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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Trading Symbol(s)
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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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TPX
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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. Tempur-Pedic was awarded #1 in Customer Satisfaction for the retail mattress segment in the J.D. Power 2019 Mattress Satisfaction Report. In addition to earning the highest score for overall customer satisfaction, Tempur-Pedic was ranked highest for support, durability, comfort, value, warranty, and contact with customer service.
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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, we united all of our Sealy products under one masterbrand, which features the Posturepedic Technology™ in the Sealy Performance™, Sealy Posturepedic Plus and Sealy Premium™ collections.
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•
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Cocoon by SealyTM - 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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Comfort Revolution® - Comfort Revolution originated in 1986 in West Long Beach, New Jersey. The brand develops, produces, markets and distributes foam and gel bedding products, which we sell through both our Wholesale and Direct channels.
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•
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Tempur-Pedic® retail stores - Tempur-Pedic® retail stores are designed for the approximately 20% of U.S. consumers, based on our research, that prefer to purchase directly from the manufacturer, and for those seeking a more personalized and educational sales experience. These retail boutiques are strategically located in high traffic, premium retail centers with customer demographics that closely align to the Tempur-Pedic customer profile. As of December 31, 2019 we had 56 retail stores. We expect to open approximately 20 stores in 2020.
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•
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Sleep Outfitters® - Sleep Outfitters is a regional bedding retailer with 97 stores across five states in the U.S. Sleep Outfitters is a specialty mattress retailer that serves consumers across all price points with its extensive selection of Tempur-Pedic®, Sealy® and Stearns & Foster® products.
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•
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Sleep Solutions OutletTM - Sleep Solutions Outlet stores serve as a channel of high quality comfort returns, as well as discontinued or factory close-out mattresses and bases. There are a limited number of stores across the U.S. that sell these products, which reduces our disposal costs, and helps reduce the volume of products disposed of via landfill, thereby favorably impacting the environment.
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•
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SOVA - SOVA is a highly respected and well established premium bedding chain in Sweden. Our stores are connected to the urban areas of Stockholm, Gothenburg and Malmoe. The assortment primarily focuses on premium to super premium brands and well trained sales staff targeting to sell quality beds with a very high average selling price.
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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 current and 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 to build product and brand awareness, driving traffic to our distribution channels and increasing sales;
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•
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our ability to continue to expand into new distribution channels and optimize 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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our ability to manage growth and limit cannibalization associated with new or expanded supply agreements;
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•
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the level of consumer acceptance of our products at optimal price points;
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•
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our ability to successfully mitigate the impact of headwinds facing our business, including increased commodity prices and the influx of low-end, imported beds that compete with certain of our products;
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•
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our ability to successfully integrate potential acquisition opportunities; 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 the obligations related 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 related impacts 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, including our new 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 and navigate any financial difficulties those customers may experience from time to time;
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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;
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•
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our ability to maintain efficient, timely and cost-effective delivery of our products; and
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•
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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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terrorist attacks in the U.S. or against U.S. targets, actual or threated acts of war (declared or undeclared) or the escalation of current hostilities involving the U.S. or its allies;
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•
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natural disasters or pandemics disrupting our businesses or suppliers;
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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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the use or non-use of our share repurchase program;
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•
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bankruptcies of any of our nationally or regionally-significant 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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•
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regulatory developments in the U.S. and abroad;
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•
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changes in international trade policy and economic and political factors in the U.S. and abroad;
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•
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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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•
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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 and certain disclosures 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
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Manufacturing
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Comfort Revolution, LLC
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Belmont, MS
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432,000
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Leased
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Manufacturing
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Sealy Mattress Manufacturing Co., LLC
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City of Industry, California
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430,000
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Leased
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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
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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
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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
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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
|
|
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
|
|
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
|
|
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
|
|
Manufacturing
|
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 Canada, Ltd
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Quebec, Canada
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88,000
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Owned
|
|
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
|
|
Manufacturing
|
|
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International
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|
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Dan-Foam ApS
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Aarup, Denmark
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523,000
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|
Owned (a)
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|
Manufacturing
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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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(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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Period
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|
(a) Total number of shares purchased
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|
(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, 2019 - October 31, 2019
|
|
218,360
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(1)
|
$78.61
|
|
217,065
|
|
$157.6
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November 1, 2019 - November 30, 2019
|
|
206,308
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(1)
|
$85.69
|
|
205,337
|
|
$140.0
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December 1, 2019 - December 31, 2019
|
|
177,464
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(1)
|
$86.44
|
|
177,464
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|
$124.6
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Total
|
|
602,132
|
|
|
|
599,866
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|
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(1)
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Includes shares withheld upon the vesting of certain equity awards to satisfy tax withholding obligations. The shares withheld were valued at the closing price of the common stock on the New York Stock Exchange on the vesting date or prior business day.
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Brunswick Corporation (BC)
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HNI Corporation (HNI)
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Sleep Number Corporation (SNBR)
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Carter's, Inc. (CRI)
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La-Z-Boy Incorporated (LZB)
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Steelcase Inc. (SCS)
|
Columbia Sportswear Company (COLM)
|
Leggett & Platt, Incorporated (LEG)
|
Tupperware Brands Corporation (TUP)
|
Deckers Outdoor Corporation (DECK)
|
lululemon athletica inc. (LULU)
|
Under Armour, Inc. (UA)
|
Gildan Activewear Inc. (GIL)
|
Herman Miller, Inc. (MLHR)
|
Williams-Sonoma, Inc. (WSM)
|
Hanesbrands Inc. (HBI)
|
Polaris Industries Inc. (PII)
|
Wolverine World Wide, Inc. (WWW)
|
Hasbro, Inc. (HAS)
|
RH (RH)
|
|
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
|
12/31/2019
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||||||||||||
Tempur Sealy International, Inc.
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$
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100.00
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|
|
$
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128.32
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|
|
$
|
124.35
|
|
|
$
|
114.17
|
|
|
$
|
75.40
|
|
|
$
|
158.55
|
|
S&P 500
|
|
100.00
|
|
|
101.38
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|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
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||||||
2018 Peer Group
|
|
100.00
|
|
|
91.04
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|
|
93.08
|
|
|
108.42
|
|
|
103.73
|
|
|
144.04
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||||||
2019 Peer Group
|
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100.00
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|
|
90.71
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90.94
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|
105.21
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|
94.63
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|
123.06
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(in millions, except per common share amounts)
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||||||||||
Statement of Income Data:
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2019
|
|
2018
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2017
|
|
2016
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|
2015
|
||||||||||
Net sales
|
$
|
3,106.0
|
|
|
$
|
2,702.9
|
|
|
$
|
2,700.6
|
|
|
$
|
3,079.7
|
|
|
$
|
3,089.3
|
|
Cost of sales
|
1,763.8
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|
|
1,582.2
|
|
|
1,579.6
|
|
|
1,790.2
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|
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1,864.4
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|||||
Gross profit
|
1,342.2
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|
|
1,120.7
|
|
|
1,121.0
|
|
|
1,289.5
|
|
|
1,224.9
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|
|||||
Operating expense, net (1)
|
995.5
|
|
|
864.4
|
|
|
825.5
|
|
|
876.1
|
|
|
918.3
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|
|||||
Operating income
|
346.7
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|
|
256.3
|
|
|
295.5
|
|
|
413.4
|
|
|
306.6
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|||||
Interest expense, net
|
85.7
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|
|
92.3
|
|
|
87.3
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|
|
82.9
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|
|
94.0
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|
|||||
Loss on extinguishment of debt
|
—
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|
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—
|
|
|
—
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|
|
47.2
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|
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—
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|||||
Other (income) expense, net
|
(4.5
|
)
|
|
(1.0
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)
|
|
(7.2
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)
|
|
(0.3
|
)
|
|
9.7
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|
|||||
Income before income taxes from continuing operations
|
265.5
|
|
|
165.0
|
|
|
215.4
|
|
|
283.6
|
|
|
202.9
|
|
|||||
Income tax provision (2)
|
(74.7
|
)
|
|
(49.6
|
)
|
|
(43.8
|
)
|
|
(86.3
|
)
|
|
(125.2
|
)
|
|||||
Income from continuing operations
|
190.8
|
|
|
115.4
|
|
|
171.6
|
|
|
197.3
|
|
|
77.7
|
|
|||||
Loss from discontinued operations, net of tax
|
(1.4
|
)
|
|
(17.8
|
)
|
|
(30.9
|
)
|
|
(12.3
|
)
|
|
(12.0
|
)
|
|||||
Net income before non-controlling interests
|
189.4
|
|
|
97.6
|
|
|
140.7
|
|
|
185.0
|
|
|
65.7
|
|
|||||
Less: net (loss) income attributable to non-controlling interests
|
(0.1
|
)
|
|
(2.9
|
)
|
|
(10.7
|
)
|
|
(5.6
|
)
|
|
1.2
|
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
189.5
|
|
|
$
|
100.5
|
|
|
$
|
151.4
|
|
|
$
|
190.6
|
|
|
$
|
64.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
64.9
|
|
|
$
|
45.8
|
|
|
$
|
41.1
|
|
|
$
|
64.6
|
|
|
$
|
153.0
|
|
Total assets
|
3,061.8
|
|
|
2,715.4
|
|
|
2,694.0
|
|
|
2,698.8
|
|
|
2,652.0
|
|
|||||
Total debt, net
|
1,468.0
|
|
|
1,576.5
|
|
|
1,644.6
|
|
|
1,779.0
|
|
|
1,420.8
|
|
|||||
Finance leases and other debt
|
72.0
|
|
|
69.7
|
|
|
108.5
|
|
|
109.1
|
|
|
34.0
|
|
|||||
Redeemable non-controlling interest
|
—
|
|
|
—
|
|
|
2.2
|
|
|
7.6
|
|
|
12.4
|
|
|||||
Total stockholders' equity (deficit)
|
360.4
|
|
|
217.5
|
|
|
112.5
|
|
|
(41.9
|
)
|
|
267.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial and Operating Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends per common share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Depreciation and amortization (3)
|
116.5
|
|
|
111.9
|
|
|
94.0
|
|
|
88.6
|
|
|
92.6
|
|
|||||
Net cash provided by operating activities from continuing operations
|
314.8
|
|
|
207.5
|
|
|
256.5
|
|
|
168.1
|
|
|
231.6
|
|
|||||
Net cash used in investing activities from continuing operations
|
(90.2
|
)
|
|
(71.2
|
)
|
|
(65.7
|
)
|
|
(61.9
|
)
|
|
(58.9
|
)
|
|||||
Net cash used in financing activities from continuing operations
|
(203.2
|
)
|
|
(107.0
|
)
|
|
(175.2
|
)
|
|
(185.1
|
)
|
|
(90.7
|
)
|
|||||
Basic earnings per common share for continuing operations
|
3.50
|
|
|
2.17
|
|
|
3.37
|
|
|
3.44
|
|
|
1.24
|
|
|||||
Diluted earnings per common share for continuing operations
|
3.45
|
|
|
2.15
|
|
|
3.33
|
|
|
3.39
|
|
|
1.22
|
|
|||||
Capital expenditures
|
88.2
|
|
|
73.6
|
|
|
66.6
|
|
|
61.9
|
|
|
65.1
|
|
(1)
|
Operating expense, net includes $29.8 million and $21.2 million of customer-related charges in connection with certain customer bankruptcies in 2019 and 2018, respectively, and $14.4 million associated with the termination of our relationship with Mattress Firm in 2017.
|
(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 15, "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 $26.8 million, $24.8 million, $13.3 million, $16.2 million, $22.5 million in non-cash, stock-based compensation expense related to restricted stock units, performance restricted stock units, deferred stock units and stock options in 2019, 2018, 2017, 2016, and 2015, respectively.
|
•
|
an overview of our business and strategy;
|
•
|
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.
