basis points as a percentage of net sales. In the first quarter of 2017, we recorded $20.9 million of charges related to the Mattress Firm termination, which included $17.2 million write-off of customer incentives and marketing assets in the first quarter and $3.7 million of employee-related and professional fees. Additionally, we had unfavorable operating expense leverage, including investments in marketing. These were offset by decreased participation in our wholesale cooperative advertising programs.
|
•
|
International
operating expenses
increased
$1.3 million
and
decreased
120
basis points as a percentage of net sales, primarily driven by improved operating expense leverage. During 2017, we recognized $4.6 million of restructuring charges, which relate to the wind down of certain operations, leadership termination charges and professional fees, as well as $3.8 million of non-income tax charges related to a subsidiary in Latin America. We also recognized $2.7 million of charges for a European customer's bankruptcy and other employee-related expenses. During 2016, we recognized $3.2 million of charges related to a subsidiary in Latin America.
|
•
|
Corporate
operating expenses
decreased
$9.5 million
, or
9.6%
. The decrease in operating expenses was primarily driven by a $9.3 million benefit recorded in the first quarter of 2017 for the change in estimate associated with performance-based stock compensation that is no longer probable of payout following the Mattress Firm termination.
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Advertising
|
$
|
352.7
|
|
|
$
|
360.5
|
|
|
$
|
316.5
|
|
|
$
|
323.0
|
|
|
$
|
36.2
|
|
|
$
|
37.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other selling and marketing
|
295.8
|
|
|
287.5
|
|
|
169.5
|
|
|
161.1
|
|
|
123.4
|
|
|
122.3
|
|
|
2.9
|
|
|
4.1
|
|
||||||||
General, administrative and other
|
281.4
|
|
|
324.9
|
|
|
127.3
|
|
|
143.6
|
|
|
57.8
|
|
|
59.9
|
|
|
96.3
|
|
|
121.4
|
|
||||||||
Total operating expense
|
$
|
929.9
|
|
|
$
|
972.9
|
|
|
$
|
613.3
|
|
|
$
|
627.7
|
|
|
$
|
217.4
|
|
|
$
|
219.7
|
|
|
$
|
99.2
|
|
|
$
|
125.5
|
|
•
|
North America
operating expenses
decreased
$14.4 million
and
decreased
50
basis points as a percentage of net sales. The decrease was primarily driven by decreased incentive compensation expenses, as well as lower overall operating expenses in selling and marketing expenses and general, administrative and other expenses.
|
•
|
International
operating expenses
decreased
$2.3 million
and
increased
90
basis points as a percentage of net sales.
|
•
|
Corporate
operating expenses
decreased
$26.3 million
, or
21.0%
. Executive management transition and retention compensation decreased $11.6 million and integration costs decreased $4.6 million, and additional costs related to our 2015 Annual Meeting which were not incurred in 2016 were $6.3 million. We also recorded a stock compensation benefit of $3.8 million, representing the fourth quarter change in estimate to reduce accumulated performance-based stock compensation amortization to actual cost based on financial results for the year ended December 31, 2016.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
Margin Change
|
|||||||||||||||||||
(in millions, except percentages)
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
2017 vs 2016
|
|
2016 vs 2015
|
|||||||||||
North America
|
$
|
273.2
|
|
|
12.6
|
%
|
|
$
|
411.8
|
|
|
16.0
|
%
|
|
$
|
335.6
|
|
|
13.0
|
%
|
|
(3.4
|
)%
|
|
3.0
|
%
|
International
|
104.9
|
|
|
18.1
|
%
|
|
97.6
|
|
|
17.5
|
%
|
|
96.3
|
|
|
16.7
|
%
|
|
0.6
|
%
|
|
0.8
|
%
|
|||
|
378.1
|
|
|
|
|
509.4
|
|
|
|
|
431.9
|
|
|
|
|
|
|
|
||||||||
Corporate expenses
|
(89.7
|
)
|
|
|
|
(99.0
|
)
|
|
|
|
(125.4
|
)
|
|
|
|
|
|
|
||||||||
Total operating income
|
$
|
288.4
|
|
|
10.5
|
%
|
|
$
|
410.4
|
|
|
13.1
|
%
|
|
$
|
306.5
|
|
|
9.7
|
%
|
|
(2.6
|
)%
|
|
3.4
|
%
|
•
|
North America
operating income
decreased
$138.6 million
and operating margin
declined
340
basis points. The decline in operating margin was primarily driven by the termination of our contracts with Mattress Firm at the beginning of the second quarter, which resulted in gross margin decline and unfavorable operating expense leverage. The decline in operating margin was also driven by charges of $32.4 million recorded in the first quarter of 2017 associated with the Mattress Firm termination. Cost of sales included $11.5 million of charges related to the write-off of customer-unique inventory and increased product obligations. Operating expenses included $20.9 million of charges related to the write-off of customer incentives and marketing assets, as well as employee-related expenses.
|
•
|
International
operating income
increased
$7.3 million
and operating margin
improved
60
basis points, primarily driven by improved operating expense leverage. Operating income includes $4.6 million of restructuring charges, which relate to the wind down of certain operations, leadership termination charges and professional fees, as well as $3.8 million of non-income tax charges related to a subsidiary in Latin America.
|
•
|
Corporate
operating expenses
decreased
$9.3 million
as discussed above, improving our consolidated operating margin by
30
basis points.
|
•
|
North America
operating income
increased
$76.2 million
and operating margin
improved
300
basis points. The improvement in operating margin was primarily driven by improved gross margin of 230 basis points and an improvement in operating expense leverage of 50 basis points.
|
•
|
International
operating income
increased
$1.3 million
and operating margin
improved
80
basis points. The improvement in operating margin was primarily driven by
improved
gross margin of
90
basis points.
|
•
|
Corporate
operating expenses
decreased
$26.3 million
, as discussed above, which improved our consolidated operating margin by
80
basis points.
|
|
Year Ended December 31,
|
|
Percent change
|
||||||||||||||
(in millions, except percentages)
|
2017
|
|
2016
|
|
2015
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||
Interest expense, net
|
$
|
108.0
|
|
|
$
|
91.6
|
|
|
$
|
102.5
|
|
|
17.9
|
%
|
|
(10.6
|
)%
|
|
Year Ended December 31,
|
|
Percent change
|
||||||||||||||
(in millions, except percentages)
|
2017
|
|
2016
|
|
2015
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||
Other (income) expense, net
|
$
|
(8.0
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
12.9
|
|
|
3,900.0
|
%
|
|
(101.6
|
)%
|
|
Year Ended December 31,
|
|
Percent change
|
||||||||||||||
(in millions, except percentages)
|
2017
|
|
2016
|
|
2015
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||
Income tax
|
$
|
47.7
|
|
|
$
|
86.8
|
|
|
$
|
125.4
|
|
|
(45.0
|
)%
|
|
(30.8
|
)%
|
Effective tax rate
|
25.3
|
%
|
|
31.9
|
%
|
|
65.6
|
%
|
|
(6.6
|
)%
|
|
(33.7
|
)%
|
|
Year Ended December 31,
|
||||||||||||
(in millions, except percentages and per common share amounts)
|
2017
|
|
2016
|
|
% Change
|
|
% Change Constant Currency
(1)
|
||||||
Net sales
|
$
|
2,754.4
|
|
|
$
|
3,128.9
|
|
|
(12.0
|
)%
|
|
(12.0
|
)%
|
Net income
|
151.4
|
|
|
190.6
|
|
|
(20.6
|
)%
|
|
(19.5
|
)%
|
||
Adjusted net income
(1)
|
175.2
|
|
|
242.4
|
|
|
(27.7
|
)%
|
|
(26.9
|
)%
|
||
EPS
|
2.77
|
|
|
3.19
|
|
|
(13.2
|
)%
|
|
(11.9
|
)%
|
||
Adjusted EPS
(1)
|
3.20
|
|
|
4.05
|
|
|
(21.0
|
)%
|
|
(20.0
|
)%
|
||
EBITDA
(1)
|
401.7
|
|
|
505.7
|
|
|
(20.6
|
)%
|
|
(20.8
|
)%
|
||
Adjusted EBITDA
(1)
|
448.5
|
|
|
521.6
|
|
|
(14.0
|
)%
|
|
(14.2
|
)%
|
(1)
|
|
Non-GAAP financial measure. Please refer to the reconciliations in the following tables.
|
|
Year Ended
|
||||||
(in millions, except per common share amounts)
|
December 31, 2017
|
|
December 31, 2016
|
||||
GAAP net income
|
$
|
151.4
|
|
|
$
|
190.6
|
|
Latin American subsidiary charges
(1)
|
25.7
|
|
|
11.5
|
|
||
Customer termination charges
(2)
|
25.9
|
|
|
—
|
|
||
Other costs
(3)
|
3.4
|
|
|
—
|
|
||
Restructuring costs
(4)
|
—
|
|
|
8.3
|
|
||
Loss on extinguishment of debt
(5)
|
—
|
|
|
47.2
|
|
||
Executive management transition and retention compensation
(6)
|
—
|
|
|
3.0
|
|
||
Interest expense
(7)
|
—
|
|
|
2.1
|
|
||
Integration costs
(8)
|
—
|
|
|
2.0
|
|
||
Stock compensation benefit
(9)
|
—
|
|
|
(3.8
|
)
|
||
Tax adjustments
(10)
|
(31.2
|
)
|
|
(18.5
|
)
|
||
Adjusted net income
|
$
|
175.2
|
|
|
$
|
242.4
|
|
|
|
|
|
||||
Adjusted earnings per share, diluted
|
$
|
3.20
|
|
|
$
|
4.05
|
|
|
|
|
|
||||
Diluted shares outstanding
|
54.7
|
|
|
59.8
|
|
(1)
|
In 2017, we recorded $25.7 million of charges associated with a Latin American subsidiary. Operating income includes $5.1 million of restructuring charges, which relate to the wind down of certain operations, leadership termination charges and professional fees, as well as $3.8 million of non-income tax charges. Interest expense includes $16.6 million of charges, comprised of $8.3 million of interest expense on non-income tax obligations, $6.3 million on financing arrangements and $2.0 million of interest expense for accelerated customer collections. Other expense, net includes $0.2 million of other charges. We also revised our financial statements for the fourth quarter of 2016 to record $11.5 million of charges associated with this subsidiary. As revised, operating income includes $4.1 million of charges related to misstatements of accounts receivable and accounts payable and $1.0 million of non-income tax obligations. Interest expense includes $6.4 million of misstatements, comprised of $1.8 million of interest expense on non-income tax obligations and $4.6 million of interest expense on accelerated customer collections.
|
(2)
|
In the first quarter of 2017, we recorded $25.9 million of net charges related to the termination of the relationship with Mattress Firm. Cost of sales included $11.5 million of charges related to the write-off of customer-unique inventory and product obligations. Operating expenses included $14.4 million of net charges, which included a write-off of $17.2 million for customer incentives and marketing assets, $5.8 million of employee-related costs and $0.7 million of professional fees. These charges were offset by $9.3 million of benefit related to the change in estimate associated with performance-based stock compensation that is no longer probable of payout following the Mattress Firm termination.
|
(3)
|
In 2017, we incurred $3.4 million in other costs. In the fourth quarter of 2017, we incurred $0.4 million in costs associated with an early lease termination. Additionally, we incurred $3.0 million in charges for hurricane-related costs and a customer's bankruptcy.
|
(4)
|
Restructuring costs represents costs associated with headcount reduction, store closures and costs related to the early termination of certain leased facilities.
|
(5)
|
Loss on extinguishment of debt represents costs associated with the completion of a new credit facility and senior notes offering in the second quarter of 2016.
|
(6)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of our executive officers following the 2015 Annual Meeting.
|
(7)
|
Interest expense in 2016 represents incremental interest incurred upon the senior notes due 2026 sold in the second quarter of 2016 and the senior notes due 2020, which were repaid with the proceeds of the new senior notes due 2026.
|
(8)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the 2013 acquisition of the Sealy Corporation (the "Sealy Acquisition").
|
(9)
|
Stock compensation benefit represents the fourth quarter change in estimate to reduce accumulated performance-based stock compensation amortization to actual cost based on financial results for the year ended December 31, 2016.
|
(10)
|
Adjusted income tax provision represents adjustments associated with the aforementioned items and other discrete income tax events. In the fourth quarter of 2017, we recorded a net income tax benefit of $23.8 million in accordance with the U.S. Tax Reform Act. This is comprised of a $69.7 million deferred tax benefit related to the reduction in the U.S. income tax rate, net of a one-time tax charge for the Transition Tax on foreign subsidiary earnings of $42.1 million.
|
|
FULL YEAR 2017
|
|||||||||||||||||||||||
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
(1) |
|
Margin
|
|
International
(2) |
|
Margin
|
|
Corporate
(3) |
|||||||||||
Net sales
|
$
|
2,754.4
|
|
|
|
|
$
|
2,173.8
|
|
|
|
|
$
|
580.6
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
$
|
1,140.7
|
|
|
41.4
|
%
|
|
$
|
844.7
|
|
|
38.9
|
%
|
|
$
|
296.0
|
|
|
51.0
|
%
|
|
$
|
—
|
|
Adjustments
|
15.6
|
|
|
|
|
12.4
|
|
|
|
|
3.2
|
|
|
|
|
—
|
|
|||||||
Adjusted gross profit
|
$
|
1,156.3
|
|
|
42.0
|
%
|
|
$
|
857.1
|
|
|
39.4
|
%
|
|
$
|
299.2
|
|
|
51.5
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (expense)
|
$
|
288.4
|
|
|
10.5
|
%
|
|
$
|
273.2
|
|
|
12.6
|
%
|
|
$
|
104.9
|
|
|
18.1
|
%
|
|
$
|
(89.7
|
)
|
Adjustments
|
38.1
|
|
|
|
|
33.7
|
|
|
|
|
11.2
|
|
|
|
|
(6.8
|
)
|
|||||||
Adjusted operating income (expense)
|
$
|
326.5
|
|
|
11.9
|
%
|
|
$
|
306.9
|
|
|
14.1
|
%
|
|
$
|
116.1
|
|
|
20.0
|
%
|
|
$
|
(96.5
|
)
|
(1)
|
Adjustments for the North America business segment represent costs related to the Mattress Firm termination, hurricane-related costs and costs related to the early termination of a lease.
|
(2)
|
Adjustments for the International business segment represent charges associated with a Latin American subsidiary discussed in Footnote 1 of the table above under the heading "
Adjusted Net Income and Adjusted EPS
", certain employee-related expenses and bad debt expense associated with a customer's bankruptcy.
|
(3)
|
Adjustments for the Corporate business segment are primarily related to a stock compensation benefit, offset by legal charges associated with a Latin American subsidiary.
|
|
FULL YEAR 2016
|
|||||||||||||||||||||||
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
(1) |
|
Margin
|
|
International
(2) |
|
Margin
|
|
Corporate
(3) |
|||||||||||
Net sales
|
$
|
3,128.9
|
|
|
|
|
$
|
2,570.1
|
|
|
|
|
$
|
558.8
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
$
|
1,307.5
|
|
|
41.8
|
%
|
|
$
|
1,017.4
|
|
|
39.6
|
%
|
|
$
|
290.1
|
|
|
51.9
|
%
|
|
$
|
—
|
|
Adjustments
|
4.0
|
|
|
|
|
1.0
|
|
|
|
|
3.0
|
|
|
|
|
—
|
|
|||||||
Adjusted gross profit
|
$
|
1,311.5
|
|
|
41.9
|
%
|
|
$
|
1,018.4
|
|
|
39.6
|
%
|
|
$
|
293.1
|
|
|
52.5
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (expense)
|
$
|
410.4
|
|
|
13.1
|
%
|
|
$
|
411.8
|
|
|
16.0
|
%
|
|
$
|
97.6
|
|
|
17.5
|
%
|
|
$
|
(99.0
|
)
|
Adjustments
|
14.6
|
|
|
|
|
1.6
|
|
|
|
|
10.9
|
|
|
|
|
2.1
|
|
|||||||
Adjusted operating income (expense)
|
$
|
425.0
|
|
|
13.6
|
%
|
|
$
|
413.4
|
|
|
16.1
|
%
|
|
$
|
108.5
|
|
|
19.4
|
%
|
|
$
|
(96.9
|
)
|
(1)
|
Adjustments for the North America business segment represent integration costs, which include professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs to support the continued alignment of the North America business related to the Sealy Acquisition. In addition, restructuring costs were incurred for the early termination of certain leased facilities.
|
(2)
|
Adjustments for the International business segment represent charges related to misstatements of accounts receivable, accounts payable and non-income tax obligations associated with a Latin American subsidiary, executive management retention compensation and restructuring costs related to headcount reduction and store closures.
|
(3)
|
Adjustments for Corporate represent executive management transition and retention costs, integration costs which include professional fees and other charges to align the business related to the Sealy Acquisition, and restructuring costs related to headcount reductions, offset by a stock compensation benefit.
|
•
|
Net income to EBITDA and adjusted EBITDA
|
•
|
Total debt to consolidated funded debt less qualified cash
|
•
|
Ratio of consolidated funded debt less qualified cash to adjusted EBITDA
|
|
|
Year Ended
|
||||||
(in millions)
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
GAAP net income
|
|
$
|
151.4
|
|
|
$
|
190.6
|
|
Interest expense, net
|
|
108.0
|
|
|
91.6
|
|
||
Loss on extinguishment of debt
(1)
|
|
—
|
|
|
47.2
|
|
||
Income taxes
|
|
47.7
|
|
|
86.8
|
|
||
Depreciation and amortization
|
|
94.6
|
|
|
89.5
|
|
||
EBITDA
|
|
$
|
401.7
|
|
|
$
|
505.7
|
|
Adjustments:
|
|
|
|
|
||||
Customer termination charges
(2)
|
|
34.3
|
|
|
—
|
|
||
Latin American subsidiary charges
(3)
|
|
9.1
|
|
|
5.1
|
|
||
Other costs
(4)
|
|
3.4
|
|
|
—
|
|
||
Restructuring costs
(5)
|
|
—
|
|
|
7.8
|
|
||
Integration costs
(6)
|
|
—
|
|
|
2.0
|
|
||
Executive management transition and retention compensation
(7)
|
|
—
|
|
|
1.0
|
|
||
Adjusted EBITDA
|
|
$
|
448.5
|
|
|
$
|
521.6
|
|
|
|
|
|
|
||||
Consolidated funded debt less qualified cash
|
|
$
|
1,753.1
|
|
|
$
|
1,879.5
|
|
|
|
|
|
|
||||
Ratio of consolidated funded debt less qualified cash to Adjusted EBITDA
|
|
3.91 times
|
|
3.60 times
|
(1)
|
Loss on extinguishment of debt represents costs associated with the completion of a new credit facility and senior notes offering in the second quarter of 2016.
|
(2)
|
Adjusted EBITDA excludes $34.3 million of charges related to the termination of the relationship with Mattress Firm. This amount represents the $25.9 million of net charges, and adds the net amortization impact of $8.4 million of stock-based compensation benefit incurred in the first quarter of 2017.
|
(3)
|
In 2017, we recorded $25.7 million of charges associated with a Latin American subsidiary. Operating income includes $5.1 million of restructuring charges, which relate to the wind down of certain operations, leadership termination charges and professional fees, as well as $3.8 million of non-income tax charges. Interest expense includes $16.6 million of charges, comprised of $8.3 million of interest expense on non-income tax obligations, $6.3 million on financing arrangements and $2.0 million of interest expense for accelerated customer collections. Other expense, net includes $0.2 million of other charges. We also revised our financial statements for the fourth quarter of 2016 to record $11.5 million of charges associated with this subsidiary. As revised, operating income includes $4.1 million of charges related to misstatements of accounts receivable and accounts payable and $1.0 million of non-income tax obligations. Interest expense includes $6.4 million of misstatements, comprised of $1.8 million of interest expense on non-income tax obligations and $4.6 million of interest expense on accelerated customer collections.
|
(4)
|
In 2017, we incurred $3.4 million in other costs. In the fourth quarter of 2017, we incurred $0.4 million in costs associated with an early lease termination. Additionally, we incurred $3.0 million in charges for hurricane-related costs and a customer's bankruptcy.
|
(5)
|
Restructuring costs represents costs associated with headcount reduction, store closures and costs related to the early termination of certain leased facilities.
|
(6)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the Sealy Acquisition.
|
(7)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of our executive officers following the 2015 Annual Meeting.
|
(in millions)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Total debt, net
|
$
|
1,753.1
|
|
|
$
|
1,888.1
|
|
Plus: Deferred financing costs
(1)
|
9.4
|
|
|
12.9
|
|
||
Total debt
|
1,762.5
|
|
|
1,901.0
|
|
||
Plus: Letters of credit outstanding
|
23.1
|
|
|
23.0
|
|
||
Consolidated funded debt
|
$
|
1,785.6
|
|
|
$
|
1,924.0
|
|
Less:
|
|
|
|
||||
Domestic qualified cash
(2)
|
18.4
|
|
|
12.7
|
|
||
Foreign qualified cash
(2)
|
14.1
|
|
|
31.8
|
|
||
Consolidated funded debt less qualified cash
|
$
|
1,753.1
|
|
|
$
|
1,879.5
|
|
(1)
|
We present deferred financing costs as a direct reduction from the carrying amount of the related debt in the Consolidated Balance Sheets. For purposes of determining total debt for financial covenant purposes, we added these costs back to total debt, net as calculated in the Consolidated Balance Sheets.
|
(2)
|
Qualified cash as defined in the 2016 Credit Agreement equals 100.0% of unrestricted domestic cash plus 60.0% of unrestricted foreign cash. For purposes of calculating leverage ratios, qualified cash is capped at $150.0 million.
|
(in millions)
|
|
Payment Due By Period
|
|||||||||||||||||||||||||||
Contractual Obligations
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
After
2022
|
|
Total
Obligations
|
|||||||||||||||
Debt
(1)
|
|
$
|
30.0
|
|
|
$
|
86.5
|
|
|
$
|
52.5
|
|
|
$
|
435.0
|
|
|
$
|
—
|
|
|
$
|
1,050.0
|
|
|
$
|
1,654.0
|
|
|
Letters of credit
|
|
22.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22.6
|
|
||||||||
Interest payments
(2)
|
|
74.4
|
|
|
72.8
|
|
|
71.3
|
|
|
58.8
|
|
|
55.6
|
|
|
130.7
|
|
|
463.6
|
|
||||||||
Operating leases
|
|
39.5
|
|
—
|
|
29.6
|
|
|
22.5
|
|
|
20.1
|
|
|
15.5
|
|
|
40.1
|
|
|
167.3
|
|
|||||||
Capital lease obligations and other
|
|
42.4
|
|
|
6.4
|
|
|
6.8
|
|
|
7.1
|
|
|
5.7
|
|
|
40.1
|
|
|
108.5
|
|
||||||||
Pension obligations
|
|
1.0
|
|
|
1.0
|
|
|
1.1
|
|
|
1.1
|
|
|
1.2
|
|
|
26.7
|
|
|
32.1
|
|
||||||||
Transition Tax
(4)
|
|
3.4
|
|
|
3.4
|
|
|
3.4
|
|
|
3.4
|
|
|
3.5
|
|
|
25.0
|
|
|
42.1
|
|
||||||||
Total
(3)
|
|
$
|
213.3
|
|
|
$
|
199.7
|
|
|
$
|
157.6
|
|
|
$
|
525.5
|
|
|
$
|
81.5
|
|
|
$
|
1,312.6
|
|
|
$
|
2,490.2
|
|
(1)
|
Debt excludes capital lease obligations and other and deferred financing costs.
|
(2)
|
Interest payments represent obligations under our debt outstanding as of
December 31, 2017
, applying
December 31, 2017
interest rates and assuming scheduled payments are paid as contractually required through maturity.
|
(3)
|
Uncertain tax positions are excluded from this table given the timing of payments cannot be reasonably estimated.
|
(4)
|
This represents the Transition Tax resulting from the U.S. Tax Reform Act associated with the Company's accumulated earnings of foreign subsidiaries as of 2017. The payments are presented at the statutory installments.