|
•
|
Completed the launch of the all-new line of Tempur-Pedic products
|
•
|
Announced that we were expanding our distribution with new supply agreements
|
•
|
Executed the largest expansion of new stores in our history.
|
•
|
Total net sales increased 14.9% to $3,106.0 million from $2,702.9 million in 2018.
|
•
|
Gross margin was 43.2% in 2019 as compared to 41.5% in 2018. Adjusted gross margin, which is a non-GAAP financial measure, was 41.9% in 2018. There were no adjustments to gross margin in 2019.
|
•
|
Operating income was $346.7 million, or 11.2% of net sales, as compared to $256.3 million, or 9.5% of net sales, in 2018. Adjusted operating income, which is a non-GAAP financial measure was $392.2 million, or 12.6% of net sales, as compared to $307.6 million, or 11.4% of net sales, in 2018.
|
•
|
Net income was $189.5 million as compared to $100.5 million in 2018. Adjusted net income, which is a non-GAAP financial measure, was $221.9 million as compared to $163.0 million in 2018.
|
•
|
EBITDA, which is a non-GAAP financial measure, increased 31.5% to $468.4 million as compared to $356.1 million in 2018. Adjusted EBITDA, which is a non-GAAP financial measure, increased 19.6% to $508.1 million as compared to $424.7 million in 2018.
|
•
|
EPS was $3.42 as compared to $1.82 in 2018. Adjusted EPS, which is a non-GAAP financial measure, was $4.01 as compared to $2.96 in 2018.
|
(in millions, except percentages and
|
Year Ended December 31,
|
||||||||||||
per common share amounts)
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
3,106.0
|
|
|
100.0
|
%
|
|
$
|
2,702.9
|
|
|
100.0
|
%
|
Cost of sales
|
1,763.8
|
|
|
56.8
|
|
|
1,582.2
|
|
|
58.5
|
|
||
Gross profit
|
1,342.2
|
|
|
43.2
|
|
|
1,120.7
|
|
|
41.5
|
|
||
Selling and marketing expenses
|
666.3
|
|
|
21.5
|
|
|
587.8
|
|
|
21.7
|
|
||
General, administrative and other expenses
|
315.3
|
|
|
10.2
|
|
|
273.0
|
|
|
10.1
|
|
||
Customer-related charges
|
29.8
|
|
|
1.0
|
|
|
21.2
|
|
|
0.8
|
|
||
Equity income in earnings of unconsolidated affiliates
|
(15.9
|
)
|
|
(0.5
|
)
|
|
(17.6
|
)
|
|
(0.7
|
)
|
||
Operating income
|
346.7
|
|
|
11.2
|
|
|
256.3
|
|
|
9.5
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest expense, net
|
85.7
|
|
|
2.8
|
|
|
92.3
|
|
|
3.4
|
|
||
Other income, net
|
(4.5
|
)
|
|
(0.1
|
)
|
|
(1.0
|
)
|
|
—
|
|
||
Total other expense, net
|
81.2
|
|
|
2.6
|
|
|
91.3
|
|
|
3.4
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
Income from continuing operations before income taxes
|
265.5
|
|
|
8.5
|
|
|
165.0
|
|
|
6.1
|
|
||
Income tax provision
|
(74.7
|
)
|
|
(2.4
|
)
|
|
(49.6
|
)
|
|
(1.8
|
)
|
||
Income from continuing operations
|
190.8
|
|
|
6.1
|
|
|
115.4
|
|
|
4.3
|
|
||
Loss from discontinued operations, net of tax
|
(1.4
|
)
|
|
—
|
|
|
(17.8
|
)
|
|
(0.6
|
)
|
||
Net income before non-controlling interests
|
189.4
|
|
|
6.1
|
|
|
97.6
|
|
|
3.6
|
|
||
Less: Net loss attributable to non-controlling interests
|
(0.1
|
)
|
|
—
|
|
|
(2.9
|
)
|
|
(0.1
|
)
|
||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
189.5
|
|
|
6.1
|
%
|
|
$
|
100.5
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share for continuing operations
|
$
|
3.50
|
|
|
|
|
$
|
2.17
|
|
|
|
||
Loss per share for discontinued operations
|
(0.02
|
)
|
|
|
|
(0.32
|
)
|
|
|
||||
Earnings per share
|
$
|
3.48
|
|
|
|
|
$
|
1.85
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
3.45
|
|
|
|
|
$
|
2.15
|
|
|
|
||
Loss per share for discontinued operations
|
(0.03
|
)
|
|
|
|
(0.33
|
)
|
|
|
||||
Earnings per share
|
$
|
3.42
|
|
|
|
|
$
|
1.82
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||
Basic
|
54.5
|
|
|
|
|
54.4
|
|
|
|
||||
Diluted
|
55.4
|
|
|
|
|
55.1
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
Consolidated
|
North America
|
International
|
||||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Net sales by channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholesale
|
$
|
2,717.1
|
|
|
$
|
2,452.1
|
|
|
$
|
2,273.5
|
|
|
$
|
1,989.1
|
|
|
$
|
443.6
|
|
|
$
|
463.0
|
|
Direct
|
388.9
|
|
|
250.8
|
|
|
259.8
|
|
|
147.1
|
|
|
129.1
|
|
|
103.7
|
|
||||||
Total net sales
|
$
|
3,106.0
|
|
|
$
|
2,702.9
|
|
|
$
|
2,533.3
|
|
|
$
|
2,136.2
|
|
|
$
|
572.7
|
|
|
$
|
566.7
|
|
•
|
North America net sales increased $397.1 million, or 18.6%. Net sales in the Wholesale channel increased $284.4 million, or 14.3%, primarily driven by new Tempur product introductions and the expansion of our retail distribution network. Net sales in our Direct channel increased $112.7 million, or 76.6%, primarily driven by growth from company-owned stores, including the Sleep Outfitters Acquisition, and our e-commerce business. Excluding Sleep Outfitters, the Wholesale channel increased approximately 17% and the Direct channel increased approximately 35%. On a constant currency basis, North America net sales increased 18.8%.
|
•
|
International net sales increased $6.0 million, or 1.1%. On a constant currency basis, our International net sales increased 5.3%, primarily driven by Direct channel growth. Net sales in the Wholesale channel decreased 0.1% on a constant currency basis, primarily driven by country specific conditions. Net sales in the Direct channel increased 29.5% on a constant currency basis, primarily driven by growth from company-owned stores.
|
|
Year Ended December 31,
|
|
|
|||||||||||||
|
2019
|
|
2018
|
|
Margin Change
|
|||||||||||
(in millions, except percentages)
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
2019 vs 2018
|
|||||||
North America
|
$
|
1,035.2
|
|
|
40.9
|
%
|
|
$
|
823.4
|
|
|
38.5
|
%
|
|
2.4
|
%
|
International
|
307.0
|
|
|
53.6
|
%
|
|
297.3
|
|
|
52.5
|
%
|
|
1.1
|
%
|
||
Consolidated
|
$
|
1,342.2
|
|
|
43.2
|
%
|
|
$
|
1,120.7
|
|
|
41.5
|
%
|
|
1.7
|
%
|
•
|
North America gross margin improved 240 basis points. The improvement in gross margin was primarily driven by favorable pricing of 130 basis points, favorable product and brand mix of 110 basis points and lower commodity costs. Additionally, in 2018, we also recorded $6.1 million of restructuring charges related to our acquisition of the remaining interest in a joint venture and $5.6 million of supply chain transition costs to consolidate certain manufacturing and distribution facilities, resulting in a favorable impact of 50 basis points in 2019. These improvements were partially offset by increased floor model expenses.
|
•
|
International gross margin improved 110 basis points. The improvement in gross margin was primarily driven by lower commodity costs and channel mix.
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Advertising
|
$
|
280.5
|
|
|
$
|
259.3
|
|
|
$
|
244.1
|
|
|
$
|
220.5
|
|
|
$
|
36.4
|
|
|
$
|
38.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other selling and marketing
|
385.8
|
|
|
328.5
|
|
|
249.3
|
|
|
194.4
|
|
|
125.3
|
|
|
125.7
|
|
|
11.2
|
|
|
8.4
|
|
||||||||
General, administrative and other
|
315.3
|
|
|
273.0
|
|
|
167.2
|
|
|
137.6
|
|
|
45.8
|
|
|
42.9
|
|
|
102.3
|
|
|
92.5
|
|
||||||||
Customer-related charges
|
29.8
|
|
|
21.2
|
|
|
29.8
|
|
|
20.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||||
Total operating expense
|
$
|
1,011.4
|
|
|
$
|
882.0
|
|
|
$
|
690.4
|
|
|
$
|
573.4
|
|
|
$
|
207.5
|
|
|
$
|
207.4
|
|
|
$
|
113.5
|
|
|
$
|
101.2
|
|
•
|
North America operating expenses increased $117.0 million, or 20.4%, and increased 50 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by advertising and other selling and marketing investments, variable compensation expense and incremental operating expense associated with a higher number of company-owned stores. In the fourth quarter of 2019, we recorded $29.8 million of customer-related charges in connection with the bankruptcy of Mattress PAL and resulting significant liquidity issues of Mattress PAL's affiliates to fully reserve trade receivables and other assets associated with this account. Additionally, in the fourth quarter of 2019, we recorded an $8.9 million charge related to the donation of common stock at fair market value to certain public charities. In the fourth quarter of 2018, prior to the Sleep Outfitters Acquisition, we recorded $21.2 million of customer-related charges in connection with the bankruptcy of iMS to fully reserve trade receivables and other assets associated with this account. Additionally, in 2018, we recorded $4.1 million of restructuring charges related to our acquisition of the remaining interest in a joint venture and $7.3 million of supply chain transition costs which represent charges incurred to consolidate certain manufacturing and distribution facilities.
|
•
|
International operating expenses increased $0.1 million and decreased 40 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by an increase in variable compensation expense, offset by $8.2 million of costs associated with our International simplification efforts, which were not repeated in 2019.
|
•
|
Corporate operating expenses increased $12.3 million, or 12.2%. The increase in operating expenses was primarily driven by increased variable compensation expense.
|
|
Year Ended December 31,
|
|
||||||||||||||
|
2019
|
|
2018
|
|
Margin Change
|
|||||||||||
(in millions, except percentages)
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
2019 vs 2018
|
|||||||
North America
|
$
|
344.8
|
|
|
13.6
|
%
|
|
$
|
250.0
|
|
|
11.7
|
%
|
|
1.9
|
%
|
International
|
115.4
|
|
|
20.2
|
%
|
|
107.5
|
|
|
19.0
|
%
|
|
1.2
|
%
|
||
|
460.2
|
|
|
|
|
357.5
|
|
|
|
|
|
|||||
Corporate expenses
|
(113.5
|
)
|
|
|
|
(101.2
|
)
|
|
|
|
|
|||||
Total operating income
|
$
|
346.7
|
|
|
11.2
|
%
|
|
$
|
256.3
|
|
|
9.5
|
%
|
|
1.7
|
%
|
•
|
North America operating income increased $94.8 million and operating margin improved 190 basis points, primarily driven by the improvement in gross margin of 240 basis points. In 2018, we recorded $10.2 million of restructuring charges related to our acquisition of the remaining interest in a joint venture, as well as incremental bad debt expense related to the bankruptcy of a department store retailer, which were not repeated in 2019. These improvements were offset by increased advertising and other selling and marketing investments and variable compensation expense. In the fourth quarter of 2019, we recorded $29.8 million of customer-related charges in connection with the bankruptcy of Mattress PAL and resulting significant liquidity issues of Mattress PAL's affiliates to fully reserve trade receivables and other assets associated with this account. In the fourth quarter of 2018, prior to the Sleep Outfitters Acquisition, we recorded $21.2 million of customer-related charges in connection with the bankruptcy of iMS to fully reserve trade receivables and other assets associated with this account. Additionally, we recorded an $8.9 million charge related to the donation of common stock at fair market value to certain public charities.