|
INDEX TO HISTORICAL FINANCIAL STATEMENTS
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
$
|
2,754.4
|
|
|
$
|
3,128.9
|
|
|
$
|
3,154.6
|
|
Cost of sales
|
1,613.7
|
|
|
1,821.4
|
|
|
1,905.4
|
|
|||
Gross profit
|
1,140.7
|
|
|
1,307.5
|
|
|
1,249.2
|
|
|||
Selling and marketing expenses
|
601.3
|
|
|
648.5
|
|
|
648.0
|
|
|||
General, administrative and other expenses
|
273.0
|
|
|
281.4
|
|
|
324.9
|
|
|||
Customer termination charges, net
|
14.4
|
|
|
—
|
|
|
—
|
|
|||
Equity income in earnings of unconsolidated affiliates
|
(15.6
|
)
|
|
(13.3
|
)
|
|
(11.9
|
)
|
|||
Royalty income, net of royalty expense
|
(20.8
|
)
|
|
(19.5
|
)
|
|
(18.3
|
)
|
|||
Operating income
|
288.4
|
|
|
410.4
|
|
|
306.5
|
|
|||
|
|
|
|
|
|
||||||
Other expense, net:
|
|
|
|
|
|
||||||
Interest expense, net
|
108.0
|
|
|
91.6
|
|
|
102.5
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
47.2
|
|
|
—
|
|
|||
Other (income) expense, net
|
(8.0
|
)
|
|
(0.2
|
)
|
|
12.9
|
|
|||
Total other expense, net
|
100.0
|
|
|
138.6
|
|
|
115.4
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
188.4
|
|
|
271.8
|
|
|
191.1
|
|
|||
Income tax provision
|
(47.7
|
)
|
|
(86.8
|
)
|
|
(125.4
|
)
|
|||
Net income before non-controlling interests
|
140.7
|
|
|
185.0
|
|
|
65.7
|
|
|||
Less: Net (loss) income attributable to non-controlling interests
|
(10.7
|
)
|
|
(5.6
|
)
|
|
1.2
|
|
|||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
151.4
|
|
|
$
|
190.6
|
|
|
$
|
64.5
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.80
|
|
|
$
|
3.23
|
|
|
$
|
1.05
|
|
Diluted
|
$
|
2.77
|
|
|
$
|
3.19
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
54.0
|
|
|
59.0
|
|
|
61.7
|
|
|||
Diluted
|
54.7
|
|
|
59.8
|
|
|
62.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income before non-controlling interests
|
$
|
140.7
|
|
|
$
|
185.0
|
|
|
$
|
65.7
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
29.1
|
|
|
(0.3
|
)
|
|
(52.7
|
)
|
|||
Net change in unrecognized gain on interest rate swap, net of tax
|
—
|
|
|
—
|
|
|
0.7
|
|
|||
Net change in pension benefits, net of tax
|
(0.5
|
)
|
|
(0.8
|
)
|
|
1.0
|
|
|||
Unrealized (loss) income on cash flow hedging derivatives, net of tax
|
(0.6
|
)
|
|
(6.0
|
)
|
|
5.3
|
|
|||
Other comprehensive income (loss), net of tax
|
28.0
|
|
|
(7.1
|
)
|
|
(45.7
|
)
|
|||
Comprehensive income
|
168.7
|
|
|
177.9
|
|
|
20.0
|
|
|||
Less: Comprehensive (loss) income attributable to non-controlling interests
|
(10.7
|
)
|
|
(5.6
|
)
|
|
1.2
|
|
|||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
179.4
|
|
|
$
|
183.5
|
|
|
$
|
18.8
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
||||
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
41.9
|
|
|
$
|
65.7
|
|
Accounts receivable, net
|
317.7
|
|
|
341.6
|
|
||
Inventories
|
183.0
|
|
|
196.5
|
|
||
Prepaid expenses and other current assets
|
64.8
|
|
|
63.9
|
|
||
Total Current Assets
|
607.4
|
|
|
667.7
|
|
||
Property, plant and equipment, net
|
435.1
|
|
|
422.2
|
|
||
Goodwill
|
733.1
|
|
|
722.5
|
|
||
Other intangible assets, net
|
667.4
|
|
|
678.7
|
|
||
Deferred income taxes
|
23.6
|
|
|
22.5
|
|
||
Other non-current assets
|
227.4
|
|
|
185.2
|
|
||
Total Assets
|
$
|
2,694.0
|
|
|
$
|
2,698.8
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
||||
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
241.2
|
|
|
$
|
235.0
|
|
Accrued expenses and other current liabilities
|
234.2
|
|
|
250.0
|
|
||
Income taxes payable
|
29.1
|
|
|
5.8
|
|
||
Current portion of long-term debt
|
72.4
|
|
|
70.3
|
|
||
Total Current Liabilities
|
576.9
|
|
|
561.1
|
|
||
Long-term debt, net
|
1,680.7
|
|
|
1,817.8
|
|
||
Deferred income taxes
|
114.3
|
|
|
174.6
|
|
||
Other non-current liabilities
|
207.4
|
|
|
179.6
|
|
||
Total Liabilities
|
2,579.3
|
|
|
2,733.1
|
|
||
|
|
|
|
||||
Redeemable non-controlling interest
|
2.2
|
|
|
7.6
|
|
||
|
|
|
|
||||
Stockholders' Equity (Deficit):
|
|
|
|
||||
Common stock, $0.01 par value, 300.0 million shares authorized; 99.2 million shares issued as of December 31, 2017 and 2016
|
1.0
|
|
|
1.0
|
|
||
Additional paid in capital
|
508.0
|
|
|
492.8
|
|
||
Retained earnings
|
1,416.2
|
|
|
1,264.8
|
|
||
Accumulated other comprehensive loss
|
(75.5
|
)
|
|
(103.5
|
)
|
||
Treasury stock at cost; 45.0 million and 44.8 million shares as of December 31, 2017 and 2016, respectively
|
(1,737.2
|
)
|
|
(1,700.0
|
)
|
||
Total stockholders' equity (deficit), net of non-controlling interests in subsidiaries
|
112.5
|
|
|
(44.9
|
)
|
||
Non-controlling interest in subsidiaries
|
—
|
|
|
3.0
|
|
||
Total Stockholders' Equity (Deficit)
|
112.5
|
|
|
(41.9
|
)
|
||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity (Deficit)
|
$
|
2,694.0
|
|
|
$
|
2,698.8
|
|
|
|
|
Tempur Sealy International, Inc. Stockholders' Equity (Deficit)
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Redeemable
Non-controlling Interest
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Non-controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity (Deficit)
|
||||||||||||||||||||||
|
|
Shares Issued
|
|
At Par
|
|
Shares Issued
|
|
At Cost
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
|
|
||||||||||||||||||||||
Balance, January 1, 2015
|
$
|
12.6
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
38.3
|
|
|
$
|
(1,191.3
|
)
|
|
$
|
411.9
|
|
|
$
|
1,009.7
|
|
|
$
|
(50.7
|
)
|
|
$
|
—
|
|
|
$
|
180.6
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
64.5
|
|
|
|
|
|
|
64.5
|
|
||||||||||||||||
Net income attributable to non-controlling interest
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Distributions paid to non-controlling interest
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjustment to pension liability, net of tax of $0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.0
|
|
|
|
|
1.0
|
|
||||||||||||||||
Derivative instruments accounted for as hedges, net of tax of $(2.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.0
|
|
|
|
|
6.0
|
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52.7
|
)
|
|
|
|
(52.7
|
)
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(1.3
|
)
|
|
16.5
|
|
|
3.9
|
|
|
|
|
|
|
|
|
20.4
|
|
||||||||||||||
Treasury stock issued to CEO
|
|
|
|
|
|
|
(0.1
|
)
|
|
0.9
|
|
|
4.1
|
|
|
|
|
|
|
|
|
5.0
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.1
|
)
|
|
0.8
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Tax adjustments related to stock compensation
|
|
|
|
|
|
|
|
|
|
|
21.8
|
|
|
|
|
|
|
|
|
21.8
|
|
||||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
||||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
22.5
|
|
|
|
|
|
|
|
|
22.5
|
|
||||||||||||||||
Balance, December 31, 2015
|
$
|
12.4
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
36.8
|
|
|
$
|
(1,174.4
|
)
|
|
$
|
463.4
|
|
|
$
|
1,074.2
|
|
|
$
|
(96.4
|
)
|
|
$
|
—
|
|
|
$
|
267.8
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
190.6
|
|
|
|
|
|
|
190.6
|
|
||||||||||||||||
Net loss attributable to non-controlling interests
|
(4.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.8
|
)
|
|
(0.8
|
)
|
|||||||||||||||
Acquisition of non-controlling interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.8
|
|
|
3.8
|
|
||||||||||||||||
Adjustment to pension liability, net of tax of $(0.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
(0.8
|
)
|
||||||||||||||||
Derivative instruments accounted for as hedges, net of tax of $(2.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6.0
|
)
|
|
|
|
(6.0
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.6
|
)
|
|
7.9
|
|
|
7.8
|
|
|
|
|
|
|
|
|
15.7
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.1
|
)
|
|
1.5
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
(0.1
|
)
|
||||||||||||||
Tax adjustments related to stock compensation
|
|
|
|
|
|
|
|
|
|
|
7.0
|
|
|
|
|
|
|
|
|
7.0
|
|
||||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
8.7
|
|
|
(533.0
|
)
|
|
|
|
|
|
|
|
|
|
(533.0
|
)
|
|||||||||||||||
Treasury stock repurchased - PRSU/RSU/DSU releases
|
|
|
|
|
|
|
—
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
|
|
|
(2.0
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
16.2
|
|
|
|
|
|
|
|
|
16.2
|
|
||||||||||||||||
Balance, December 31, 2016
|
$
|
7.6
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.8
|
|
|
$
|
(1,700.0
|
)
|
|
$
|
492.8
|
|
|
$
|
1,264.8
|
|
|
$
|
(103.5
|
)
|
|
$
|
3.0
|
|
|
$
|
(41.9
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
151.4
|
|
|
|
|
|
|
151.4
|
|
||||||||||||||||
Net loss attributable to non-controlling interests
|
(5.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.3
|
)
|
|
(5.3
|
)
|
|||||||||||||||
Adjustment to pension liability, net of tax of $(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
(0.5
|
)
|
||||||||||||||||
Derivative instruments accounted for as hedges, net of tax of $(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
|
(0.6
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29.1
|
|
|
|
|
29.1
|
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.3
|
)
|
|
4.5
|
|
|
8.3
|
|
|
|
|
|
|
|
|
12.8
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.2
|
)
|
|
3.2
|
|
|
(3.2
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
0.6
|
|
|
(40.1
|
)
|
|
|
|
|
|
|
|
|
|
(40.1
|
)
|
|||||||||||||||
Treasury stock repurchased - PRSU/RSU/DSU releases
|
|
|
|
|
|
|
0.1
|
|
|
(4.8
|
)
|
|
|
|
|
|
|
|
|
|
(4.8
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
13.3
|
|
|
|
|
|
|
|
|
13.3
|
|
||||||||||||||||
Acquisition of non-controlling interest
|
|
|
|
|
|
|
|
|
|
|
(3.2
|
)
|
|
|
|
|
|
2.3
|
|
|
(0.9
|
)
|
|||||||||||||||
Balance, December 31, 2017
|
$
|
2.2
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
45.0
|
|
|
$
|
(1,737.2
|
)
|
|
$
|
508.0
|
|
|
$
|
1,416.2
|
|
|
$
|
(75.5
|
)
|
|
$
|
—
|
|
|
$
|
112.5
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income before non-controlling interests
|
$
|
140.7
|
|
|
$
|
185.0
|
|
|
$
|
65.7
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
81.3
|
|
|
73.3
|
|
|
71.4
|
|
|||
Amortization of stock-based compensation
|
13.3
|
|
|
16.2
|
|
|
22.5
|
|
|||
Amortization of deferred financing costs
|
2.2
|
|
|
3.5
|
|
|
20.3
|
|
|||
Bad debt expense
|
10.4
|
|
|
4.6
|
|
|
6.9
|
|
|||
Deferred income taxes
|
(60.2
|
)
|
|
(31.1
|
)
|
|
(21.3
|
)
|
|||
Dividends received from unconsolidated affiliates
|
11.3
|
|
|
10.8
|
|
|
9.1
|
|
|||
Equity income in earnings of unconsolidated affiliates
|
(15.6
|
)
|
|
(13.3
|
)
|
|
(11.9
|
)
|
|||
Non-cash interest expense on 8.0% Sealy Notes
|
—
|
|
|
4.0
|
|
|
6.3
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
47.2
|
|
|
—
|
|
|||
Loss on sale of assets
|
0.3
|
|
|
1.3
|
|
|
1.5
|
|
|||
Foreign currency adjustments and other
|
(3.2
|
)
|
|
(0.5
|
)
|
|
5.5
|
|
|||
Changes in operating assets and liabilities, net of effect of business acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
22.3
|
|
|
17.6
|
|
|
(38.4
|
)
|
|||
Inventories
|
17.1
|
|
|
1.8
|
|
|
10.7
|
|
|||
Prepaid expenses and other assets
|
(16.2
|
)
|
|
(124.4
|
)
|
|
(58.7
|
)
|
|||
Accounts payable
|
(1.6
|
)
|
|
(40.6
|
)
|
|
52.8
|
|
|||
Accrued expenses and other
|
(4.1
|
)
|
|
6.8
|
|
|
95.7
|
|
|||
Income taxes
|
24.9
|
|
|
3.3
|
|
|
(3.9
|
)
|
|||
Net cash provided by operating activities
|
222.9
|
|
|
165.5
|
|
|
234.2
|
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from disposition of business
|
—
|
|
|
—
|
|
|
7.2
|
|
|||
Purchases of property, plant and equipment
|
(67.0
|
)
|
|
(62.4
|
)
|
|
(65.9
|
)
|
|||
Proceeds from sale of property, plant and equipment
|
4.9
|
|
|
0.2
|
|
|
—
|
|
|||
Other
|
—
|
|
|
(0.2
|
)
|
|
(1.0
|
)
|
|||
Net cash used in investing activities
|
(62.1
|
)
|
|
(62.4
|
)
|
|
(59.7
|
)
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from borrowings under long-term debt obligations
|
1,332.9
|
|
|
2,233.3
|
|
|
863.5
|
|
|||
Repayments of borrowings under long-term debt obligations
|
(1,471.5
|
)
|
|
(1,867.7
|
)
|
|
(988.3
|
)
|
|||
Proceeds from exercise of stock options
|
12.8
|
|
|
15.7
|
|
|
20.4
|
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
7.0
|
|
|
21.8
|
|
|||
Treasury stock repurchased
|
(44.9
|
)
|
|
(535.0
|
)
|
|
(1.3
|
)
|
|||
Payment of deferred financing costs
|
(0.5
|
)
|
|
(6.9
|
)
|
|
(8.0
|
)
|
|||
Fees paid to lenders
|
—
|
|
|
(7.8
|
)
|
|
—
|
|
|||
Call premium on 2020 Senior Notes
|
—
|
|
|
(23.6
|
)
|
|
—
|
|
|||
Proceeds from purchase of treasury shares by CEO
|
—
|
|
|
—
|
|
|
5.0
|
|
|||
Other
|
(4.0
|
)
|
|
(0.1
|
)
|
|
(3.8
|
)
|
|||
Net cash used in financing activities
|
(175.2
|
)
|
|
(185.1
|
)
|
|
(90.7
|
)
|
|||
|
|
|
|
|
|
||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(9.4
|
)
|
|
(6.2
|
)
|
|
7.6
|
|
|||
(Decrease) increase in cash and cash equivalents
|
(23.8
|
)
|
|
(88.2
|
)
|
|
91.4
|
|
|||
CASH AND CASH EQUIVALENTS, beginning of period
|
65.7
|
|
|
153.9
|
|
|
62.5
|
|
|||
CASH AND CASH EQUIVALENTS, end of period
|
$
|
41.9
|
|
|
$
|
65.7
|
|
|
$
|
153.9
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
106.3
|
|
|
$
|
83.2
|
|
|
$
|
66.5
|
|
Income taxes, net of refunds
|
$
|
81.2
|
|
|
$
|
81.3
|
|
|
$
|
94.9
|
|
•
|
Level 1 – Valuation is based upon unadjusted quoted prices for identical assets or liabilities in active markets.
|
•
|
Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.
|
•
|
Level 3 – Valuation is based upon other unobservable inputs that are significant to the fair value measurements.
|
|
December 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Finished goods
|
$
|
121.8
|
|
|
$
|
130.1
|
|
Work-in-process
|
11.5
|
|
|
10.7
|
|
||
Raw materials and supplies
|
49.7
|
|
|
55.7
|
|
||
|
$
|
183.0
|
|
|
$
|
196.5
|
|
|
Estimated
Useful Lives
(in years)
|
Buildings
|
25-30
|
Computer equipment and software
|
3-5
|
Leasehold improvements
|
4-7
|
Machinery and equipment
|
3-7
|
Office furniture and fixtures
|
5-7
|
|
December 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Machinery and equipment
|
$
|
315.0
|
|
|
$
|
283.9
|
|
Land and buildings
|
316.2
|
|
|
302.6
|
|
||
Computer equipment and software
|
114.0
|
|
|
97.2
|
|
||
Furniture and fixtures
|
57.4
|
|
|
50.4
|
|
||
Construction in progress
|
63.2
|
|
|
52.9
|
|
||
Total property, plant, and equipment
|
865.8
|
|
|
787.0
|
|
||
Accumulated depreciation
|
(430.7
|
)
|
|
(364.8
|
)
|
||
Total property, plant and equipment, net
|
$
|
435.1
|
|
|
$
|
422.2
|
|
(in millions)
|
|
||
Balance as of December 31, 2015
|
$
|
29.6
|
|
Amounts accrued
|
50.0
|
|
|
Warranties charged to accrual
|
(49.7
|
)
|
|
Balance as of December 31, 2016
|
$
|
29.9
|
|
Amounts accrued
|
50.3
|
|
|
Warranties charged to accrual
|
(43.5
|
)
|
|
Balance as of December 31, 2017
|
$
|
36.7
|
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||
|
Previously Reported
|
|
Correction
|
|
As Revised
|
|
Previously Reported
|
|
Correction
|
|
As Revised
|
||||||||||||
Net sales
|
$
|
3,127.3
|
|
|
$
|
1.6
|
|
|
$
|
3,128.9
|
|
|
$
|
3,151.2
|
|
|
$
|
3.4
|
|
|
$
|
3,154.6
|
|
Gross profit
|
1,309.4
|
|
|
(1.9
|
)
|
|
1,307.5
|
|
|
1,248.9
|
|
|
0.3
|
|
|
1,249.2
|
|
||||||
Operating income
|
415.5
|
|
|
(5.1
|
)
|
|
410.4
|
|
|
309.1
|
|
|
(2.6
|
)
|
|
306.5
|
|
||||||
Income before income taxes
|
283.3
|
|
|
(11.5
|
)
|
|
271.8
|
|
|
200.1
|
|
|
(9.0
|
)
|
|
191.1
|
|
||||||
Income tax provision
|
(86.8
|
)
|
|
—
|
|
|
(86.8
|
)
|
|
(125.4
|
)
|
|
—
|
|
|
(125.4
|
)
|
||||||
Net income before non-controlling interests
|
196.5
|
|
|
(11.5
|
)
|
|
185.0
|
|
|
74.7
|
|
|
(9.0
|
)
|
|
65.7
|
|
||||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
202.1
|
|
|
$
|
(11.5
|
)
|
|
$
|
190.6
|
|
|
$
|
73.5
|
|
|
$
|
(9.0
|
)
|
|
$
|
64.5
|
|
|
December 31, 2016
|
||||||||||
|
Previously Reported
|
|
Correction
|
|
As Revised
|
||||||
Total assets
|
$
|
2,702.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
2,698.8
|
|
Total liabilities
|
2,707.2
|
|
|
25.9
|
|
|
2,733.1
|
|
|||
Retained earnings
|
1,312.4
|
|
|
(47.6
|
)
|
|
1,264.8
|
|
|||
Total stockholders' deficit
|
(12.2
|
)
|
|
(29.7
|
)
|
|
(41.9
|
)
|
|||
Total liabilities, redeemable non-controlling interest and stockholders' deficit
|
$
|
2,702.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
2,698.8
|
|
•
|
The Company recognized all excess tax benefits and tax deficiencies as income tax provision or benefit in the Consolidated Statement of Income. The Company recognized excess tax deficiencies of
$0.7 million
for the year ended December 31, 2017.
|
•
|
The Company is prospectively presenting these excess tax benefits and tax deficiencies as an operating activity on the Consolidated Statement of Cash Flows.
|
•
|
The Company adopted a change in accounting policy to recognize forfeitures of awards as they occur instead of estimating potential forfeitures. Historically, the Company estimated the number of awards expected to be forfeited and adjusted the estimate when it was no longer probable that employees would fulfill their service conditions. The effect of this change in accounting policy is not material.
|
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
||||||
Balance as of January 1, 2016
|
$
|
562.8
|
|
|
$
|
146.6
|
|
|
$
|
709.4
|
|
Goodwill resulting from acquisition
|
7.4
|
|
|
—
|
|
|
7.4
|
|
|||
Foreign currency translation adjustments and other
|
1.8
|
|
|
3.9
|
|
|
5.7
|
|
|||
Balance as of December 31, 2016
|
$
|
572.0
|
|
|
$
|
150.5
|
|
|
$
|
722.5
|
|
Foreign currency translation adjustments and other
|
4.6
|
|
|
6.0
|
|
|
10.6
|
|
|||
Balance as of December 31, 2017
|
$
|
576.6
|
|
|
$
|
156.5
|
|
|
$
|
733.1
|
|
($ in millions)
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
Useful
Lives
(Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|||||||||||||
Unamortized indefinite life intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
|
$
|
561.7
|
|
|
$
|
—
|
|
|
$
|
561.7
|
|
|
$
|
559.8
|
|
|
$
|
—
|
|
|
$
|
559.8
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contractual distributor relationships
|
15
|
|
$
|
86.0
|
|
|
$
|
27.5
|
|
|
$
|
58.5
|
|
|
$
|
85.0
|
|
|
$
|
21.5
|
|
|
$
|
63.5
|
|
Technology and other
|
4-10
|
|
91.4
|
|
|
54.3
|
|
|
37.1
|
|
|
90.4
|
|
|
46.5
|
|
|
43.9
|
|
||||||
Patents, other trademarks and other trade names
|
5-20
|
|
27.3
|
|
|
19.0
|
|
|
8.3
|
|
|
27.1
|
|
|
19.2
|
|
|
7.9
|
|
||||||
Customer databases, relationships and reacquired rights
|
2-5
|
|
23.9
|
|
|
22.1
|
|
|
1.8
|
|
|
24.2
|
|
|
20.6
|
|
|
3.6
|
|
||||||
Total
|
|
|
$
|
790.3
|
|
|
$
|
122.9
|
|
|
$
|
667.4
|
|
|
$
|
786.5
|
|
|
$
|
107.8
|
|
|
$
|
678.7
|
|
(in millions)
|
2017
|
|
2016
|
||||
Current assets
|
$
|
73.7
|
|
|
$
|
58.6
|
|
Non-current assets
|
17.8
|
|
|
14.2
|
|
||
Current liabilities
|
52.3
|
|
|
41.8
|
|
||
Equity
|
39.2
|
|
|
31.0
|
|
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
$
|
195.1
|
|
|
$
|
155.2
|
|
|
$
|
131.6
|
|
Gross profit
|
129.9
|
|
|
101.7
|
|
|
85.0
|
|
|||
Income from operations
|
43.3
|
|
|
32.2
|
|
|
26.2
|
|
|||
Net income
|
31.7
|
|
|
24.8
|
|
|
20.1
|
|
(in millions)
|
December 31, 2017
|
|
December 31, 2016
|
|
|
||||||||
Debt:
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Maturity Date
|
||||
2016 Credit Agreement:
|
|
|
|
|
|
|
|
|
|
||||
Term A Facility
|
$
|
555.0
|
|
|
(1)
|
|
$
|
585.0
|
|
|
(2)
|
|
April 6, 2021
|
Revolver
|
—
|
|
|
(1)
|
|
156.9
|
|
|
(2)
|
|
April 6, 2021
|
||
2026 Senior Notes
|
600.0
|
|
|
5.500%
|
|
600.0
|
|
|
5.500%
|
|
June 15, 2026
|
||
2023 Senior Notes
|
450.0
|
|
|
5.625%
|
|
450.0
|
|
|
5.625%
|
|
October 15, 2023
|
||
Securitized debt
|
49.0
|
|
|
(3)
|
|
—
|
|
|
N/A
|
|
April 12, 2019
|
||
Capital lease obligations
(4)
|
71.8
|
|
|
|
|
73.3
|
|
|
|
|
Various
|
||
Other
|
36.7
|
|
|
|
|
35.8
|
|
|
|
|
Various
|
||
Total debt
|
1,762.5
|
|
|
|
|
1,901.0
|
|
|
|
|
|
||
Less: deferred financing costs
|
(9.4
|
)
|
|
|
|
(12.9
|
)
|
|
|
|
|
||
Total debt, net
|
1,753.1
|
|
|
|
|
1,888.1
|
|
|
|
|
|
||
Less: current portion
|
(72.4
|
)
|
|
|
|
(70.3
|
)
|
|
|
|
|
||
Total long-term debt, net
|
$
|
1,680.7
|
|
|
|
|
$
|
1,817.8
|
|
|
|
|
|
(1)
|
Interest at LIBOR plus applicable margin of 1.75% as of December 31, 2017.
|
(2)
|
Interest at LIBOR plus applicable margin of 1.50% as of December 31, 2016.
|
(3)
|
Interest at one month LIBOR index plus 80 basis points.
|
(4)
|
Capital lease obligations are a non-cash financing activity.
|
|
|
Fair Value
|
||||||
(in millions)
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
2023 Senior Notes
|
|
$
|
470.9
|
|
|
$
|
468.5
|
|
2026 Senior Notes
|
|
618.1
|
|
|
606.8
|
|
(in millions)
|
|
|
||
2018
|
|
$
|
72.4
|
|
2019
|
|
92.9
|
|
|
2020
|
|
59.3
|
|
|
2021
|
|
442.1
|
|
|
2022
|
|
5.7
|
|
|
Thereafter
|
|
1,090.1
|
|
|
Total
|
|
$
|
1,762.5
|
|
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Service cost
|
$
|
0.9
|
|
|
$
|
0.8
|
|
|
$
|
0.8
|
|
Interest cost
|
1.2
|
|
|
1.2
|
|
|
1.9
|
|
|||
Expected return on assets
|
(1.5
|
)
|
|
(1.3
|
)
|
|
(2.2
|
)
|
|||
Amortization of prior service cost
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Settlement loss
|
—
|
|
|
0.2
|
|
|
1.3
|
|
|||
Net periodic pension cost
|
$
|
0.7
|
|
|
$
|
0.9
|
|
|
$
|
1.8
|
|
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
0.4
|
|
|
$
|
1.5
|
|
|
$
|
0.2
|
|
Amortization of prior service cost
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization or settlement recognition of net loss
|
—
|
|
|
(0.2
|
)
|
|
(1.3
|
)
|
|||
New prior service cost
|
0.5
|
|
|
—
|
|
|
0.1
|
|
|||
Total recognized in other comprehensive loss (income)
|
$
|
0.8
|
|
|
$
|
1.3
|
|
|
$
|
(1.0
|
)
|
|
2017
|
|
2016
|
|
2015
|
|||
Discount rate
(a)
|
4.07
|
%
|
|
4.27
|
%
|
|
4.12
|
%
|
Expected long-term return on plan assets
|
6.64
|
%
|
|
6.71
|
%
|
|
7.05
|
%
|
(a)
|
The discount rates used in 2017 to determine the expenses for the U.S. retirement plan and Canadian retirement plan were
4.06%
and
4.10%
, respectively. The discount rates used in 2016 to determine the expenses for the U.S. retirement plan and Canadian retirement plan were
4.26%
and
4.30%
, respectively.
|
(in millions)
|
2017
|
|
2016
|
||||
Change in Benefit Obligation:
|
|
|
|
||||
Projected benefit obligation at beginning of year
|
$
|
28.0
|
|
|
$
|
28.2
|
|
Service cost
|
0.9
|
|
|
0.8
|
|
||
Interest cost
|
1.2
|
|
|
1.2
|
|
||
Plan amendments
|
0.5
|
|
|
—
|
|
||
Actuarial loss
|
2.3
|
|
|
0.8
|
|
||
Settlements
|
—
|
|
|
(2.0
|
)
|
||
Benefits paid
|
(0.9
|
)
|
|
(1.1
|
)
|
||
Expenses paid
|
(0.1
|
)
|
|
—
|
|
||
Foreign currency exchange rate changes
|
0.2
|
|
|
0.1
|
|
||
Projected benefit obligation at end of year
|
$
|
32.1
|
|
|
$
|
28.0
|
|
Change in Plan Assets:
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
21.7
|
|
|
$
|
13.9
|
|
Actual return on plan assets
|
3.5
|
|
|
0.6
|
|
||
Employer contribution
|
0.9
|
|
|
10.2
|
|
||
Settlements
|
—
|
|
|
(2.0
|
)
|
||
Benefits paid
|
(0.9
|
)
|
|
(1.1
|
)
|
||
Expenses paid
|
(0.1
|
)
|
|
—
|
|
||
Foreign currency exchange rate changes
|
0.2
|
|
|
0.1
|
|
||
Fair value of plan assets at end of year
|
$
|
25.3
|
|
|
$
|
21.7
|
|
Funded status
|
$
|
(6.8
|
)
|
|
$
|
(6.3
|
)
|
|
December 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Amounts recognized in the Consolidated Balance Sheets:
|
|
|
|
||||
Non-current benefit liability
|
$
|
7.3
|
|
|
$
|
6.3
|
|
Non-current benefit asset
|
0.5
|
|
|
—
|
|
|
2017
|
|
2016
|
||
Discount rate
(a)
|
3.56
|
%
|
|
4.06
|
%
|
(a)
|
The discount rates used in 2017 to determine the expenses for the U.S. retirement plan and Canadian retirement plan were
3.54%
and
3.70%
, respectively. The discount rates used in 2016 to determine the benefit obligations for the U.S. and Canadian defined benefit pension plans were
4.06%
and
4.10%
, respectively.