|
|
|
•
|
International operating income increased $7.9 million and operating margin improved 120 basis points. The improvement in operating margin was driven by the improvement in gross margin of 110 basis points. In 2018, we recorded $8.5 million of costs associated with our International simplification efforts, including headcount reduction, professional fees and store closures, which were not repeated in 2019. These improvements were offset by an increase in variable compensation expense.
|
•
|
Corporate operating expenses increased $12.3 million, which negatively impacted our consolidated operating margin by 40 basis points. The increase in operating expenses was primarily driven by an increase in variable compensation expense.
|
|
Year Ended December 31,
|
|
Percent change
|
|||||||
(in millions, except percentages)
|
2019
|
|
2018
|
|
2019 vs 2018
|
|||||
Interest expense, net
|
$
|
85.7
|
|
|
$
|
92.3
|
|
|
(7.2
|
)%
|
|
Year Ended December 31,
|
|
Percent change
|
|||||||
(in millions, except percentages)
|
2019
|
|
2018
|
|
2019 vs 2018
|
|||||
Income tax
|
$
|
74.7
|
|
|
$
|
49.6
|
|
|
50.6
|
%
|
Effective tax rate
|
28.1
|
%
|
|
30.1
|
%
|
|
(2.0
|
)%
|
|
|
Year Ended December 31,
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Net cash provided by (used in) continuing operations:
|
|
|
|
|
||||
Operating activities
|
|
$
|
314.8
|
|
|
$
|
207.5
|
|
Investing activities
|
|
(90.2
|
)
|
|
(71.2
|
)
|
||
Financing activities
|
|
(203.2
|
)
|
|
(107.0
|
)
|
|
|
Year Ended December 31,
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Net cash (used in) provided by discontinued operations:
|
|
|
|
|
||||
Operating activities
|
|
$
|
(2.0
|
)
|
|
$
|
(24.4
|
)
|
Investing activities
|
|
—
|
|
|
2.1
|
|
||
Financing activities
|
|
—
|
|
|
—
|
|
(in millions)
|
|
Payment Due By Period
|
||||||||||||||||||||||||||
Contractual Obligations
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
After
2024
|
|
Total
Obligations
|
||||||||||||||
Debt (1)
|
|
$
|
29.2
|
|
|
$
|
21.3
|
|
|
$
|
21.3
|
|
|
$
|
481.8
|
|
|
$
|
329.3
|
|
|
$
|
600.0
|
|
|
$
|
1,482.9
|
|
Letters of credit
|
|
23.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23.6
|
|
|||||||
Interest payments (2)
|
|
74.0
|
|
|
72.8
|
|
|
70.2
|
|
|
64.5
|
|
|
42.6
|
|
|
53.0
|
|
|
377.1
|
|
|||||||
Operating leases
|
|
62.1
|
|
|
54.5
|
|
|
46.6
|
|
|
36.2
|
|
|
29.0
|
|
|
74.5
|
|
|
302.9
|
|
|||||||
Finance lease obligations(3)
|
|
8.5
|
|
|
8.7
|
|
|
7.1
|
|
|
5.5
|
|
|
4.2
|
|
|
30.1
|
|
|
64.1
|
|
|||||||
Pension obligations
|
|
1.1
|
|
|
1.1
|
|
|
1.2
|
|
|
1.2
|
|
|
1.3
|
|
|
31.0
|
|
|
36.9
|
|
|||||||
Total (4)
|
|
$
|
198.5
|
|
|
$
|
158.4
|
|
|
$
|
146.4
|
|
|
$
|
589.2
|
|
|
$
|
406.4
|
|
|
$
|
788.6
|
|
|
$
|
2,287.5
|
|
(1)
|
Debt excludes finance lease obligations and deferred financing costs.
|
(2)
|
Interest payments represent obligations under our debt outstanding as of December 31, 2019, applying December 31, 2019 interest rates and assuming scheduled payments are paid as contractually required through maturity.
|
(3)
|
The payments due for finance lease obligations excludes $20.3 million in future payments for interest.
|
(4)
|
Uncertain tax positions are excluded from this table given the timing of payments cannot be reasonably estimated.
|
|
Year Ended December 31,
|
||||||||||||
(in millions, except percentages)
|
2019
|
|
2018
|
|
% Change
|
|
% Change Constant Currency (1)
|
||||||
Net sales
|
$
|
3,106.0
|
|
|
$
|
2,702.9
|
|
|
14.9
|
%
|
|
16.0
|
%
|
Net income
|
$
|
189.5
|
|
|
$
|
100.5
|
|
|
88.6
|
%
|
|
92.1
|
%
|
EBITDA (1)
|
$
|
468.4
|
|
|
$
|
356.1
|
|
|
31.5
|
%
|
|
33.2
|
%
|
Adjusted EBITDA (1)
|
$
|
508.1
|
|
|
$
|
424.7
|
|
|
19.6
|
%
|
|
21.0
|
%
|
EPS
|
$
|
3.42
|
|
|
$
|
1.82
|
|
|
87.9
|
%
|
|
91.2
|
%
|
Adjusted EPS (1)
|
$
|
4.01
|
|
|
$
|
2.96
|
|
|
35.5
|
%
|
|
37.5
|
%
|
(1)
|
|
Non-GAAP financial measure. Please refer to the reconciliations in the following tables.
|
|
Year Ended December 31,
|
||||||
(in millions, except per common share amounts)
|
2019
|
|
2018
|
||||
Net income
|
$
|
189.5
|
|
|
$
|
100.5
|
|
Loss from discontinued operations, net of tax (1)
|
1.4
|
|
|
17.8
|
|
||
Customer-related charges (2)
|
29.8
|
|
|
21.2
|
|
||
Charitable stock donation (3)
|
8.9
|
|
|
—
|
|
||
Acquisition-related costs and other (4)
|
6.1
|
|
|
—
|
|
||
Credit facility amendment (5)
|
0.7
|
|
|
—
|
|
||
Other income (6)
|
(7.2
|
)
|
|
—
|
|
||
Restructuring costs (7)
|
—
|
|
|
24.9
|
|
||
Supply chain transition costs (8)
|
—
|
|
|
7.3
|
|
||
Tax adjustments (9)
|
(7.3
|
)
|
|
(8.7
|
)
|
||
Adjusted net income
|
$
|
221.9
|
|
|
$
|
163.0
|
|
|
|
|
|
||||
Adjusted earnings per share, diluted
|
$
|
4.01
|
|
|
$
|
2.96
|
|
|
|
|
|
||||
Diluted shares outstanding
|
55.4
|
|
|
55.1
|
|
(1)
|
Certain subsidiaries in the International business segment are accounted for as discontinued operations and have been designated as unrestricted subsidiaries in the 2019 Credit Agreement. Therefore, these subsidiaries are excluded from our adjusted financial measures for covenant compliance purposes.
|
(2)
|
In the fourth quarter of 2019, we recorded $29.8 million of customer-related charges in connection with the bankruptcy of Mattress PAL and resulting significant liquidity issues of Mattress PAL's affiliates to fully reserve trade receivables and other assets associated with this account. In the fourth quarter of 2018, we recorded $21.2 million of customer-related charges in connection with the bankruptcy of iMS to fully reserve trade receivables and other assets associated with this account.
|
(3)
|
In the fourth quarter of 2019, we recorded an $8.9 million charge related to the donation of common stock at fair market value to certain public charities.
|
(4)
|
In the first half of 2019, we recorded $6.1 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in connection with the acquisition of substantially all of the net assets of iMS by an affiliate of ours.
|
(5)
|
In the fourth quarter of 2019, we incurred $0.7 million of professional fees in connection with the amendment of the senior secured credit facility.
|
(6)
|
In the first quarter of 2019, we recorded $7.2 million of other income related to the sale of our interest in a subsidiary of the Asia-Pacific joint venture.
|
(7)
|
In 2018, we recorded $24.9 million of restructuring costs, which included $1.3 million of other expense, net. These costs included $11.5 million of charges related to the operational alignment of a joint venture that was wholly owned in the North America business segment, which included $6.1 million in cost of sales and $1.3 million of other expense, net. Restructuring costs also included $8.5 million of expenses in the International business segment related to International simplification efforts, which included $0.3 million in cost of sales. Corporate recorded $4.9 million of professional fees related to restructuring activities.
|
(8)
|
In 2018, we recorded $7.3 million of supply chain transition costs which represent charges incurred to consolidate certain manufacturing and distribution facilities, including $5.6 million in cost of sales and $0.8 million of other expense.
|
(9)
|
Adjusted income tax provision represents the tax effects associated with the aforementioned items and other discrete income tax events.
|
|
FULL YEAR 2019
|
|||||||||||||||||||||||
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
|
|
Margin
|
|
International
|
|
Margin
|
|
Corporate
|
|||||||||||
Net sales
|
$
|
3,106.0
|
|
|
|
|
$
|
2,533.3
|
|
|
|
|
$
|
572.7
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
$
|
1,342.2
|
|
|
43.2
|
%
|
|
$
|
1,035.2
|
|
|
40.9
|
%
|
|
$
|
307.0
|
|
|
53.6
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (expense)
|
$
|
346.7
|
|
|
11.2
|
%
|
|
$
|
344.8
|
|
|
13.6
|
%
|
|
$
|
115.4
|
|
|
20.2
|
%
|
|
$
|
(113.5
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Customer-related charges (1)
|
29.8
|
|
|
|
|
29.8
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Charitable stock donation (2)
|
8.9
|
|
|
|
|
8.9
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Acquisition-related costs and other (3)
|
6.1
|
|
|
|
|
1.7
|
|
|
|
|
0.3
|
|
|
|
|
4.1
|
|
|||||||
Credit facility amendment (4)
|
0.7
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.7
|
|
|||||||
Total Adjustments
|
45.5
|
|
|
|
|
40.4
|
|
|
|
|
0.3
|
|
|
|
|
4.8
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted operating income (expense)
|
$
|
392.2
|
|
|
12.6
|
%
|
|
$
|
385.2
|
|
|
15.2
|
%
|
|
$
|
115.7
|
|
|
20.2
|
%
|
|
$
|
(108.7
|
)
|
(1)
|
In the fourth quarter of 2019, we recorded $29.8 million of customer-related charges in connection with the bankruptcy of Mattress PAL and resulting significant liquidity issues of Mattress PAL's affiliates to fully reserve trade receivables and other assets associated with this account.
|
(2)
|
In the fourth quarter of 2019, we recorded an $8.9 million charge related to the donation of common stock at fair market value to certain public charities.
|
(3)
|
In the first half of 2019, we recorded $6.1 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in connection with the acquisition of substantially all of the net assets of iMS by an affiliate of ours.
|
(4)
|
In the fourth quarter of 2019, we incurred $0.7 million of professional fees in connection with the amendment of the senior secured credit facility.