|
(in millions)
|
|
||
Fiscal 2018
|
$
|
1.0
|
|
Fiscal 2019
|
1.0
|
|
|
Fiscal 2020
|
1.1
|
|
|
Fiscal 2021
|
1.1
|
|
|
Fiscal 2022
|
1.2
|
|
|
Fiscal 2023 ‑ Fiscal 2027
|
7.0
|
|
|
2017 Target
|
|
2017
Actual |
||
Common/collective trust consisting primarily of:
|
|
|
|
||
Equity securities
|
60.00
|
%
|
|
76.47
|
%
|
Debt securities
|
40.00
|
%
|
|
23.28
|
%
|
Other
|
—
|
%
|
|
0.25
|
%
|
Total plan assets
|
100.00
|
%
|
|
100.00
|
%
|
(in millions)
|
2017
|
|
2016
|
||||
Asset Category
|
|
|
|
||||
Common/collective trust
|
|
|
|
||||
U.S. equity
|
$
|
15.1
|
|
|
$
|
12.5
|
|
International equity
|
4.2
|
|
|
3.7
|
|
||
Total equity based funds
|
19.3
|
|
|
16.2
|
|
||
Common/collective trust - fixed income
|
5.9
|
|
|
4.9
|
|
||
Money market funds
|
0.1
|
|
|
0.6
|
|
||
Total
|
$
|
25.3
|
|
|
$
|
21.7
|
|
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Multi‑employer retirement plan expense
|
$
|
4.3
|
|
|
$
|
4.9
|
|
|
$
|
5.0
|
|
Multi‑employer health and welfare plan expense
|
3.5
|
|
|
2.8
|
|
|
2.4
|
|
Pension Fund
|
|
EIN/Pension Plan Number
|
|
Date of Plan Year-End
|
|
Pension Protection Act
Zone Status (1) 2017 |
|
FIP/RP Status
Pending/Implemented (2) |
|
Contributions of the Company 2017
|
|
Surcharge Imposed
(3)
|
|
Expiration Date
of Collective Bargaining Agreement |
|
Year Contributions to Plan Exceeded More than 5 Percent of Total Contributions
|
||||
|
||||||||||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Furniture Workers Pension Fund A
(4)
|
|
13-5511877-001
|
|
2/28/17
|
|
Red
|
|
Implemented
|
|
$
|
1.1
|
|
|
No
|
|
2020
|
|
2015, 2016, 2017
|
||
Pension Plan of the National Retirement Fund
|
|
13-6130178-001
|
|
12/31/16
|
|
Red
|
|
Implemented
|
|
$
|
0.8
|
|
|
Yes, 10.0%
|
|
2019
|
|
N/A
|
||
Central States, Southeast & Southwest Areas Pension Plan
|
|
36-6044243-001
|
|
12/31/16
|
|
Red
|
|
Implemented
|
|
$
|
0.7
|
|
|
Yes, 10.0%
|
|
2018
|
|
N/A
|
Pension Fund
|
|
EIN/Pension Plan Number
|
|
Date of Plan Year-End
|
|
Pension Protection Act
Zone Status (1) 2016 |
|
FIP/RP Status
Pending/Implemented (2) |
|
Contributions of the Company 2016
|
|
Surcharge Imposed
(3)
|
|
Expiration Date
of Collective Bargaining Agreement |
|
Year Contributions to Plan Exceeded More than 5 Percent of Total Contributions
|
||||
|
||||||||||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Furniture Workers Pension Fund A
(4)
|
|
13-5511877-001
|
|
2/29/16
|
|
Red
|
|
Implemented
|
|
$
|
1.2
|
|
|
Yes, 10.0%
|
|
2017
|
|
2014, 2015, 2016
|
||
Pension Plan of the National Retirement Fund
|
|
13-6130178-001
|
|
12/31/15
|
|
Red
|
|
Implemented
|
|
$
|
1.3
|
|
|
Yes, 10.0%
|
|
2019
|
|
N/A
|
||
Central States, Southeast & Southwest Areas Pension Plan
|
|
36-6044243-001
|
|
12/31/15
|
|
Red
|
|
Implemented
|
|
$
|
0.3
|
|
|
Yes, 10.0%
|
|
2018
|
|
N/A
|
(1)
|
The Pension Protection Act of 2006 ranks the funded status of multi-employer pension plans depending upon a plan’s current and projected funding. A plan is in the Red Zone (Critical) if it has a current funded percentage of less than
65.0%
. A plan is in the Yellow Zone (Endangered) if it has a current funded percentage of less than
80.0%
, or projects a credit balance deficit within
seven
years. A plan is in the Green Zone (Healthy) if it has a current funded percentage greater than
80.0%
and does not have a projected credit balance deficit within
seven
years. The zone status is based on the plan’s year end rather than the Company’s. The zone status listed for each plan is based on information that the Company received from that plan and is certified by that plan’s actuary for the most recent year available.
|
(2)
|
Funding Improvement Plan or Rehabilitation Plan as defined in the Employee Retirement Income Security Act of 1974 has been implemented or is pending.
|
(3)
|
Indicates whether the Company paid a surcharge to the plan in the most current year due to funding shortfalls and the amount of the surcharge.
|
(4)
|
The Company represented more than
5.0%
of the total contributions for the most recent plan year available. For year ended December 31, 2015, the Company contributed
$1.1 million
to the plan.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Foreign Currency Translation
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
(101.9
|
)
|
|
$
|
(101.6
|
)
|
|
$
|
(48.9
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
(1)
|
29.1
|
|
|
(0.3
|
)
|
|
(52.7
|
)
|
|||
Balance at end of period
|
$
|
(72.8
|
)
|
|
$
|
(101.9
|
)
|
|
$
|
(101.6
|
)
|
|
|
|
|
|
|
||||||
Interest Rate Swap Agreement
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Net change from period revaluation:
|
—
|
|
|
—
|
|
|
3.1
|
|
|||
Tax expense
(2)
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|||
Total other comprehensive income before reclassifications, net of tax
|
—
|
|
|
—
|
|
|
1.9
|
|
|||
Net amount reclassified to earnings
(3)
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|||
Tax benefit
(2)
|
—
|
|
|
—
|
|
|
0.7
|
|
|||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
0.7
|
|
|||
Balance at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Pension Benefits
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
(2.2
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(2.4
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Net change from period revaluation:
|
(0.8
|
)
|
|
(1.5
|
)
|
|
0.2
|
|
|||
Tax benefit
(2)
|
0.3
|
|
|
0.6
|
|
|
—
|
|
|||
Total other comprehensive (loss) income before reclassifications, net of tax
|
(0.5
|
)
|
|
(0.9
|
)
|
|
0.2
|
|
|||
Net amount reclassified to earnings
|
—
|
|
|
0.2
|
|
|
1.3
|
|
|||
Tax expense
(2)
|
—
|
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
—
|
|
|
0.1
|
|
|
0.8
|
|
|||
Total other comprehensive (loss) income
|
(0.5
|
)
|
|
(0.8
|
)
|
|
1.0
|
|
|||
Balance at end of period
|
$
|
(2.7
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
(1.4
|
)
|
|
|
|
|
|
|
||||||
Foreign Exchange Forward Contracts
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
0.6
|
|
|
$
|
6.6
|
|
|
$
|
1.3
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Net change from period revaluation:
|
(0.6
|
)
|
|
(3.6
|
)
|
|
14.6
|
|
|||
Tax benefit (expense)
(2)
|
0.1
|
|
|
1.0
|
|
|
(3.8
|
)
|
|||
Total other comprehensive (loss) income before reclassifications, net of tax
|
(0.5
|
)
|
|
(2.6
|
)
|
|
10.8
|
|
|||
Net amount reclassified to earnings
(4)
|
(0.1
|
)
|
|
(4.6
|
)
|
|
(7.4
|
)
|
|||
Tax benefit
(2)
|
—
|
|
|
1.2
|
|
|
1.9
|
|
|||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
(0.1
|
)
|
|
(3.4
|
)
|
|
(5.5
|
)
|
|||
Total other comprehensive (loss) income
|
(0.6
|
)
|
|
(6.0
|
)
|
|
5.3
|
|
|||
Balance at end of period
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
6.6
|
|
(1)
|
In 2017, 2016 and 2015, there were
no
tax impacts related to foreign currency translation adjustments and
no
amounts were reclassified to earnings.
|
(2)
|
These amounts were included in the income tax provision in the accompanying Consolidated Statements of Income.
|
(3)
|
This amount was included in interest expense, net in the accompanying Consolidated Statements of Income.
|
(4)
|
This amount was included in cost of sales, net in the accompanying Consolidated Statements of Income
.
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Wages and benefits
|
$
|
57.6
|
|
|
$
|
74.3
|
|
Advertising
|
44.5
|
|
|
48.6
|
|
||
Sales returns
|
19.6
|
|
|
20.0
|
|
||
Rebates
|
11.4
|
|
|
8.4
|
|
||
Warranty
|
16.7
|
|
|
14.3
|
|
||
Other
|
84.4
|
|
|
84.4
|
|
||
|
$
|
234.2
|
|
|
$
|
250.0
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
PRSU (benefit) expense
|
$
|
(6.5
|
)
|
|
$
|
3.9
|
|
|
$
|
13.7
|
|
Stock option expense
|
7.1
|
|
|
5.3
|
|
|
6.6
|
|
|||
RSU/DSU expense
|
12.7
|
|
|
7.0
|
|
|
2.2
|
|
|||
Total stock-based compensation expense
|
$
|
13.3
|
|
|
$
|
16.2
|
|
|
$
|
22.5
|
|
(shares in millions)
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Awards unvested at December 31, 2015
|
1.9
|
|
|
$
|
68.17
|
|
Granted
|
0.2
|
|
|
60.78
|
|
|
Vested
|
(0.1
|
)
|
|
51.87
|
|
|
Forfeited
|
(0.3
|
)
|
|
70.43
|
|
|
Awards unvested at December 31, 2016
|
1.7
|
|
|
68.02
|
|
|
Granted
|
1.6
|
|
|
59.64
|
|
|
Vested
|
(0.2
|
)
|
|
59.39
|
|
|
Forfeited
|
(0.4
|
)
|
|
65.48
|
|
|
Awards unvested at December 31, 2017
|
2.7
|
|
|
$
|
64.13
|
|
|
Year Ended December 31,
|
||||
|
2017
|
|
2016
|
|
2015
|
Expected volatility range of stock
|
37.4% - 40.8%
|
|
N/A
|
|
34.0% - 36.2%
|
Expected life of option, range in years
|
5
|
|
N/A
|
|
3 - 5
|
Risk-free interest range rate
|
1.8% - 1.9%
|
|
N/A
|
|
0.9% - 1.5%
|
Expected dividend yield on stock
|
0.0% - 0.0%
|
|
N/A
|
|
0.0% - 0.0%
|
(in millions, except per share amounts and years)
|
Shares
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
|
|||||
Options outstanding at December 31, 2015
|
2.1
|
|
|
$
|
42.75
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Released
|
(0.6
|
)
|
|
24.72
|
|
|
|
|
|
|||
Forfeited
|
—
|
|
|
58.37
|
|
|
|
|
|
|||
Options outstanding at December 31, 2016
|
1.5
|
|
|
$
|
50.46
|
|
|
|
|
|
||
Granted
|
0.6
|
|
|
69.04
|
|
|
|
|
|
|||
Released
|
(0.3
|
)
|
|
38.44
|
|
|
|
|
|
|||
Forfeited
|
(0.1
|
)
|
|
67.45
|
|
|
|
|
|
|||
Options outstanding at December 31, 2017
|
1.7
|
|
|
$
|
58.93
|
|
|
6.98
|
|
$
|
1.5
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable at December 31, 2017
|
0.9
|
|
|
$
|
51.57
|
|
|
5.66
|
|
$
|
10.2
|
|
(shares in millions)
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Options unvested at December 31, 2015
|
0.8
|
|
|
$
|
62.34
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(0.3
|
)
|
|
61.28
|
|
|
Forfeited
|
—
|
|
|
58.37
|
|
|
Options unvested at December 31, 2016
|
0.5
|
|
|
$
|
63.09
|
|
Granted
|
0.6
|
|
|
69.04
|
|
|
Vested
|
(0.3
|
)
|
|
61.69
|
|
|
Forfeited
|
(0.1
|
)
|
|
67.45
|
|
|
Options unvested at December 31, 2017
|
0.7
|
|
|
$
|
67.95
|
|
(in millions, except per share amounts)
|
Shares
|
|
Weighted Average Release Price
|
|
Aggregate Intrinsic Value
|
|||||
Awards outstanding at December 31, 2015
|
0.1
|
|
|
$
|
66.41
|
|
|
|
||
Granted
|
0.3
|
|
|
53.77
|
|
|
|
|||
Vested
|
—
|
|
|
60.17
|
|
|
|
|||
Terminated
|
—
|
|
|
53.45
|
|
|
|
|||
Awards outstanding at December 31, 2016
|
0.4
|
|
|
$
|
59.37
|
|
|
|
||
Granted
|
0.4
|
|
|
68.08
|
|
|
|
|||
Vested
|
(0.1
|
)
|
|
54.20
|
|
|
|
|||
Terminated
|
(0.1
|
)
|
|
64.66
|
|
|
|
|||
Awards outstanding at December 31, 2017
|
0.6
|
|
|
$
|
64.94
|
|
|
$
|
41.7
|
|
(in millions, except years)
|
December 31, 2017
|
|
Weighted Average Remaining Vesting Period (Years)
|
||
Unrecognized stock option expense
|
$
|
12.0
|
|
|
2.66
|
Unrecognized DSU/RSU expense
|
4.8
|
|
|
2.65
|
|
Unrecognized PRSU expense
|
25.8
|
|
|
2.69