|
|
FULL YEAR 2018
|
|||||||||||||||||||||||
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
|
|
Margin
|
|
International
|
|
Margin
|
|
Corporate
|
|||||||||||
Net sales
|
$
|
2,702.9
|
|
|
|
|
$
|
2,136.2
|
|
|
|
|
$
|
566.7
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
$
|
1,120.7
|
|
|
41.5
|
%
|
|
$
|
823.4
|
|
|
38.5
|
%
|
|
$
|
297.3
|
|
|
52.5
|
%
|
|
$
|
—
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restructuring costs (1)
|
6.4
|
|
|
|
|
6.1
|
|
|
|
|
0.3
|
|
|
|
|
—
|
|
|||||||
Supply chain transition costs (2)
|
5.6
|
|
|
|
|
5.6
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Total adjustments
|
12.0
|
|
|
|
|
11.7
|
|
|
|
|
0.3
|
|
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted gross profit
|
$
|
1,132.7
|
|
|
41.9
|
%
|
|
$
|
835.1
|
|
|
39.1
|
%
|
|
$
|
297.6
|
|
|
52.5
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (expense)
|
$
|
256.3
|
|
|
9.5
|
%
|
|
$
|
250.0
|
|
|
11.7
|
%
|
|
$
|
107.5
|
|
|
19.0
|
%
|
|
$
|
(101.2
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restructuring costs (1)
|
23.6
|
|
|
|
|
10.2
|
|
|
|
|
8.5
|
|
|
|
|
4.9
|
|
|||||||
Customer-related charges (3)
|
21.2
|
|
|
|
|
20.9
|
|
|
|
|
—
|
|
|
|
|
0.3
|
|
|||||||
Supply chain transition costs (2)
|
6.5
|
|
|
|
|
6.5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Total adjustments
|
51.3
|
|
|
|
|
37.6
|
|
|
|
|
8.5
|
|
|
|
|
5.2
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted operating income (expense)
|
$
|
307.6
|
|
|
11.4
|
%
|
|
$
|
287.6
|
|
|
13.5
|
%
|
|
$
|
116.0
|
|
|
20.5
|
%
|
|
$
|
(96.0
|
)
|
(1)
|
In 2018, we recorded $24.9 million of restructuring costs, which included $1.3 million of other expense, net. These costs included $11.5 million of charges related to the operational alignment of a joint venture that was wholly owned in the North America business segment, which included $6.1 million in cost of sales and $1.3 million of other expense, net. Restructuring costs also included $8.5 million of expenses in the International business segment related to International simplification efforts, which included $0.3 million in cost of sales. Corporate recorded $4.9 million of professional fees related to restructuring activities.
|
(2)
|
In 2018, we recorded $7.3 million of supply chain transition costs which represent charges incurred to consolidate certain manufacturing and distribution facilities, including $5.6 million in cost of sales and $0.8 million of other expense.
|
(3)
|
In the fourth quarter of 2018, we recorded $21.2 million of customer-related charges in connection with the bankruptcy of iMS to fully reserve trade receivables and other assets associated with this account.
|
•
|
Net income to EBITDA and adjusted EBITDA
|
•
|
Ratio of consolidated indebtedness less netted cash to adjusted EBITDA
|
•
|
Total debt, net to consolidated indebtedness less netted cash
|
•
|
Net cash provided by operating activities to free cash flow
|
|
|
Year Ended
|
||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Net income
|
|
$
|
189.5
|
|
|
$
|
100.5
|
|
Interest expense, net
|
|
85.7
|
|
|
92.3
|
|
||
Income tax provision
|
|
74.7
|
|
|
49.6
|
|
||
Depreciation and amortization
|
|
118.5
|
|
|
113.7
|
|
||
EBITDA
|
|
$
|
468.4
|
|
|
$
|
356.1
|
|
Adjustments:
|
|
|
|
|
||||
Loss from discontinued operations, net of tax (1)
|
|
1.4
|
|
|
17.8
|
|
||
Customer-related charges (2)
|
|
29.8
|
|
|
21.2
|
|
||
Charitable stock donation (3)
|
|
8.9
|
|
|
—
|
|
||
Acquisition-related costs and other (4)
|
|
6.1
|
|
|
—
|
|
||
Credit facility amendment (5)
|
|
0.7
|
|
|
—
|
|
||
Other income (6)
|
|
(7.2
|
)
|
|
—
|
|
||
Restructuring costs (7)
|
|
—
|
|
|
22.3
|
|
||
Supply chain transition costs (8)
|
|
—
|
|
|
7.3
|
|
||
Adjusted EBITDA
|
|
$
|
508.1
|
|
|
$
|
424.7
|
|
|
|
|
|
|
||||
Consolidated indebtedness less netted cash
|
|
$
|
1,483.6
|
|
|
$
|
1,644.6
|
|
|
|
|
|
|
||||
Ratio of consolidated indebtedness less netted cash to adjusted EBITDA
|
|
2.92 times
|
|
3.87 times
|
|
(1)
|
Certain subsidiaries in the International business segment are accounted for as discontinued operations and have been designated as unrestricted subsidiaries in the 2019 Credit Agreement. Therefore, these subsidiaries are excluded from our adjusted financial measures for covenant compliance purposes.
|
(2)
|
In the fourth quarter of 2019, we recorded $29.8 million of customer-related charges in connection with the bankruptcy of Mattress PAL and resulting significant liquidity issues of Mattress PAL's affiliates to fully reserve trade receivables and other assets associated with this account. In the fourth quarter of 2018, we recorded $21.2 million of customer-related charges in connection with the bankruptcy of iMS to fully reserve trade receivables and other assets associated with this account.
|
(3)
|
In the fourth quarter of 2019, we recorded an $8.9 million charge related to the donation of common stock at fair market value to certain public charities.
|
(4)
|
In the first half of 2019, we recorded $6.1 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in connection with the acquisition of substantially all of the net assets of iMS by an affiliate of ours.
|
(5)
|
In the fourth quarter of 2019, we incurred $0.7 million of professional fees in connection with the amendment of the senior secured credit facility.
|
(6)
|
In the first quarter of 2019, we recorded $7.2 million of other income related to the sale of our interest in a subsidiary of the Asia-Pacific joint venture.
|
(7)
|
In 2018, we recorded $24.9 million of restructuring costs, including $2.6 million of depreciation expense and $1.3 million of other expense, net. These costs included $11.5 million of charges related to the operational alignment of a joint venture that was wholly owned in the North America business segment, which included $6.1 million in cost of sales and $1.3 million of other expense, net. Restructuring costs also included $8.5 million of expenses in the International business segment related to International simplification efforts, which included $0.3 million in cost of sales. Corporate recorded $4.9 million of professional fees related to restructuring activities.
|
(8)
|
In 2018, we recorded $7.3 million of supply chain transition costs which represent charges incurred to consolidate certain manufacturing and distribution facilities, including $5.6 million in cost of sales and $0.8 million of other expense.
|
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||
Total debt, net
|
$
|
1,540.0
|
|
|
$
|
1,646.2
|
|
Plus: Deferred financing costs (1)
|
7.0
|
|
|
7.6
|
|
||
Consolidated indebtedness
|
1,547.0
|
|
|
1,653.8
|
|
||
Less: Netted cash (2)
|
63.4
|
|
|
32.9
|
|
||
Consolidated indebtedness less netted cash
|
$
|
1,483.6
|
|
|
$
|
1,644.6
|
|
(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 per the Consolidated Balance Sheets.
|
(2)
|
Netted cash includes cash and cash equivalents for domestic and foreign subsidiaries designated as restricted subsidiaries in the 2019 Credit Agreement.
|
|
Year Ended December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
314.8
|
|
|
$
|
207.5
|
|
Subtract: Purchases of property, plant and equipment
|
88.2
|
|
|
73.6
|
|
||
Free cash flow
|
$
|
226.6
|
|
|
$
|
133.9
|
|
INDEX TO HISTORICAL FINANCIAL STATEMENTS
|
|
|
Danish Tax Matter Uncertain Tax Position
|
|
|
Description of the Matter
|
As described in Note 15 to the consolidated financial statements, the Company’s liability for the Danish Tax Matter uncertain tax position, including interest and penalties, was approximately $166.7 million as of December 31, 2019. The Company’s liability for the Danish Tax Matter uncertain tax position is derived using the cumulative probability analysis with possible outcomes based on an evaluation of the facts and circumstances and applying the technical requirements applicable to U.S., Danish, and international transfer pricing standards, taking into account both the U.S. and Danish income tax implications of such outcomes.
Auditing the measurement of the liability for the Danish Tax Matter uncertain tax position was complex and highly judgmental due to the significant judgment to measure the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to measure the liability for the Danish Tax Matter uncertain tax position. For example, we tested management’s review of inputs and calculations of the liability for the Danish Tax Matter uncertain tax position.
To test the Company’s measurement of the liability for the Danish Tax Matter uncertain tax position, we involved our tax professionals to evaluate the pricing conclusions reached by the Company. For example, we compared the transfer pricing methodology utilized by management to alternative methodologies. We also reviewed the Company’s correspondence with the relevant tax authorities and any third-party professional and legal advice obtained by the Company. In addition, we used our knowledge of international, domestic and local income tax laws, as well as settlement activity from the relevant income tax authorities, to evaluate the Company’s measurement of the liability for the Danish Tax Matter uncertain tax position.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
3,106.0
|
|
|
$
|
2,702.9
|
|
|
$
|
2,700.6
|
|
Cost of sales
|
1,763.8
|
|
|
1,582.2
|
|
|
1,579.6
|
|
|||
Gross profit
|
1,342.2
|
|
|
1,120.7
|
|
|
1,121.0
|
|
|||
Selling and marketing expenses
|
666.3
|
|
|
587.8
|
|
|
586.1
|
|
|||
General, administrative and other expenses
|
315.3
|
|
|
273.0
|
|
|
261.4
|
|
|||
Customer-related charges
|
29.8
|
|
|
21.2
|
|
|
14.4
|
|
|||
Equity income in earnings of unconsolidated affiliates
|
(15.9
|
)
|
|
(17.6
|
)
|
|
(15.6
|
)
|
|||
Royalty income, net of royalty expense
|
—
|
|
|
—
|
|
|
(20.8
|
)
|
|||
Operating income
|
346.7
|
|
|
256.3
|
|
|
295.5
|
|
|||
|
|
|
|
|
|
||||||
Other expense, net:
|
|
|
|
|
|
||||||
Interest expense, net
|
85.7
|
|
|
92.3
|
|
|
87.3
|
|
|||
Other income, net
|
(4.5
|
)
|
|
(1.0
|
)
|
|
(7.2
|
)
|
|||
Total other expense, net
|
81.2
|
|
|
91.3
|
|
|
80.1
|
|
|||
|
|
|
|
|
|
||||||
Income from continuing operations before income taxes
|
265.5
|
|
|
165.0
|
|
|
215.4
|
|
|||
Income tax provision
|
(74.7
|
)
|
|
(49.6
|
)
|
|
(43.8
|
)
|
|||
Income from continuing operations
|
190.8
|
|
|
115.4
|
|
|
171.6
|
|
|||
Loss from discontinued operations, net of tax
|
(1.4
|
)
|
|
(17.8
|
)
|
|
(30.9
|
)
|
|||
Net income before non-controlling interests
|
189.4
|
|
|
97.6
|
|
|
140.7
|
|
|||
Less: Net loss attributable to non-controlling interests
|
(0.1
|
)
|
|
(2.9
|
)
|
|
(10.7
|
)
|
|||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
189.5
|
|
|
$
|
100.5
|
|
|
$
|
151.4
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
3.50
|
|
|
$
|
2.17
|
|
|
$
|
3.37
|
|
Loss per share for discontinued operations
|
(0.02
|
)
|
|
(0.32
|
)
|
|
(0.57
|
)
|
|||
Earnings per share
|
$
|
3.48
|
|
|
$
|
1.85
|
|
|
$
|
2.80
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
3.45
|
|
|
$
|
2.15
|
|
|
$
|
3.33
|
|
Loss per share for discontinued operations
|
(0.03
|
)
|
|
(0.33
|
)
|
|
(0.56
|
)
|
|||
Earnings per share
|
$
|
3.42
|
|
|
$
|
1.82
|
|
|
$
|
2.77
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
54.5
|
|
|
54.4
|
|
|
54.0
|
|
|||
Diluted
|
55.4
|
|
|
55.1
|
|
|
54.7
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income before non-controlling interests
|
$
|
189.4
|
|
|
$
|
97.6
|
|
|
$
|
140.7
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
9.5
|
|
|
(18.9
|
)
|
|
29.1
|
|
|||
Net change in pension benefits, net of tax
|
(1.9
|
)
|
|
(0.9
|
)
|
|
(0.5
|
)
|
|||
Unrealized loss on cash flow hedging derivatives, net of tax
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
Other comprehensive income (loss), net of tax
|
7.6
|
|
|
(19.8
|
)
|
|
28.0
|
|
|||
Comprehensive income
|
197.0
|
|
|
77.8
|
|
|
168.7
|
|
|||
Less: Comprehensive loss attributable to non-controlling interests
|
(0.1
|
)
|
|
(2.9
|
)
|
|
(10.7
|
)
|
|||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
197.1
|
|
|
$
|
80.7
|
|
|
$
|
179.4
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
|
||
Current Assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
64.9
|
|
|
$
|
45.8
|
|
Accounts receivable, net
|
372.0
|
|
|
321.5
|
|
||
Inventories
|
260.5
|
|
|
222.3
|
|
||
Prepaid expenses and other current assets
|
202.8
|
|
|
215.8
|
|
||
Total Current Assets
|
900.2
|
|
|
805.4
|
|
||
Property, plant and equipment, net
|
435.8
|
|
|
420.8
|
|
||
Goodwill
|
732.3
|
|
|
723.0
|
|
||
Other intangible assets, net
|
641.4
|
|
|
649.3
|
|
||
Operating lease right-of-use assets
|
245.4
|
|
|
—
|
|
||
Deferred income taxes
|
14.1
|
|
|
22.6
|
|
||
Other non-current assets
|
92.6
|
|
|
94.3
|
|
||
Total Assets
|
$
|
3,061.8
|
|
|
$
|
2,715.4
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
251.7
|
|
|
$
|
253.0
|
|
Accrued expenses and other current liabilities
|
473.2
|
|
|
359.2
|
|
||
Income taxes payable
|
11.0
|
|
|
9.7
|
|
||
Current portion of long-term debt
|
37.4
|
|
|
47.1
|
|
||
Total Current Liabilities
|
773.3
|
|
|
669.0
|
|
||
Long-term debt, net
|
1,502.6
|
|
|
1,599.1
|
|
||
Long-term operating lease obligations
|
205.4
|
|
|
—
|
|
||
Deferred income taxes
|
102.1
|
|
|
117.5
|
|
||
Other non-current liabilities
|
118.0
|
|
|
112.3
|
|
||
Total Liabilities
|
2,701.4
|
|
|
2,497.9
|
|
||
|
|
|
|
||||
Stockholders' Equity:
|
|
|
|
||||
Common stock, $0.01 par value, 300.0 million shares authorized; 99.2 million shares issued as of December 31, 2019 and 2018
|
1.0
|
|
|
1.0
|
|
||
Additional paid in capital
|
575.7
|
|
|
532.1
|
|
||
Retained earnings
|
1,703.3
|
|
|
1,513.8
|
|
||
Accumulated other comprehensive loss
|
(87.7
|
)
|
|
(95.3
|
)
|
||
Treasury stock at cost; 45.4 million and 44.7 million shares as of December 31, 2019 and 2018, respectively
|
(1,832.8
|
)
|
|
(1,737.0
|
)
|
||
Total stockholders' equity, net of non-controlling interest in subsidiaries
|
359.5
|
|
|
214.6
|
|
||
Non-controlling interest in subsidiaries
|
0.9
|
|
|
2.9
|
|
||
Total Stockholders' Equity
|
360.4
|
|
|
217.5
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
3,061.8
|
|
|
$
|
2,715.4
|
|
|
|
|
Tempur Sealy International, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
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, 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
|
)
|
|||||||||||||||
Acquisition of non-controlling interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
(3.2
|
)
|
|
|
|
|
|
2.3
|
|
|
(0.9
|
)
|
|||||||||||||||
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
|
|
||||||||||||||||
Balance, December 31, 2017
|
$
|
2.2
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
45.0
|
|
|
$
|
(1,737.2
|
)
|
|
$
|
508.0
|
|
|
$
|
1,416.2
|
|
|
$
|
(75.5
|
)
|
|
$
|
—
|
|
|
$
|
112.5
|
|
Adoption of accounting standards effective January 1, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.9
|
)
|
|
$
|
(0.5
|
)
|
|
|
|
(3.4
|
)
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
100.5
|
|
|
|
|
|
|
100.5
|
|
||||||||||||||||
Net loss attributable to non-controlling interests
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||||||||||||||
Acquisition of non-controlling interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
3.1
|
|
|||||||||||||||
Adjustment to pension liability, net of tax of $(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
(0.4
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18.9
|
)
|
|
|
|
(18.9
|
)
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.2
|
)
|
|
2.1
|
|
|
2.5
|
|
|
|
|
|
|
|
|
4.6
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.2
|
)
|
|
2.7
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased - PRSU/RSU/DSU releases
|
|
|
|
|
|
|
0.1
|
|
|
(4.6
|
)
|
|
|
|
|
|
|
|
|
|
(4.6
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
24.8
|
|
|
|
|
|
|
|
|
24.8
|
|
||||||||||||||||
Acquisition of non-controlling interest
|
0.5
|
|
|
|
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
(0.5
|
)
|
|||||||||||||||
Balance, December 31, 2018
|
$
|
—
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.7
|
|
|
$
|
(1,737.0
|
)
|
|
$
|
532.1
|
|
|
$
|
1,513.8
|
|
|
$
|
(95.3
|
)
|
|
$
|
2.9
|
|
|
$
|
217.5
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
189.5
|
|
|
|
|
|
|
189.5
|
|
||||||||||||||||
Net loss attributable to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||||||||||||
Repurchase of interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.9
|
)
|
|
(1.9
|
)
|
||||||||||||||||
Adjustment to pension liability, net of tax of $(0.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.9
|
)
|
|
|
|
(1.9
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.5
|
|
|
|
|
9.5
|
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.3
|
)
|
|
4.8
|
|
|
13.0
|
|
|
|
|
|
|
|
|
17.8
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.3
|
)
|
|
3.7
|
|
|
(3.7
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
1.3
|
|
|
(102.3
|
)
|
|
|
|
|
|
|
|
|
|
(102.3
|
)
|
|||||||||||||||
Treasury stock repurchased - PRSU/RSU/DSU releases
|
|
|
|
|
|
|
0.1
|
|
|
(3.4
|
)
|
|
|
|
|
|
|
|
|
|
(3.4
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
26.8
|
|
|
|
|
|
|
|
|
26.8
|
|
||||||||||||||||
Charitable stock donation
|
|
|
|
|
|
|
(0.1
|
)
|
|
1.4
|
|
|
7.5
|
|
|
|
|
|
|
|
|
8.9
|
|
||||||||||||||
Balance, December 31, 2019
|
$
|
—
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
45.4
|
|
|
$
|
(1,832.8
|
)
|
|
$
|
575.7
|
|
|
$
|
1,703.3
|
|
|
$
|
(87.7
|
)
|
|
$
|
0.9
|
|
|
$
|
360.4
|
|
|
December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
157.4
|
|
|
$
|
148.9
|
|
Work-in-process
|
10.8
|
|
|
11.8
|
|
||
Raw materials and supplies
|
92.3
|
|
|
61.6
|
|
||
|
$
|
260.5
|
|
|
$
|
222.3
|
|
|
Estimated
Useful Lives
(in years)
|
Buildings
|
25-30
|
Computer equipment and software
|
3-7
|
Leasehold improvements
|
4-7
|
Machinery and equipment
|
3-7
|
Office furniture and fixtures
|
5-7
|
|
December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Machinery and equipment
|
$
|
350.7
|
|
|
$
|
319.3
|
|
Land and buildings
|
317.8
|
|
|
328.5
|
|
||
Computer equipment and software
|
155.2
|
|
|
142.2
|
|
||
Furniture and fixtures
|
52.5
|
|
|
50.4
|
|
||
Construction in progress
|
65.0
|
|
|
52.4
|
|
||
Total property, plant, and equipment
|
941.2
|
|
|
892.8
|
|
||
Accumulated depreciation
|
(505.4
|
)
|
|
(472.0
|
)
|
||
Total property, plant and equipment, net
|
$
|
435.8
|
|
|
$
|
420.8
|
|
(in millions)
|
|
||
Balance as of December 31, 2017
|
$
|
30.0
|
|
Reclassification and remeasurement of sales return asset under Topic 606
|
1.7
|
|
|
Balance as of January 1, 2018
|
31.7
|
|
|
Amounts accrued
|
83.8
|
|
|
Returns charged to accrual
|
(81.2
|
)
|
|
Balance as of December 31, 2018
|
34.3
|
|
|
Amounts accrued
|
112.4
|
|
|
Returns charged to accrual
|
(107.4
|
)
|
|
Balance as of December 31, 2019
|
$
|
39.3
|
|
|
Twelve Months Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
—
|
|
|
$
|
31.1
|
|
|
$
|
53.8
|
|
Cost of sales
|
—
|
|
|
23.0
|
|
|
34.1
|
|
|||
Gross profit
|
—
|
|
|
8.1
|
|
|
19.7
|
|
|||
Selling and marketing expenses
|
0.1
|
|
|
12.4
|
|
|
15.2
|
|
|||
General, administrative and other expenses
|
2.6
|
|
|
6.8
|
|
|
11.6
|
|
|||
Operating loss
|
(2.7
|
)
|
|
(11.1
|
)
|
|
(7.1
|
)
|
|||
|
|
|
|
|
|
||||||
Interest (income) expense, net and other
|
(1.5
|
)
|
|
7.7
|
|
|
19.9
|
|
|||
Loss from discontinued operations before income taxes
|
(1.2
|
)
|
|
(18.8
|
)
|
|
(27.0
|
)
|
|||
|
|
|
|
|
|
||||||
Income tax provision
|
(0.2
|
)
|
|
—
|
|
|
(3.9
|
)
|
|||
Loss generated from discontinued operations, net of tax
|
(1.4
|
)
|
|
(18.8
|
)
|
|
(30.9
|
)
|
|||
Gain on disposal of business
|
—
|
|
|
1.0
|
|
|
—
|
|
|||
Loss from discontinued operations, net of tax
|
$
|
(1.4
|
)
|
|
$
|
(17.8
|
)
|
|
$
|
(30.9
|
)
|
|
Twelve Months Ended December 31, 2019
|
|
Twelve Months Ended December 31, 2018
|
||||||||||||||||||||
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholesale
|
$
|
2,273.5
|
|
|
$
|
443.6
|
|
|
$
|
2,717.1
|
|
|
$
|
1,989.1
|
|
|
$
|
463.0
|
|
|
$
|
2,452.1
|
|
Direct
|
259.8
|
|
|
129.1
|
|
|
388.9
|
|
|
147.1
|
|
|
103.7
|
|
|
250.8
|
|
||||||
Net sales
|
$
|
2,533.3
|
|
|
$
|
572.7
|
|
|
$
|
3,106.0
|
|