|
|
Total unrecognized stock-based compensation expense
|
$
|
42.6
|
|
|
2.67
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Income before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
97.2
|
|
|
$
|
179.0
|
|
|
$
|
120.2
|
|
Rest of the world
|
91.2
|
|
|
92.8
|
|
|
70.9
|
|
|||
|
$
|
188.4
|
|
|
$
|
271.8
|
|
|
$
|
191.1
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
(dollars in millions)
|
Amount
|
|
Percentage of Income
Before Income Taxes
|
|
Amount
|
|
Percentage of Income
Before Income Taxes |
|
Amount
|
|
Percentage of Income
Before Income Taxes |
|||||||||
Statutory U.S. federal income tax
|
$
|
65.9
|
|
|
35.0
|
%
|
|
$
|
95.1
|
|
|
35.0
|
%
|
|
$
|
66.9
|
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
(0.6
|
)
|
|
(0.3
|
)%
|
|
8.0
|
|
|
2.9
|
%
|
|
1.1
|
|
|
0.6
|
%
|
|||
Foreign repatriation, net of foreign tax credits
|
—
|
|
|
—
|
|
|
(4.3
|
)
|
|
(1.6
|
)%
|
|
—
|
|
|
—
|
|
|||
Foreign tax differential
|
(11.6
|
)
|
|
(6.1
|
)%
|
|
(11.9
|
)
|
|
(4.4
|
)%
|
|
(10.0
|
)
|
|
(5.2
|
)%
|
|||
Change in valuation allowances
|
8.3
|
|
|
4.4
|
%
|
|
20.2
|
|
|
7.4
|
%
|
|
2.5
|
|
|
1.3
|
%
|
|||
Uncertain tax positions
|
0.2
|
|
|
0.0
|
%
|
|
(27.1
|
)
|
|
(9.9
|
)%
|
|
59.7
|
|
|
31.2
|
%
|
|||
Subpart F income
|
2.7
|
|
|
1.4
|
%
|
|
2.0
|
|
|
0.7
|
%
|
|
1.9
|
|
|
1.0
|
%
|
|||
Manufacturing deduction
|
(1.9
|
)
|
|
(1.0
|
)%
|
|
(4.2
|
)
|
|
(1.5
|
)%
|
|
(1.6
|
)
|
|
(0.8
|
)%
|
|||
Remeasurement of deferred taxes
|
(69.7
|
)
|
|
(37.0
|
)%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transition Tax
|
45.9
|
|
|
24.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Permanent and other
|
8.5
|
|
|
4.5
|
%
|
|
9.0
|
|
|
3.3
|
%
|
|
4.9
|
|
|
2.5
|
%
|
|||
Effective income tax provision
|
$
|
47.7
|
|
|
25.3
|
%
|
|
$
|
86.8
|
|
|
31.9
|
%
|
|
$
|
125.4
|
|
|
65.6
|
%
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Current provision
|
|
|
|
|
|
||||||
Federal
|
$
|
73.5
|
|
|
$
|
73.5
|
|
|
$
|
107.1
|
|
State
|
3.1
|
|
|
4.5
|
|
|
7.2
|
|
|||
Foreign
|
31.3
|
|
|
39.9
|
|
|
32.4
|
|
|||
Total current
|
$
|
107.9
|
|
|
$
|
117.9
|
|
|
$
|
146.7
|
|
Deferred provision
|
|
|
|
|
|
||||||
Federal
|
$
|
(67.7
|
)
|
|
$
|
(21.4
|
)
|
|
$
|
(12.3
|
)
|
State
|
7.5
|
|
|
1.6
|
|
|
(3.7
|
)
|
|||
Foreign
|
—
|
|
|
(11.3
|
)
|
|
(5.3
|
)
|
|||
Total deferred
|
(60.2
|
)
|
|
(31.1
|
)
|
|
(21.3
|
)
|
|||
Total income tax provision
|
$
|
47.7
|
|
|
$
|
86.8
|
|
|
$
|
125.4
|
|
|
December 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Stock-based compensation
|
$
|
10.6
|
|
|
$
|
18.4
|
|
Accrued expenses and other
|
36.3
|
|
|
49.9
|
|
||
Net operating losses, foreign tax credits and other tax attribute carryforwards
|
92.9
|
|
|
98.5
|
|
||
Inventories
|
6.2
|
|
|
7.2
|
|
||
Transaction costs
|
13.4
|
|
|
10.2
|
|
||
Property, plant and equipment
|
2.8
|
|
|
3.4
|
|
||
Total deferred tax assets
|
162.2
|
|
|
187.6
|
|
||
Valuation allowances
|
(55.1
|
)
|
|
(45.2
|
)
|
||
Total net deferred tax assets
|
$
|
107.1
|
|
|
$
|
142.4
|
|
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
$
|
(161.9
|
)
|
|
$
|
(242.4
|
)
|
Property, plant and equipment
|
(29.5
|
)
|
|
(42.4
|
)
|
||
Accrued expenses and other
|
(6.4
|
)
|
|
(9.7
|
)
|
||
Total deferred tax liabilities
|
(197.8
|
)
|
|
(294.5
|
)
|
||
Net deferred tax liabilities
|
$
|
(90.7
|
)
|
|
$
|
(152.1
|
)
|
(in millions)
|
2017
|
|
2016
|
||||
State net operating losses (“SNOLs”)
|
$
|
133.9
|
|
|
$
|
131.2
|
|
U.S. federal foreign tax credits (“FTCs”)
|
12.2
|
|
|
12.2
|
|
||
U.S. state income tax credits ("SITCs")
|
8.1
|
|
|
4.0
|
|
||
Foreign net operating losses (“FNOLs”)
|
33.1
|
|
|
34.1
|
|
||
Charitable contribution carryover ("CCCs")
|
18.0
|
|
|
38.4
|
|
(in millions)
|
|
||
Balance as of December 31, 2015
|
$
|
69.8
|
|
Additions based on tax positions related to 2016
|
2.5
|
|
|
Additions for tax positions of prior years
|
29.2
|
|
|
Expiration of statutes of limitations
|
(5.0
|
)
|
|
Settlements of uncertain tax positions with tax authorities
|
(24.8
|
)
|
|
Balance as of December 31, 2016
|
$
|
71.7
|
|
Additions based on tax positions related to 2017
|
3.9
|
|
|
Additions for tax positions of prior years
|
11.4
|
|
|
Expiration of statutes of limitations
|
—
|
|
|
Settlements of uncertain tax positions with tax authorities
|
(2.5
|
)
|
|
Balance as of December 31, 2017
|
$
|
84.5
|
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per common share amounts)
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
151.4
|
|
|
$
|
190.6
|
|
|
$
|
64.5
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Denominator for basic earnings per common share—weighted average shares
|
54.0
|
|
|
59.0
|
|
|
61.7
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Employee stock-based compensation
|
0.7
|
|
|
0.8
|
|
|
0.9
|
|
|||
Denominator for diluted earnings per common share—adjusted weighted average shares
|
54.7
|
|
|
59.8
|
|
|
62.6
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per common share
|
$
|
2.80
|
|
|
$
|
3.23
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
||||||
Diluted earnings per common share
|
$
|
2.77
|
|
|
$
|
3.19
|
|
|
$
|
1.03
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
North America
|
$
|
2,759.4
|
|
|
$
|
2,581.4
|
|
International
|
609.4
|
|
|
568.8
|
|
||
Corporate
|
627.3
|
|
|
658.7
|
|
||
Inter-segment eliminations
|
(1,302.1
|
)
|
|
(1,110.1
|
)
|
||
Total assets
|
$
|
2,694.0
|
|
|
$
|
2,698.8
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
North America
|
$
|
307.6
|
|
|
$
|
297.4
|
|
International
|
54.7
|
|
|
54.9
|
|
||
Corporate
|
72.8
|
|
|
69.9
|
|
||
Total property, plant and equipment, net
|
$
|
435.1
|
|
|
$
|
422.2
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Bedding sales
|
$
|
2,051.8
|
|
|
$
|
470.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,521.8
|
|
Other sales
|
122.0
|
|
|
110.6
|
|
|
—
|
|
|
—
|
|
|
232.6
|
|
|||||
Net sales
|
2,173.8
|
|
|
580.6
|
|
|
—
|
|
|
—
|
|
|
2,754.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
3.8
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
(4.7
|
)
|
|
$
|
—
|
|
Gross profit
|
844.7
|
|
|
296.0
|
|
|
—
|
|
|
—
|
|
|
1,140.7
|
|
|||||
Inter-segment royalty expense (income)
|
5.5
|
|
|
(5.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating income (loss)
|
273.2
|
|
|
104.9
|
|
|
(89.7
|
)
|
|
—
|
|
|
288.4
|
|
|||||
Income (loss) before income taxes
|
276.0
|
|
|
77.5
|
|
|
(165.1
|
)
|
|
—
|
|
|
188.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
51.4
|
|
|
$
|
14.7
|
|
|
$
|
28.5
|
|
|
$
|
—
|
|
|
$
|
94.6
|
|
Capital expenditures
|
39.9
|
|
|
9.4
|
|
|
17.7
|
|
|
—
|
|
|
67.0
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Bedding sales
|
$
|
2,447.8
|
|
|
$
|
445.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,892.9
|
|
Other sales
|
122.3
|
|
|
113.7
|
|
|
—
|
|
|
—
|
|
|
236.0
|
|
|||||
Net sales
|
2,570.1
|
|
|
558.8
|
|
|
—
|
|
|
—
|
|
|
3,128.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
4.5
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
(4.9
|
)
|
|
$
|
—
|
|
Gross profit
|
1,017.4
|
|
|
290.1
|
|
|
—
|
|
|
—
|
|
|
1,307.5
|
|
|||||
Inter-segment royalty expense (income)
|
7.2
|
|
|
(7.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating income (loss)
|
411.8
|
|
|
97.6
|
|
|
(99.0
|
)
|
|
—
|
|
|
410.4
|
|
|||||
Income (loss) before income taxes
|
406.8
|
|
|
82.5
|
|
|
(217.5
|
)
|
|
—
|
|
|
271.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
43.7
|
|
|
$
|
15.6
|
|
|
$
|
30.2
|
|
|
$
|
—
|
|
|
$
|
89.5
|
|
Capital expenditures
|
32.8
|
|
|
15.3
|
|
|
14.3
|
|
|
—
|
|
|
62.4
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Bedding sales
|
$
|
2,428.9
|
|
|
$
|
461.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,890.0
|
|
Other sales
|
148.3
|
|
|
116.3
|
|
|
—
|
|
|
—
|
|
|
264.6
|
|
|||||
Net sales
|
2,577.2
|
|
|
577.4
|
|
|
—
|
|
|
—
|
|
|
3,154.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
5.9
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
(6.6
|
)
|
|
$
|
—
|
|
Gross profit
|
954.6
|
|
|
294.6
|
|
|
—
|
|
|
—
|
|
|
1,249.2
|
|
|||||
Inter-segment royalty expense (income)
|
7.1
|
|
|
(7.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating income (loss)
|
335.6
|
|
|
96.3
|
|
|
(125.4
|
)
|
|
—
|
|
|
306.5
|
|
|||||
Income (loss) before income taxes
|
324.4
|
|
|
64.2
|
|
|
(197.5
|
)
|
|
—
|
|
|
191.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
43.3
|
|
|
$
|
16.0
|
|
|
$
|
34.6
|
|
|
$
|
—
|
|
|
$
|
93.9
|
|
Capital expenditures
|
28.9
|
|
|
14.8
|
|
|
22.2
|
|
|
—
|
|
|
65.9
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
United States
|
$
|
373.2
|
|
|
$
|
360.7
|
|
Canada
|
7.2
|
|
|
6.6
|
|
||
Other International
|
54.7
|
|
|
54.9
|
|
||
Total property, plant and equipment, net
|
$
|
435.1
|
|
|
$
|
422.2
|
|
Total International
|
$
|
61.9
|
|
|
$
|
61.5
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
$
|
1,954.2
|
|
|
$
|
2,361.8
|
|
|
$
|
2,374.7
|
|
Canada
|
219.6
|
|
|
208.3
|
|
|
202.5
|
|
|||
Other International
|
580.6
|
|
|
558.8
|
|
|
577.4
|
|
|||
Total net sales
|
$
|
2,754.4
|
|
|
$
|
3,128.9
|
|
|
$
|
3,154.6
|
|
Total International
|
$
|
800.2
|
|
|
$
|
767.1
|
|
|
$
|
779.9
|
|
(in millions, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
722.1
|
|
|
$
|
659.3
|
|
|
$
|
724.8
|
|
|
$
|
648.2
|
|
Gross profit
|
286.6
|
|
|
268.6
|
|
|
312.2
|
|
|
273.3
|
|
||||
Operating income
|
59.5
|
|
|
56.6
|
|
|
94.6
|
|
|
77.7
|
|
||||
Net income
|
33.9
|
|
|
24.5
|
|
|
44.6
|
|
|
48.4
|
|
||||
Basic earnings per common share
|
$
|
0.63
|
|
|
$
|
0.45
|
|
|
$
|
0.83
|
|
|
$
|
0.89
|
|
Diluted earnings per common share
|
$
|
0.62
|
|
|
$
|
0.45
|
|
|
$
|
0.81
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
721.0
|
|
|
$
|
804.4
|
|
|
$
|
832.4
|
|
|
$
|
771.1
|
|
Gross profit
|
291.0
|
|
|
336.9
|
|
|
362.1
|
|
|
317.5
|
|
||||
Operating income
|
76.7
|
|
|
100.2
|
|
|
131.1
|
|
|
102.4
|
|
||||
Net income
|
39.6
|
|
|
21.3
|
|
|
77.8
|
|
|
51.9
|
|
||||
Basic earnings per common share
|
$
|
0.64
|
|
|
$
|
0.35
|
|
|
$
|
1.34
|
|
|
$
|
0.93
|
|
Diluted earnings per common share
|
$
|
0.63
|
|
|
$
|
0.35
|
|
|
$
|
1.32
|
|
|
$
|
0.92
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,961.2
|
|
|
$
|
862.5
|
|
|
$
|
(69.3
|
)
|
|
$
|
2,754.4
|
|
Cost of sales
|
—
|
|
|
1,185.4
|
|
|
497.6
|
|
|
(69.3
|
)
|
|
1,613.7
|
|
|||||
Gross profit
|
—
|
|
|
775.8
|
|
|
364.9
|
|
|
—
|
|
|
1,140.7
|
|
|||||
Selling and marketing expenses
|
5.6
|
|
|
406.8
|
|
|
188.9
|
|
|
—
|
|
|
601.3
|
|
|||||
General, administrative and other expenses
|
17.5
|
|
|
176.6
|
|
|
78.9
|
|
|
—
|
|
|
273.0
|
|
|||||
Customer termination charges, net
|
(8.4
|
)
|
|
21.7
|
|
|
1.1
|
|
|
—