|
$
|
2,136.2
|
|
|
$
|
566.7
|
|
|
$
|
2,702.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Product
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bedding
|
$
|
2,379.6
|
|
|
$
|
455.7
|
|
|
$
|
2,835.3
|
|
|
$
|
2,002.1
|
|
|
$
|
453.2
|
|
|
$
|
2,455.3
|
|
Other
|
153.7
|
|
|
117.0
|
|
|
270.7
|
|
|
134.1
|
|
|
113.5
|
|
|
247.6
|
|
||||||
Net sales
|
$
|
2,533.3
|
|
|
$
|
572.7
|
|
|
$
|
3,106.0
|
|
|
$
|
2,136.2
|
|
|
$
|
566.7
|
|
|
$
|
2,702.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Geographical region
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
2,312.3
|
|
|
$
|
—
|
|
|
$
|
2,312.3
|
|
|
$
|
1,928.9
|
|
|
$
|
—
|
|
|
$
|
1,928.9
|
|
Canada
|
221.0
|
|
|
—
|
|
|
221.0
|
|
|
207.3
|
|
|
—
|
|
|
207.3
|
|
||||||
International
|
—
|
|
|
572.7
|
|
|
572.7
|
|
|
—
|
|
|
566.7
|
|
|
566.7
|
|
||||||
Net sales
|
$
|
2,533.3
|
|
|
$
|
572.7
|
|
|
$
|
3,106.0
|
|
|
$
|
2,136.2
|
|
|
$
|
566.7
|
|
|
$
|
2,702.9
|
|
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
||||||
Balance as of December 31, 2017
|
$
|
576.6
|
|
|
$
|
156.1
|
|
|
$
|
732.7
|
|
Foreign currency translation adjustments and other
|
(5.5
|
)
|
|
(4.2
|
)
|
|
(9.7
|
)
|
|||
Balance as of December 31, 2018
|
$
|
571.1
|
|
|
$
|
151.9
|
|
|
$
|
723.0
|
|
Goodwill resulting from acquisitions
|
2.4
|
|
|
5.4
|
|
|
7.8
|
|
|||
Foreign currency translation adjustments and other
|
3.1
|
|
|
(1.6
|
)
|
|
1.5
|
|
|||
Balance as of December 31, 2019
|
$
|
576.6
|
|
|
$
|
155.7
|
|
|
$
|
732.3
|
|
($ in millions)
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
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
|
|
|
$
|
559.5
|
|
|
$
|
—
|
|
|
$
|
559.5
|
|
|
$
|
556.5
|
|
|
$
|
—
|
|
|
$
|
556.5
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contractual distributor relationships
|
15
|
|
85.5
|
|
|
38.7
|
|
|
46.8
|
|
|
84.7
|
|
|
32.7
|
|
|
52.0
|
|
||||||
Technology and other
|
4-10
|
|
91.1
|
|
|
68.7
|
|
|
22.4
|
|
|
90.2
|
|
|
61.1
|
|
|
29.1
|
|
||||||
Patents, other trademarks and other trade names
|
5-20
|
|
27.9
|
|
|
18.6
|
|
|
9.3
|
|
|
32.0
|
|
|
21.0
|
|
|
11.0
|
|
||||||
Customer databases, relationships and reacquired rights
|
2-5
|
|
30.9
|
|
|
27.5
|
|
|
3.4
|
|
|
21.3
|
|
|
20.6
|
|
|
0.7
|
|
||||||
Total
|
|
|
$
|
794.9
|
|
|
$
|
153.5
|
|
|
$
|
641.4
|
|
|
$
|
784.7
|
|
|
$
|
135.4
|
|
|
$
|
649.3
|
|
(in millions)
|
2019
|
|
2018
|
||||
Current assets
|
$
|
81.0
|
|
|
$
|
81.8
|
|
Non-current assets
|
15.3
|
|
|
18.6
|
|
||
Total liabilities
|
55.4
|
|
|
59.0
|
|
||
Equity
|
40.9
|
|
|
41.4
|
|
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
212.6
|
|
|
$
|
220.5
|
|
|
$
|
195.1
|
|
Gross profit
|
147.2
|
|
|
147.8
|
|
|
129.9
|
|
|||
Income from operations
|
44.6
|
|
|
46.6
|
|
|
43.3
|
|
|||
Net income
|
32.4
|
|
|
33.5
|
|
|
31.7
|
|
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
|
|
||||||||
Debt:
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Maturity Date
|
||||
2019 Credit Agreement:
|
|
|
|
|
|
|
|
|
|
||||
Term A Facility
|
$
|
425.0
|
|
|
(1)
|
|
$
|
—
|
|
|
N/A
|
|
October 16, 2024
|
Revolver
|
—
|
|
|
(1)
|
|
—
|
|
|
N/A
|
|
October 16, 2024
|
||
2016 Credit Agreement:
|
|
|
|
|
|
|
|
|
|
||||
Term A Facility
|
—
|
|
|
N/A
|
|
525.0
|
|
|
(2)
|
|
|
||
Revolver
|
—
|
|
|
N/A
|
|
—
|
|
|
(2)
|
|
|
||
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
|
—
|
|
|
(3)
|
|
9.1
|
|
|
(3)
|
|
April 6, 2021
|
||
Finance lease obligations (4)
|
64.1
|
|
|
|
|
66.7
|
|
|
|
|
Various
|
||
Other
|
7.9
|
|
|
|
|
3.0
|
|
|
|
|
Various
|
||
Total debt
|
1,547.0
|
|
|
|
|
1,653.8
|
|
|
|
|
|
||
Less: Deferred financing costs
|
7.0
|
|
|
|
|
7.6
|
|
|
|
|
|
||
Total debt, net
|
1,540.0
|
|
|
|
|
1,646.2
|
|
|
|
|
|
||
Less: Current portion
|
37.4
|
|
|
|
|
47.1
|
|
|
|
|
|
||
Total long-term debt, net
|
$
|
1,502.6
|
|
|
|
|
$
|
1,599.1
|
|
|
|
|
|
(1)
|
Interest at LIBOR plus applicable margin of 1.625% as of December 31, 2019.
|
(2)
|
Interest at LIBOR plus applicable margin of 2.00% as of December 31, 2018.
|
(3)
|
Interest at one month LIBOR index plus 80 basis points.
|
(4)
|
Finance lease obligations are a non-cash financing activity. Refer to Note 9, "Leases."
|
|
|
Fair Value
|
||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
2023 Senior Notes
|
|
$
|
464.2
|
|
|
$
|
435.6
|
|
2026 Senior Notes
|
|
634.9
|
|
|
549.3
|
|
(in millions)
|
|
|
||
2020
|
|
$
|
29.2
|
|
2021
|
|
21.3
|
|
|
2022
|
|
21.3
|
|
|
2023
|
|
481.8
|
|
|
2024
|
|
329.3
|
|
|
Thereafter
|
|
600.0
|
|
|
Total
|
|
$
|
1,482.9
|
|
(in millions)
|
|
|
|
December 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease assets
|
|
Operating lease right-of-use assets
|
|
$
|
245.4
|
|
Finance lease assets
|
|
Property, plant and equipment, net
|
|
54.4
|
|
|
Total leased assets
|
|
|
|
$
|
299.8
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Short-term:
|
|
|
|
|
||
Operating lease obligations
|
|
Accrued expenses and other current liabilities
|
|
$
|
50.8
|
|
Finance lease obligations
|
|
Current portion of long-term debt
|
|
8.2
|
|
|
Long-term:
|
|
|
|
|
||
Operating lease obligations
|
|
Long-term operating lease obligations
|
|
205.4
|
|
|
Finance lease obligations
|
|
Long-term debt, net
|
|
55.9
|
|
|
Total lease obligations
|
|
|
|
$
|
320.3
|
|
|
|
Twelve months ended
|
||
(in millions)
|
|
December 31, 2019
|
||
Operating lease expense:
|
|
|
||
Operating lease expense
|
|
$
|
63.8
|
|
Short-term lease expense
|
|
9.0
|
|
|
Variable lease expense
|
|
18.8
|
|
|
Finance lease expense:
|
|
|
||
Amortization of right-of-use assets
|
|
8.5
|
|
|
Interest on lease obligations
|
|
4.7
|
|
|
Total lease expense
|
|
$
|
104.8
|
|
(in millions)
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
Year Ended December 31,
|
|
|
|
|
|
|
||||||
2020
|
|
$
|
62.1
|
|
|
$
|
12.3
|
|
|
$
|
74.4
|
|
2021
|
|
54.5
|
|
|
12.0
|
|
|
66.5
|
|
|||
2022
|
|
46.6
|
|
|
9.8
|
|
|
56.4
|
|
|||
2023
|
|
36.2
|
|
|
7.8
|
|
|
44.0
|
|
|||
2024
|
|
29.0
|
|
|
6.2
|
|
|
35.2
|
|
|||
Thereafter
|
|
74.5
|
|
|
36.3
|
|
|
110.8
|
|
|||
Total lease payments
|
|
302.9
|
|
|
84.4
|
|
|
387.3
|
|
|||
Less: Interest
|
|
(46.7
|
)
|
|
(20.3
|
)
|
|
(67.0
|
)
|
|||
Present value of lease obligations
|
|
$
|
256.2
|
|
|
$
|
64.1
|
|
|
$
|
320.3
|
|
|
|
December 31, 2019
|
|
Weighted average remaining lease term (years):
|
|
|
|
Operating leases
|
|
6.43
|
|
Finance leases
|
|
9.03
|
|
|
|
|
|
Weighted average discount rate:
|
|
|
|
Operating leases
|
|
5.42
|
%
|
Finance leases
|
|
6.27
|
%
|
|
|
Twelve months ended
|
||
(in millions)
|
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease obligations:
|
|
|
||
Operating cash flows paid for operating leases
|
|
$
|
62.7
|
|
Operating cash flows paid for finance leases
|
|
$
|
3.7
|
|
Financing cash flows paid for finance leases
|
|
$
|
7.7
|
|
|
|
|
||
Right-of-use assets obtained in exchange for new operating lease obligations
|
|
$
|
60.9
|
|
Right-of-use assets obtained in exchange for new finance lease obligations
|
|
$
|
4.1
|
|
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Service cost
|
$
|
0.9
|
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
Interest cost
|
1.2
|
|
|
1.1
|
|
|
1.2
|
|
|||
Expected return on assets
|
(1.3
|
)
|
|
(1.5
|
)
|
|
(1.5
|
)
|
|||
Amortization of prior service cost
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||
Amortization of net gain
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Net periodic pension cost
|
$
|
1.0
|
|
|
$
|
0.7
|
|
|
$
|
0.7
|
|
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
$
|
2.2
|
|
|
$
|
0.6
|
|
|
$
|
0.4
|
|
New prior service cost
|
0.6
|
|
|
0.1
|
|
|
0.5
|
|
|||
Amortization of prior service cost
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Amortization or settlement recognition of net loss
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
Total recognized in other comprehensive loss
|
$
|
2.6
|
|
|
$
|
0.6
|
|
|
$
|
0.8
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate (a)
|
4.10
|
%
|
|
3.58
|
%
|
|
4.07
|
%
|
Expected long-term return on plan assets
|
6.16
|
%
|
|
6.25
|
%
|
|
6.64
|
%
|
(a)
|
The discount rates used in 2019 to determine the expenses for the U.S. retirement plan and Canadian retirement plan were 4.16% and 3.90%, respectively. The discount rates used in 2018 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 2017 to determine the expenses for the U.S. retirement plan and Canadian retirement plan were 4.06% and 4.10%
|
(in millions)
|
2019
|
|
2018
|
||||
Change in Benefit Obligation:
|
|
|
|
||||
Projected benefit obligation at beginning of year
|
$
|
30.0
|
|
|
$
|
32.1
|
|
Service cost
|
0.9
|
|
|
1.0
|
|
||
Interest cost
|
1.2
|
|
|
1.1
|
|
||
Plan amendments
|
0.5
|
|
|
0.1
|
|
||
Actuarial (gain) loss
|
5.5
|
|
|
(3.0
|
)
|
||
Benefits paid
|
(1.3
|
)
|
|
(0.9
|
)
|
||
Expenses paid
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Foreign currency exchange rate changes
|
0.2
|
|
|
(0.3
|
)
|
||
Projected benefit obligation at end of year
|
$
|
36.9
|
|
|
$
|
30.0
|
|
Change in Plan Assets:
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
22.2
|
|
|
$
|
25.3
|
|
Actual return on plan assets
|
4.6
|
|
|
(2.1
|
)
|
||
Employer contribution
|
1.4
|
|
|
0.3
|
|
||
Benefits paid
|
(1.3
|
)
|
|
(0.9
|
)
|
||
Expenses paid
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Foreign currency exchange rate changes
|
0.2
|
|
|
(0.3
|
)
|
||
Fair value of plan assets at end of year
|
$
|
27.0
|
|
|
$
|
22.2
|
|
Funded status
|
$
|
(9.9
|
)
|
|
$
|
(7.8
|
)
|
|
December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Amounts recognized in the Consolidated Balance Sheets:
|
|
|
|
||||
Non-current benefit liability
|
$
|
10.0
|
|
|
$
|
8.1
|
|
Non-current benefit asset
|
0.1
|
|
|
0.3
|
|
|
2019
|
|
2018
|
||
Discount rate (a)
|
3.16
|
%
|
|
4.13
|
%
|
(a)
|
The discount rates used in 2019 to determine the benefit obligations for the U.S. retirement plan and Canadian retirement plan were 3.15% and 3.20%, respectively. The discount rates used in 2018 to determine the benefit obligations for the U.S. and Canadian defined benefit pension plans were 4.16% and 3.90%, respectively.
|
(in millions)
|
|
||
Fiscal 2020
|
$
|
1.1
|
|
Fiscal 2021
|
1.1
|
|
|
Fiscal 2022
|
1.2
|
|
|
Fiscal 2023
|
1.2
|
|
|
Fiscal 2024
|
1.3
|
|
|
Fiscal 2025 ‑ Fiscal 2028
|
8.0
|
|
|
2019 Target
|
|
2019
Actual |
||
Common/collective trust consisting primarily of:
|
|
|
|
||
Equity securities
|
60.0
|
%
|
|
55.7
|
%
|
Debt securities
|
40.0
|
%
|
|
44.0
|
%
|
Other
|
—
|
%
|
|
0.3
|
%
|
Total plan assets
|
100.0
|
%
|
|
100.0
|
%
|
(in millions)
|
2019
|
|
2018
|
||||
Asset Category
|
|
|
|
||||
Common/collective trust
|
|
|
|
||||
U.S. equity
|
$
|
5.5
|
|
|
$
|
14.1
|
|
International equity
|
9.5
|
|
|
3.6
|
|
||
Total equity based funds
|
15.0
|
|
|
17.7
|
|
||
Common/collective trust - fixed income
|
11.9
|
|
|
4.4
|
|
||
Money market funds
|
0.1
|
|
|
0.1
|
|
||
Total
|
$
|
27.0
|
|
|
$
|
22.2
|
|
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Multi‑employer retirement plan expense
|
$
|
4.3
|
|
|
$
|
3.9
|
|
|
$
|
4.3
|
|
Multi‑employer health and welfare plan expense
|
3.8
|
|
|
3.6
|
|
|
3.5
|
|
Pension Fund
|
|
EIN/Pension Plan Number
|
|
Date of Plan Year-End
|
|
Pension Protection Act
Zone Status(1) 2019 |
|
FIP/RP Status
Pending/Implemented(2) |
|
Contributions of the Company in 2019
|
|
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
|
|
2/28/19
|
|
Red
|
|
Implemented
|
|
$
|
1.1
|
|
|
No
|
|
2020
|
|
2017, 2018, 2019
|
||
Pension Plan of the National Retirement Fund
|
|
13-6130178-001
|
|
12/31/18
|
|
Red
|
|
Implemented
|
|
$
|
1.0
|
|
|
Yes, 10.0%
|
|
2022
|
|
N/A
|
||
Central States, Southeast & Southwest Areas Pension Plan
|
|
36-6044243-001
|
|
12/31/18
|
|
Red
|
|
Implemented
|
|
$
|
0.8
|
|
|
Yes, 10.0%
|
|
2021
|
|
N/A
|
Pension Fund
|
|
EIN/Pension Plan Number
|
|
Date of Plan Year-End
|
|
Pension Protection Act
Zone Status(1) 2018 |
|
FIP/RP Status
Pending/Implemented(2) |
|
Contributions of the Company in 2018
|
|
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
|
|
2/28/18
|
|
Red
|
|
Implemented
|
|
$
|
0.7
|
|
|
No
|
|
2020
|
|
2016, 2017, 2018
|
||
Pension Plan of the National Retirement Fund
|
|
13-6130178-001
|
|
12/31/17
|
|
Red
|
|
Implemented
|
|
$
|
0.7
|
|
|
Yes, 10.0%
|
|
2019
|
|
N/A
|
||
Central States, Southeast & Southwest Areas Pension Plan
|
|
36-6044243-001
|
|
12/31/17
|
|
Red
|
|
Implemented
|
|
$
|
0.8
|
|
|
Yes, 10.0%
|
|
2021
|
|
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, 2017, the Company contributed $1.1 million to the plan.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign Currency Translation
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
(91.7
|
)
|
|
$
|
(72.8
|
)
|
|
$
|
(101.9
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments (1)
|
9.5
|
|
|
(18.9
|
)
|
|
29.1
|
|
|||
Balance at end of period
|
$
|
(82.2
|
)
|
|
$
|
(91.7
|
)
|
|
$
|
(72.8
|
)
|
|
|
|
|
|
|
||||||
Pension Benefits
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
(3.6
|
)
|
|
$
|
(2.7
|
)
|
|
$
|
(2.2
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Net change from period revaluation
|
(2.6
|
)
|
|
(0.4
|
)
|
|
(0.8
|
)
|
|||
Tax benefit (2)
|
0.7
|
|
|
0.1
|
|
|
0.3
|
|
|||
Total other comprehensive loss before reclassifications, net of tax
|
(1.9
|
)
|
|
(0.3
|
)
|
|
(0.5
|
)
|
|||
Net amount reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
U.S tax reform - reclassification to retained earnings upon adoption of ASU No. 2018-02
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|||
Tax expense (2)
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|||
Total other comprehensive loss
|
(1.9
|
)
|
|
(0.9
|
)
|
|
(0.5
|
)
|
|||
Balance at end of period
|
$
|
(5.5
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(2.7
|
)
|
|
|
|
|
|
|
||||||
Foreign Exchange Forward Contracts
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Net change from period revaluation
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
Tax benefit (2)
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Total other comprehensive loss before reclassifications, net of tax
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||
Net amount reclassified to earnings (3)
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
Balance at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
In 2019, 2018 and 2017, 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 cost of sales, net in the accompanying Consolidated Statements of Income.
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Taxes
|
$
|
136.0
|
|
|
$
|
136.8
|
|
Other
|
90.8
|
|
|
84.1
|
|
||
Wages and benefits
|
79.5
|
|
|
43.7
|
|
||
Advertising
|
56.9
|
|
|
46.1
|
|
||
Operating leases obligations
|
50.8
|
|
|
—
|
|
||
Sales returns
|
26.2
|
|
|
22.0
|
|
||
Warranty
|
19.4
|
|
|
14.9
|
|
||
Rebates
|
13.6
|
|
|
11.6
|
|
||
|
$
|
473.2
|
|
|
$
|
359.2
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
PRSU expense (benefit)
|
$
|
1.4
|
|
|
$
|
2.5
|
|
|
$
|
(6.5
|
)
|
Stock option expense
|
4.9
|
|
|
6.7
|
|
|
7.1
|
|
|||
RSU/DSU expense
|
20.5
|
|
|
15.6
|
|
|
12.7
|
|
|||
Total stock-based compensation expense
|
$
|
26.8
|
|
|
$
|
24.8
|
|
|
$
|
13.3
|
|
(shares in millions)
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Awards unvested at December 31, 2017
|
2.7
|
|
|
$
|
64.13
|
|
Granted
|
0.2
|
|
|
51.72
|
|
|
Vested
|
(0.1
|
)
|
|
68.57
|
|
|
Forfeited
|
(0.8
|
)
|
|
68.07
|
|
|
Awards unvested at December 31, 2018
|
2.0
|
|
|
61.07
|
|
|
Granted
|
0.1
|
|
|
85.41
|
|
|
Vested
|
—
|
|
|
59.21
|
|
|
Forfeited
|
(1.3
|
)
|
|
70.94
|
|
|
Awards unvested at December 31, 2019
|
0.8
|
|
|
$
|
60.09
|
|
|
Year Ended December 31,
|
||||
|
2019
|
|
2018
|
|
2017
|
Expected volatility range of stock
|
N/A
|
|
39.8% - 40.1%
|
|
37.4% - 40.8%
|
Expected life of option, range in years
|
N/A
|
|
5
|
|
5
|
Risk-free interest range rate
|
N/A
|
|
2.2% - 2.8%
|
|
1.8% - 1.9%
|
Expected dividend yield on stock
|
N/A
|
|
—%
|
|
—%
|
(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, 2017
|
1.7
|
|
|
$
|
58.93
|
|
|
|
|
|
|
Granted
|
0.3
|
|
|
61.84
|
|
|
|
|
|
||
Exercised
|
(0.2
|
)
|
|
28.20
|
|
|
|
|
|
||
Forfeited
|
(0.2
|
)
|
|
60.45
|
|
|
|
|
|
||
Options outstanding at December 31, 2018
|
1.6
|
|
|
$
|
62.51
|
|
|
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
||
Exercised
|
(0.3
|
)
|
|
52.49
|
|
|
|
|
|
||
Forfeited
|
—
|
|
|
46.36
|
|
|
|
|
|
||
Options outstanding at December 31, 2019
|
1.3
|
|
|
$
|
65.18
|
|
|
6.35
|
|
20.8
|
|
|
|
|
|
|
|
|
|
||||
Options exercisable at December 31, 2019
|
0.8
|
|
|
$
|
64.72
|
|
|
5.73
|
|
18.4
|
|
(shares in millions)
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Options unvested at December 31, 2017
|
0.7
|
|
|
$
|
67.95
|
|
Granted
|
0.3
|
|
|
61.84
|
|
|
Vested
|
(0.2
|
)
|
|
66.72
|
|
|
Forfeited
|
(0.2
|
)
|
|
60.45
|
|
|
Options unvested at December 31, 2018
|
0.6
|
|
|
$
|
66.20
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(0.1
|
)
|
|
66.66
|
|
|
Forfeited
|
—
|
|
|
46.36
|
|
|
Options unvested at December 31, 2019
|
0.5
|
|
|
$
|
65.99
|
|
(in millions, except per share amounts)
|
Shares
|
|
Weighted Average Release Price
|
|
Aggregate Intrinsic Value
|
|||||
Awards outstanding at December 31, 2017
|
0.6
|
|
|
$
|
64.94
|
|
|
|
||
Granted
|
0.3
|
|
|
61.29
|
|
|
|
|||
Vested
|
(0.1
|
)
|
|
62.85
|
|
|
|
|||
Terminated
|
—
|
|
|
64.00
|
|
|
|
|||
Awards outstanding at December 31, 2018
|
0.8
|
|
|
$
|
63.82
|
|
|
$
|
34.6
|
|
Granted
|
0.7
|
|
|
43.07
|
|
|
|
|||
Vested
|
(0.3
|
)
|
|
62.54
|
|
|
|
|||
Terminated
|
—
|
|
|
58.07
|
|
|
|
|||
Awards outstanding at December 31, 2019
|
1.2
|
|
|
$
|
52.96
|
|
|
$
|
110.5
|
|
(in millions, except years)
|
December 31, 2019
|
|
Weighted Average Remaining Vesting Period (Years)
|
||
Unrecognized stock option expense
|
$
|
6.6
|
|
|
1.50
|
Unrecognized DSU/RSU expense
|
37.6
|
|
|
2.42
|
|
Unrecognized PRSU expense
|
2.0
|
|
|
1.73
|
|
Total unrecognized stock-based compensation expense
|
$
|
46.2
|
|
|
2.25
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Income before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
150.9
|
|
|
$
|
59.2
|
|
|
$
|
97.2
|
|
Rest of the world
|
114.6
|
|
|
105.8
|
|
|
118.2
|
|
|||
|
$
|
265.5
|
|
|
$
|
165.0
|
|
|
$
|
215.4
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(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
|
$
|
55.8
|
|
|
21.0
|
%
|
|
$
|
34.6
|
|
|
21.0
|
%
|
|
$
|
75.4
|
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
8.7
|
|
|
3.3
|
%
|
|
1.8
|
|
|
1.1
|
%
|
|
(0.6
|
)
|
|
(0.3
|
)%
|
|||
Foreign tax differential
|
2.1
|
|
|
0.8
|
%
|
|
2.5
|
|
|
1.5
|
%
|
|
(11.9
|
)
|
|
(5.5
|
)%
|
|||
Change in valuation allowances
|
(8.6
|
)
|
|