|
|
|
14.4
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(15.6
|
)
|
|
—
|
|
|
(15.6
|
)
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
(20.8
|
)
|
|
—
|
|
|
—
|
|
|
(20.8
|
)
|
|||||
Operating (loss) income
|
(14.7
|
)
|
|
191.5
|
|
|
111.6
|
|
|
—
|
|
|
288.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third party interest expense, net
|
59.6
|
|
|
26.0
|
|
|
22.4
|
|
|
—
|
|
|
108.0
|
|
|||||
Intercompany interest (income) expense, net
|
(4.7
|
)
|
|
8.3
|
|
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
54.9
|
|
|
34.3
|
|
|
18.8
|
|
|
—
|
|
|
108.0
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(17.2
|
)
|
|
9.2
|
|
|
—
|
|
|
(8.0
|
)
|
|||||
Total other expense, net
|
54.9
|
|
|
17.1
|
|
|
28.0
|
|
|
—
|
|
|
100.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
193.1
|
|
|
51.3
|
|
|
—
|
|
|
(244.4
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
123.5
|
|
|
225.7
|
|
|
83.6
|
|
|
(244.4
|
)
|
|
188.4
|
|
|||||
Income tax benefit (provision)
|
17.2
|
|
|
(32.6
|
)
|
|
(32.3
|
)
|
|
—
|
|
|
(47.7
|
)
|
|||||
Net income before non-controlling interests
|
140.7
|
|
|
193.1
|
|
|
51.3
|
|
|
(244.4
|
)
|
|
140.7
|
|
|||||
Less: Net loss attributable to non-controlling interests
|
(10.7
|
)
|
|
(5.2
|
)
|
|
(5.5
|
)
|
|
10.7
|
|
|
(10.7
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
151.4
|
|
|
$
|
198.3
|
|
|
$
|
56.8
|
|
|
$
|
(255.1
|
)
|
|
$
|
151.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
179.4
|
|
|
$
|
193.0
|
|
|
$
|
89.9
|
|
|
$
|
(282.9
|
)
|
|
$
|
179.4
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
2,355.9
|
|
|
$
|
837.6
|
|
|
$
|
(64.6
|
)
|
|
$
|
3,128.9
|
|
Cost of sales
|
—
|
|
|
1,409.4
|
|
|
476.6
|
|
|
(64.6
|
)
|
|
1,821.4
|
|
|||||
Gross profit
|
—
|
|
|
946.5
|
|
|
361.0
|
|
|
—
|
|
|
1,307.5
|
|
|||||
Selling and marketing expenses
|
2.9
|
|
|
458.6
|
|
|
187.0
|
|
|
—
|
|
|
648.5
|
|
|||||
General, administrative and other expenses
|
14.8
|
|
|
186.8
|
|
|
79.8
|
|
|
—
|
|
|
281.4
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
|
—
|
|
|
(13.3
|
)
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
(19.5
|
)
|
|
—
|
|
|
—
|
|
|
(19.5
|
)
|
|||||
Operating (loss) income
|
(17.7
|
)
|
|
320.6
|
|
|
107.5
|
|
|
—
|
|
|
410.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third party interest expense, net
|
66.0
|
|
|
15.4
|
|
|
10.2
|
|
|
—
|
|
|
91.6
|
|
|||||
Intercompany interest (income) expense, net
|
(4.1
|
)
|
|
(0.1
|
)
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
61.9
|
|
|
15.3
|
|
|
14.4
|
|
|
—
|
|
|
91.6
|
|
|||||
Loss on extinguishment of debt
|
34.3
|
|
|
12.9
|
|
|
—
|
|
|
—
|
|
|
47.2
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(1.4
|
)
|
|
1.2
|
|
|
—
|
|
|
(0.2
|
)
|
|||||
Total other expense, net
|
96.2
|
|
|
26.8
|
|
|
15.6
|
|
|
—
|
|
|
138.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
260.1
|
|
|
65.3
|
|
|
—
|
|
|
(325.4
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
146.2
|
|
|
359.1
|
|
|
91.9
|
|
|
(325.4
|
)
|
|
271.8
|
|
|||||
Income tax benefit (provision)
|
38.8
|
|
|
(99.0
|
)
|
|
(26.6
|
)
|
|
—
|
|
|
(86.8
|
)
|
|||||
Net income before non-controlling interests
|
185.0
|
|
|
260.1
|
|
|
65.3
|
|
|
(325.4
|
)
|
|
185.0
|
|
|||||
Less: Net loss attributable to non-controlling interests
|
(5.6
|
)
|
|
—
|
|
|
(5.6
|
)
|
|
5.6
|
|
|
(5.6
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
190.6
|
|
|
$
|
260.1
|
|
|
$
|
70.9
|
|
|
$
|
(331.0
|
)
|
|
$
|
190.6
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
183.5
|
|
|
$
|
260.4
|
|
|
$
|
63.5
|
|
|
$
|
(323.9
|
)
|
|
$
|
183.5
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
2,422.9
|
|
|
$
|
782.4
|
|
|
$
|
(50.7
|
)
|
|
$
|
3,154.6
|
|
Cost of sales
|
—
|
|
|
1,532.6
|
|
|
423.5
|
|
|
(50.7
|
)
|
|
1,905.4
|
|
|||||
Gross profit
|
—
|
|
|
890.3
|
|
|
358.9
|
|
|
—
|
|
|
1,249.2
|
|
|||||
Selling and marketing expenses
|
4.1
|
|
|
460.1
|
|
|
183.8
|
|
|
—
|
|
|
648.0
|
|
|||||
General, administrative and other expenses
|
20.8
|
|
|
232.6
|
|
|
71.5
|
|
|
—
|
|
|
324.9
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(11.9
|
)
|
|
—
|
|
|
(11.9
|
)
|
|||||
Royalty income, net of royalty expense
|
—
|
|
|
(18.3
|
)
|
|
—
|
|
|
—
|
|
|
(18.3
|
)
|
|||||
Operating (loss) income
|
(24.9
|
)
|
|
215.9
|
|
|
115.5
|
|
|
—
|
|
|
306.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third party interest expense, net
|
27.2
|
|
|
66.2
|
|
|
9.1
|
|
|
—
|
|
|
102.5
|
|
|||||
Intercompany interest expense (income), net
|
32.9
|
|
|
(35.5
|
)
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
60.1
|
|
|
30.7
|
|
|
11.7
|
|
|
—
|
|
|
102.5
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(8.1
|
)
|
|
21.0
|
|
|
—
|
|
|
12.9
|
|
|||||
Total other expense, net
|
60.1
|
|
|
22.6
|
|
|
32.7
|
|
|
—
|
|
|
115.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
123.9
|
|
|
55.7
|
|
|
—
|
|
|
(179.6
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
38.9
|
|
|
249.0
|
|
|
82.8
|
|
|
(179.6
|
)
|
|
191.1
|
|
|||||
Income tax benefit (provision)
|
26.8
|
|
|
(125.1
|
)
|
|
(27.1
|
)
|
|
—
|
|
|
(125.4
|
)
|
|||||
Net income before non-controlling interests
|
65.7
|
|
|
123.9
|
|
|
55.7
|
|
|
(179.6
|
)
|
|
65.7
|
|
|||||
Less: Net income attributable to non-controlling interests
|
1.2
|
|
|
1.2
|
|
|
—
|
|
|
(1.2
|
)
|
|
1.2
|
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
64.5
|
|
|
$
|
122.7
|
|
|
$
|
55.7
|
|
|
$
|
(178.4
|
)
|
|
$
|
64.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
18.8
|
|
|
$
|
121.9
|
|
|
$
|
(2.4
|
)
|
|
$
|
(119.5
|
)
|
|
$
|
18.8
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
0.1
|
|
|
$
|
12.3
|
|
|
$
|
29.5
|
|
|
$
|
—
|
|
|
$
|
41.9
|
|
Accounts receivable, net
|
—
|
|
|
5.1
|
|
|
322.2
|
|
|
(9.6
|
)
|
|
317.7
|
|
|||||
Inventories
|
—
|
|
|
103.4
|
|
|
79.6
|
|
|
—
|
|
|
183.0
|
|
|||||
Income tax receivable
|
260.2
|
|
|
—
|
|
|
—
|
|
|
(260.2
|
)
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
0.8
|
|
|
50.6
|
|
|
13.4
|
|
|
—
|
|
|
64.8
|
|
|||||
Total Current Assets
|
261.1
|
|
|
171.4
|
|
|
444.7
|
|
|
(269.8
|
)
|
|
607.4
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
360.4
|
|
|
74.7
|
|
|
—
|
|
|
435.1
|
|
|||||
Goodwill
|
—
|
|
|
507.6
|
|
|
225.5
|
|
|
—
|
|
|
733.1
|
|
|||||
Other intangible assets, net
|
—
|
|
|
577.5
|
|
|
89.9
|
|
|
—
|
|
|
667.4
|
|
|||||
Deferred income taxes
|
11.8
|
|
|
—
|
|
|
23.6
|
|
|
(11.8
|
)
|
|
23.6
|
|
|||||
Other non-current assets
|
—
|
|
|
47.2
|
|
|
180.2
|
|
|
—
|
|
|
227.4
|
|
|||||
Net investment in subsidiaries
|
2,381.0
|
|
|
127.7
|
|
|
—
|
|
|
(2,508.7
|
)
|
|
—
|
|
|||||
Due from affiliates
|
87.2
|
|
|
1,975.9
|
|
|
15.6
|
|
|
(2,078.7
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
2,741.1
|
|
|
$
|
3,767.7
|
|
|
$
|
1,054.2
|
|
|
$
|
(4,869.0
|
)
|
|
$
|
2,694.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
174.6
|
|
|
$
|
76.2
|
|
|
$
|
(9.6
|
)
|
|
$
|
241.2
|
|
Accrued expenses and other current liabilities
|
7.6
|
|
|
144.2
|
|
|
82.4
|
|
|
—
|
|
|
234.2
|
|
|||||
Income taxes payable
|
—
|
|
|
279.3
|
|
|
10.0
|
|
|
(260.2
|
)
|
|
29.1
|
|
|||||
Current portion of long-term debt
|
—
|
|
|
35.7
|
|
|
36.7
|
|
|
—
|
|
|
72.4
|
|
|||||
Total Current Liabilities
|
7.6
|
|
|
633.8
|
|
|
205.3
|
|
|
(269.8
|
)
|
|
576.9
|
|
|||||
Long-term debt, net
|
1,041.6
|
|
|
589.4
|
|
|
49.7
|
|
|
—
|
|
|
1,680.7
|
|
|||||
Deferred income taxes
|
—
|
|
|
107.8
|
|
|
18.3
|
|
|
(11.8
|
)
|
|
114.3
|
|
|||||
Other non-current liabilities
|
—
|
|
|
55.2
|
|
|
152.2
|
|
|
—
|
|
|
207.4
|
|
|||||
Due to affiliates
|
1,577.2
|
|
|
0.5
|
|
|
501.0
|
|
|
(2,078.7
|
)
|
|
—
|
|
|||||
Total Liabilities
|
2,626.4
|
|
|
1,386.7
|
|
|
926.5
|
|
|
(2,360.3
|
)
|
|
2,579.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Redeemable non-controlling interest
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|
(2.2
|
)
|
|
2.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Stockholder's Equity
|
112.5
|
|
|
2,381.0
|
|
|
125.5
|
|
|
(2,506.5
|
)
|
|
112.5
|
|
|||||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity
|
$
|
2,741.1
|
|
|
$
|
3,767.7
|
|
|
$
|
1,054.2
|
|
|
$
|
(4,869.0
|
)
|
|
$
|
2,694.0
|
|
Plan category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
||||
|
|
(a)
|
|
(b)
|
|
(c)
|
||||
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
||||
Amended and Restated 2003 Equity Incentive Plan
(1)
|
|
385,421
|
|
|
$
|
37.47
|
|
|
—
|
|
Amended and Restated 2013 Equity Incentive Plan
(2)
|
|
5,100,936
|
|
|
65.42
|
|
|
2,285,591
|
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
5,486,357
|
|
|
$
|
58.93
|
|
|
2,285,591
|
|
(1)
|
In May 2013, our Board of Directors adopted a resolution that prohibited further grants under the Amended and Restated 2003 Equity Incentive Plan. The number of securities to be issued upon exercise of outstanding stock options, warrants and rights issued under the Amended and Restated 2003 Equity Incentive Plan includes 404 shares issuable under restricted stock units and deferred stock units. These restricted and deferred stock units are excluded from the weighted average exercise price calculation above.
|
(2)
|
The number of securities to be issued upon exercise of outstanding stock options, warrants and rights issued under the Amended and Restated 2013 Equity Incentive Plan includes 665,324 shares issuable under restricted stock units and deferred stock units. Additionally, this number includes 3,160,506 performance restricted stock units which reflects a maximum payout of the awards granted. These restricted, deferred and performance restricted stock units are excluded from the weighted average exercise price calculation above.
|
(a)
|
1.
|
The following is a list of the financial statements of Tempur Sealy International, Inc. included in this Report, which are filed herewith pursuant to ITEM 8:
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Report of Independent Registered Public Accounting Firm
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Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015
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Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
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Consolidated Balance Sheets as of December 31, 2017 and 2016
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Consolidated Statements of Stockholders' Equity/(deficit) for the years ended December 31, 2017, 2016, and 2015
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Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
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Notes to the Consolidated Financial Statements
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2.
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Financial Statement Schedule:
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Schedule II—Valuation of Qualifying Accounts and Reserves
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All other schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the Consolidated Financial Statements or notes thereto.
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3.
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Exhibits:
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(b)
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EXHIBIT INDEX
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3.1
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3.2
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3.3
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3.4
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4.1
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4.2
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4.3
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4.4
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4.5
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10.26
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10.27
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10.28
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10.29
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10.30
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10.31
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10.32
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10.33
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10.34
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10.35
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10.36
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10.37
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10.38
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10.39
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10.40
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10.41
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10.42
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10.43
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10.44
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10.45
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10.46
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10.47
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10.48
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10.49
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10.50
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10.51
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10.52
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10.53
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10.54
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10.55
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(1)
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Incorporated by reference.
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(2)
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Indicates management contract or compensatory plan or arrangement.
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(3)
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This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
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Additions
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Description
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Balance at
Beginning of
Period
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Charges to
Costs and
Expenses
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Charged to Other
Accounts
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Deductions
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Balance at
End of
Period
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Allowance for doubtful accounts:
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Year Ended December 31, 2015
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$
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19.5
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6.9
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—
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(3.1
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)
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$
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23.3
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Year Ended December 31, 2016
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$
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23.3
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4.6
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—
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(5.5
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$
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22.4
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Year Ended December 31, 2017
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$
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22.4
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10.4
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—
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(5.4
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)
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$
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27.4
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Additions
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|||||||||
Description
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Balance at
Beginning of
Period
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Charges to
Costs and
Expenses
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Charged to Other
Accounts
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Deductions
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Balance at
End of
Period
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Valuation allowance for deferred tax assets:
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Year Ended December 31, 2015
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$
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21.7
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4.6
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—
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(2.1
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)
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$
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24.2
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Year Ended December 31, 2016
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$
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24.2
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20.2
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0.8
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—
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$
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45.2
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Year Ended December 31, 2017
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$
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45.2
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9.9
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—
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—
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$
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55.1
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TEMPUR SEALY INTERNATIONAL, INC.
(Registrant)
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Date: March 1, 2018
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By:
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/S/ Scott L. Thompson
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Scott L. Thompson
Chairman, President and Chief Executive Officer
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Signature
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Capacity
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/S/ SCOTT L. THOMPSON
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Chairman, President and Chief Executive Officer (Principal Executive Officer)
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Scott L. Thompson
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/S/ BHASKAR RAO
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Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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Bhaskar Rao
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/S/ EVELYN S. DILSAVER
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Director
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Evelyn S. Dilsaver
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/S/ JOHN A. HEIL
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Director
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John A. Heil
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/S/ JON L. LUTHER
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Director
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Jon L. Luther
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/S/ USMAN S. NABI
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Director
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Usman S. Nabi
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/S/ RICHARD W. NEU
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Director
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Richard W. Neu
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/S/ ROBERT B. TRUSSELL, JR.
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Director
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Robert B. Trussell, Jr.
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Exhibit A-1 –
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Form of First Amendment to Stock Option Agreement
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Exhibit A-2 –
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Form of First Amendment to RSU Award Agreement
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Exhibit A-3 –
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Form of Second Amendment to Matching PRSU Award Agreement
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Exhibit A-4 –
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Form of First Amendment to Matching PRSU Agreement
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Exhibit A-5 –
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Form of First Amendment to Matching PRSU Agreement
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Exhibit A-6 –
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Form of First Amendment to RSU Award Agreement
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Exhibit A
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Competitive Enterprises of the Company and its Affiliates
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Ace
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AH Beard
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Auping
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Ashley Sleep
Aviya
Bedshed
Better Bed
Bohus
Botafogo
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Boyd
Bruno
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Carpe Diem
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Carpenter
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Carolina Mattress
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Casper
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Cauval Group
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Chaide & Chaide
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Classic Sleep Products
Coin
Colunex
Copel
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Comforpedic
Comfort Group
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Comfort Solutions
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COFEL group
Correct
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De Rucci
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Diamona
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Doremo Octaspring
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Dorelan
Dreams
Drommeland
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Dunlopillo
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Duxiana
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Eastborne
El Corte Ingles
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Eminflex
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Englander
Eve
Falafella
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Flex Group of Companies
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Foamex
Forty Winks
Furniture Villge
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France Bed
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Future Foam
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Harrisons
Harvey Norman Group
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Hastens
Helix Sleep
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Hilding Anders Group
Hyundai Retail Group
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Hypnos
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IBC
Jysk Group
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KayMed
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King Koil
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Kingsdown
Koala
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Lady Americana
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Land and Sky
Leesa Sleep
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Leggett & Platt
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Lo Monaco
Lotte Retail Group
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Luna
Lutz Group
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Magniflex
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Metzler
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Myers
Nature’s Sleep (GhostBed)
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Optimo
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Ortobom
Per Dormire
Purple, Inc.
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Natura
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Natures Rest
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Park Place
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Permaflex
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Pikolin Group
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Recticel Group
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Relyon
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Restonic
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Reverie
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Rosen
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Rowe
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Saatva
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Sapsa Bedding
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Select Comfort
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Serta and any direct or indirect parent company
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Silentnight
Simba
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Simmons Company/Beautyrest and any direct or indirect parent company
Sinomax
Sleep Innovations
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Sleepmaker
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Spring Air
Steinhoff
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Sterling
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Stobel
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Swiss Comfort
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Swiss Sense
Tediber
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Therapedic
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Tuft and Needle
Whisper
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Ashley
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Innovative Mattress Solutions
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Mattress Firm/Steinhoff
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Sleepy’s
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Wayfair
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Number of Shares
in Each Installment |
Initial Exercise Date
for Shares in Installment |
_________
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First Anniversary of Grant Date
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_________
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Second Anniversary of Grant Date
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_________
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Third Anniversary of Grant Date
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__________
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Fourth Anniversary of Grant Date
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Ace
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AH Beard
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Auping
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Ashley Sleep
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Boyd
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Carpe Diem
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Carpenter
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Casper
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Carolina Mattress
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Cauval Group
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Chaide & Chaide
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Classic Sleep Products
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Comforpedic
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Comfort Solutions
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COFEL group
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De Rucci
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Diamona
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Doremo Octaspring
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Dorelan
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Dunlopillo
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Duxiana
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Eastborne
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Eminflex
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Englander
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Flex Group of Companies
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Foamex
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France Bed
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Future Foam
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Harrisons
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Hastens
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Hilding Anders Group
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Hypnos
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IBC
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KayMed
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King Koil
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Kingsdown
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Lady Americana
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Land and Sky
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Leggett & Platt
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Lo Monaco
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Luna
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Magniflex
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Metzler
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Myers
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Optimo
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Ortobom
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Natura
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Natures Rest
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Park Place
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Permaflex
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Pikolin Group
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Recticel Group
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Relyon
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Restonic
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Reverie
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Rosen
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Rowe
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Saatva
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Sapsa Bedding
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Select Comfort
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Serta and any direct or indirect parent company
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Silentnight
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Simmons Company/Beautyrest and any direct or
indirect parent company
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Sleepmaker
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Spring Air
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Sterling
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Stobel
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Swiss Comfort
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Swiss Sense
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Therapedic
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Tufts and Needles
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Ashley
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Innovative Mattress Solutions
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Mattress Firm
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Sleepy’s
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Wayfair
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TEMPUR SEALY INTERNATIONAL, INC.
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By:
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Name:
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Title:
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RECIPIENT
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Recipient signature
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Name of Recipient
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Ace
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AH Beard
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Auping
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Ashley Sleep
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Boyd
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Carpe Diem
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Carpenter
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Casper
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Carolina Mattress
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Cauval Group
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Chaide & Chaide
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Classic Sleep Products
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Comforpedic
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Comfort Solutions
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COFEL group
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De Rucci
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Diamona
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Doremo Octaspring
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Dorelan
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Dunlopillo
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Duxiana
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Eastborne
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Eminflex
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Englander
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Flex Group of Companies
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Foamex
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France Bed
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Future Foam
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Harrisons
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Hastens
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Hilding Anders Group
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Hypnos
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IBC
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KayMed
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King Koil
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Kingsdown
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Lady Americana
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Land and Sky
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Leggett & Platt
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Lo Monaco
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Luna
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Magniflex
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Metzler
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Myers
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Optimo
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Ortobom
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Natura
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Natures Rest
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Park Place
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Permaflex
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Pikolin Group
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Recticel Group
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Relyon
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Restonic
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Reverie
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Rosen
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Rowe
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Saatva
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Sapsa Bedding
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Select Comfort
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Serta and any direct or indirect parent company
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Silentnight
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Simmons Company/Beautyrest and any direct or
indirect parent company
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Sleepmaker
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Spring Air
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Sterling
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Stobel
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Swiss Comfort
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Swiss Sense
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Therapedic
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Tufts and Needles
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Ashley
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Innovative Mattress Solutions
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Mattress Firm
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Sleepy’s
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Wayfair
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Entity
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State or Country of Organization
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Tempur World, LLC
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Delaware
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Tempur-Pedic Management, LLC
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Delaware
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Tempur Production USA, LLC
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Virginia
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Tempur-Pedic North America, LLC
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Delaware
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Tempur-Pedic Technologies, LLC
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Delaware
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Tempur Retail Stores, LLC
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Delaware
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Tempur Sealy Receivables, LLC
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Delaware
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Sleep Insurance, Inc.
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Vermont
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Tempur Sealy International Distribution, LLC
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Delaware
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Tempur Holdings B.V.
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Netherlands
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Dan-Foam ApS
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Denmark
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Tempur Danish Holdings ApS
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Denmark
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Tempur Danmark P/S
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Denmark
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Dan-Foam Acquisition ApS
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Denmark
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Tempur UK, Ltd.
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United Kingdom
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Tempur Japan Yugen Kaisha
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Japan
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Tempur Sealy International Limited
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United Kingdom
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Tempur Sealy France SAS
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France
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Tempur Sealy Deutschland GmbH
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Germany
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Tempur Singapore Pte Ltd.
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Singapore
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Tempur Sealy Benelux B.V.
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Netherlands
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Tempur Australia Pty. Ltd.
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Australia
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Tempur Korea Limited
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Republic of Korea
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Sealy Mattress Corporation
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Delaware
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Sealy Mattress Company
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Ohio
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Sealy Mattress Company of Puerto Rico
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Ohio
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Sealy, Inc.
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Ohio
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The Ohio Mattress Company Licensing and Components Group, Inc.
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Delaware
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Sealy Mattress Manufacturing Company, LLC.
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Delaware
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Sealy Technology LLC
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North Carolina
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Burlington Mattress Co. LLC
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Delaware
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Sealy (Switzerland) Gmbh
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Switzerland
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Mattress Holdings International B.V.
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The Netherlands
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Sealy Canada, Ltd.
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Alberta
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Gestion Centurion Inc.
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Quebec
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Tempur Sealy Mexico S. de R.L. de C.V.
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Mexico
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Sealy Servicios de Mexico S.A. de C.V.
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Mexico
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Sealy Colchones de Mexico S.A. de C.V.
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Mexico
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(1)
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Registration Statement (Form S-8 No. 333-160821) pertaining to the Tempur Sealy International, Inc. Amended and Restated 2003 Equity Incentive Plan,
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(2)
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Registration Statement (Form S-8 No. 333-154966) pertaining to the Tempur Sealy International, Inc. Amended and Restated 2003 Equity Incentive Plan,
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(3)
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Registration Statement (Form S-8 No. 333-111545) pertaining to the Tempur Sealy International, Inc. 2003 Equity Incentive Plan, the 2003 Employee Stock Purchase Plan, and the 2002 Stock Option Plan,
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(4)
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Registration Statement (Form S-8 No. 333-192220) pertaining to the Tempur Sealy International, Inc. 2013 Equity Incentive Plan,
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(5)
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Registration Statement (Form S-8 No. 333-217901) pertaining to the Tempur Sealy International, Inc. Amended and Restated 2013 Equity Incentive Plan,
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(6)
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Registration Statement (Form S-4 No. 333-209511) of Tempur Sealy International, Inc., and
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(7)
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Registration Statement (Form S-4 No. 333-212943) of Tempur Sealy International, Inc.;
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Date: March 1, 2018
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By:
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/S/ SCOTT L. THOMPSON
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Scott L. Thompson
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President and Chief Executive Officer
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Date: March 1, 2018
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By:
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/S/ BHASKAR RAO
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Bhaskar Rao
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Executive Vice President and Chief Financial Officer
|
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Date: March 1, 2018
|
|
/S/ SCOTT L. THOMPSON
|
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Scott L. Thompson
President and Chief Executive Officer
|
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Date: March 1, 2018
|
|
/S/ BHASKAR RAO
|
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Bhaskar Rao
Executive Vice President and Chief Financial Officer
|