(3.2
|
)%
|
|
(17.7
|
)
|
|
(10.7
|
)%
|
|
5.6
|
|
|
2.6
|
%
|
|||
Uncertain tax positions and interest
|
2.4
|
|
|
0.9
|
%
|
|
33.1
|
|
|
20.1
|
%
|
|
(1.0
|
)
|
|
(0.5
|
)%
|
|||
Subpart F income
|
11.0
|
|
|
4.1
|
%
|
|
6.6
|
|
|
4.0
|
%
|
|
2.7
|
|
|
1.2
|
%
|
|||
Manufacturing deduction
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|
(0.9
|
)%
|
|||
Remeasurement of deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69.7
|
)
|
|
(32.3
|
)%
|
|||
Transition Tax
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|
(4.1
|
)%
|
|
45.9
|
|
|
21.3
|
%
|
|||
Permanent and other
|
3.3
|
|
|
1.2
|
%
|
|
(4.5
|
)
|
|
(2.8
|
)%
|
|
(0.7
|
)
|
|
(0.3
|
)%
|
|||
Effective income tax provision
|
$
|
74.7
|
|
|
28.1
|
%
|
|
$
|
49.6
|
|
|
30.1
|
%
|
|
$
|
43.8
|
|
|
20.3
|
%
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Current provision
|
|
|
|
|
|
||||||
Federal
|
$
|
50.4
|
|
|
$
|
(14.6
|
)
|
|
$
|
73.5
|
|
State
|
11.9
|
|
|
1.1
|
|
|
3.1
|
|
|||
Foreign
|
19.5
|
|
|
57.1
|
|
|
28.3
|
|
|||
Total current
|
$
|
81.8
|
|
|
$
|
43.6
|
|
|
$
|
104.9
|
|
Deferred provision
|
|
|
|
|
|
||||||
Federal
|
$
|
(10.8
|
)
|
|
$
|
11.4
|
|
|
$
|
(67.7
|
)
|
State
|
(8.0
|
)
|
|
(4.5
|
)
|
|
7.6
|
|
|||
Foreign
|
11.7
|
|
|
(0.9
|
)
|
|
(1.0
|
)
|
|||
Total deferred
|
(7.1
|
)
|
|
6.0
|
|
|
(61.1
|
)
|
|||
Total income tax provision
|
$
|
74.7
|
|
|
$
|
49.6
|
|
|
$
|
43.8
|
|
|
December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Stock-based compensation
|
$
|
13.9
|
|
|
$
|
12.8
|
|
Accrued expenses and other
|
129.7
|
|
|
49.1
|
|
||
Net operating losses, foreign tax credits and other tax attribute carryforwards
|
43.1
|
|
|
56.1
|
|
||
Inventories
|
8.2
|
|
|
6.0
|
|
||
Transaction costs
|
6.6
|
|
|
13.5
|
|
||
Property, plant and equipment
|
2.9
|
|
|
3.6
|
|
||
Total deferred tax assets
|
204.4
|
|
|
141.1
|
|
||
Valuation allowances
|
(30.0
|
)
|
|
(43.1
|
)
|
||
Total net deferred tax assets
|
$
|
174.4
|
|
|
$
|
98.0
|
|
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
$
|
(156.4
|
)
|
|
$
|
(156.8
|
)
|
Property, plant and equipment
|
(36.9
|
)
|
|
(30.3
|
)
|
||
Accrued expenses and other
|
(69.1
|
)
|
|
(5.8
|
)
|
||
Total deferred tax liabilities
|
(262.4
|
)
|
|
(192.9
|
)
|
||
Net deferred tax liabilities
|
$
|
(88.0
|
)
|
|
$
|
(94.9
|
)
|
(in millions)
|
2019
|
|
2018
|
||||
State net operating losses (“SNOLs”)
|
$
|
165.7
|
|
|
$
|
355.7
|
|
U.S. federal foreign tax credits (“FTCs”)
|
12.2
|
|
|
12.2
|
|
||
U.S. state income tax credits ("SITCs")
|
5.3
|
|
|
8.0
|
|
||
Foreign net operating losses (“FNOLs”)
|
36.9
|
|
|
57.0
|
|
||
Charitable contribution carryover ("CCCs")
|
32.9
|
|
|
39.6
|
|
||
Interest limitation carryover ("ILC")
|
—
|
|
|
10.6
|
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per common share amounts)
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income from continuing operations, net of loss attributable to non-controlling interests
|
$
|
190.9
|
|
|
$
|
118.3
|
|
|
$
|
182.3
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Denominator for basic earnings per common share—weighted average shares
|
54.5
|
|
|
54.4
|
|
|
54.0
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Employee stock-based compensation
|
0.9
|
|
|
0.7
|
|
|
0.7
|
|
|||
Denominator for diluted earnings per common share—adjusted weighted average shares
|
55.4
|
|
|
55.1
|
|
|
54.7
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per common share for continuing operations
|
$
|
3.50
|
|
|
$
|
2.17
|
|
|
$
|
3.37
|
|
|
|
|
|
|
|
||||||
Diluted earnings per common share for continuing operations
|
$
|
3.45
|
|
|
$
|
2.15
|
|
|
$
|
3.33
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
North America
|
$
|
3,142.9
|
|
|
$
|
2,788.1
|
|
International
|
615.3
|
|
|
604.8
|
|
||
Corporate
|
477.1
|
|
|
569.0
|
|
||
Inter-segment eliminations
|
(1,173.5
|
)
|
|
(1,246.5
|
)
|
||
Total assets
|
$
|
3,061.8
|
|
|
$
|
2,715.4
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
North America
|
$
|
328.9
|
|
|
$
|
317.5
|
|
International
|
51.8
|
|
|
51.1
|
|
||
Corporate
|
55.1
|
|
|
52.2
|
|
||
Total property, plant and equipment, net
|
$
|
435.8
|
|
|
$
|
420.8
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
North America
|
$
|
202.0
|
|
|
$
|
—
|
|
International
|
42.2
|
|
|
—
|
|
||
Corporate
|
1.2
|
|
|
—
|
|
||
Total operating lease right-of-use assets
|
$
|
245.4
|
|
|
$
|
—
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Bedding sales
|
$
|
2,379.6
|
|
|
$
|
455.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,835.3
|
|
Other sales
|
153.7
|
|
|
117.0
|
|
|
—
|
|
|
—
|
|
|
270.7
|
|
|||||
Net sales
|
$
|
2,533.3
|
|
|
$
|
572.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,106.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
3.4
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
(4.1
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
4.5
|
|
|
(4.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
1,035.2
|
|
|
307.0
|
|
|
—
|
|
|
—
|
|
|
1,342.2
|
|
|||||
Operating income (loss)
|
344.8
|
|
|
115.4
|
|
|
(113.5
|
)
|
|
—
|
|
|
346.7
|
|
|||||
Income (loss) from continuing operations before income taxes
|
337.0
|
|
|
109.7
|
|
|
(181.2
|
)
|
|
—
|
|
|
265.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization (1)
|
$
|
64.4
|
|
|
$
|
13.7
|
|
|
$
|
38.4
|
|
|
$
|
—
|
|
|
$
|
116.5
|
|
Capital expenditures
|
62.1
|
|
|
11.6
|
|
|
14.5
|
|
|
—
|
|
|
88.2
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Bedding sales
|
$
|
2,002.1
|
|
|
$
|
453.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,455.3
|
|
Other sales
|
134.1
|
|
|
113.5
|
|
|
—
|
|
|
—
|
|
|
247.6
|
|
|||||
Net sales
|
$
|
2,136.2
|
|
|
$
|
566.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,702.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
3.4
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
(3.9
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
3.1
|
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
823.4
|
|
|
297.3
|
|
|
—
|
|
|
—
|
|
|
1,120.7
|
|
|||||
Operating income (loss)
|
250.0
|
|
|
107.5
|
|
|
(101.2
|
)
|
|
—
|
|
|
256.3
|
|
|||||
Income (loss) from continuing operations before income taxes
|
241.1
|
|
|
101.0
|
|
|
(177.1
|
)
|
|
—
|
|
|
165.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization (1)
|
$
|
59.0
|
|
|
$
|
13.5
|
|
|
$
|
39.4
|
|
|
$
|
—
|
|
|
$
|
111.9
|
|
Capital expenditures
|
52.7
|
|
|
14.0
|
|
|
6.9
|
|
|
—
|
|
|
73.6
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Bedding sales
|
$
|
2,051.8
|
|
|
$
|
421.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,473.4
|
|
Other sales
|
122.0
|
|
|
105.2
|
|
|
—
|
|
|
—
|
|
|
227.2
|
|
|||||
Net sales
|
$
|
2,173.8
|
|
|
$
|
526.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,700.6
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
3.8
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
(4.8
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
5.5
|
|
|
(5.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
844.7
|
|
|
276.3
|
|
|
—
|
|
|
—
|
|
|
1,121.0
|
|
|||||
Operating income (loss)
|
273.2
|
|
|
112.0
|
|
|
(89.7
|
)
|
|
—
|
|
|
295.5
|
|
|||||
Income (loss) from continuing operations before income taxes
|
276.0
|
|
|
104.5
|
|
|
(165.1
|
)
|
|
—
|
|
|
215.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization (1)
|
$
|
51.4
|
|
|
$
|
14.1
|
|
|
$
|
28.5
|
|
|
$
|
—
|
|
|
$
|
94.0
|
|
Capital expenditures
|
39.9
|
|
|
9.0
|
|
|
17.7
|
|
|
—
|
|
|
66.6
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
United States
|
$
|
366.4
|
|
|
$
|
350.7
|
|
Canada
|
17.5
|
|
|
19.1
|
|
||
Other International
|
51.9
|
|
|
51.0
|
|
||
Total property, plant and equipment, net
|
$
|
435.8
|
|
|
$
|
420.8
|
|
Total International
|
$
|
69.4
|
|
|
$
|
70.1
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
United States
|
$
|
198.3
|
|
|
$
|
—
|
|
Canada
|
4.9
|
|
|
—
|
|
||
Other International
|
42.2
|
|
|
—
|
|
||
Total operating lease right-of-use assets
|
$
|
245.4
|
|
|
$
|
—
|
|
Total International
|
$
|
47.1
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
2,312.3
|
|
|
$
|
1,928.9
|
|
|
$
|
1,954.2
|
|
Canada
|
221.0
|
|
|
207.3
|
|
|
219.6
|
|
|||
Other International
|
572.7
|
|
|
566.7
|
|
|
526.8
|
|
|||
Total net sales
|
$
|
3,106.0
|
|
|
$
|
2,702.9
|
|
|
$
|
2,700.6
|
|
Total International
|
$
|
793.7
|
|
|
$
|
774.0
|
|
|
$
|
746.4
|
|
(in millions, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
690.9
|
|
|
$
|
722.8
|
|
|
$
|
821.0
|
|
|
$
|
871.3
|
|
Gross profit
|
281.8
|
|
|
313.4
|
|
|
360.6
|
|
|
386.4
|
|
||||
Operating income
|
60.5
|
|
|
81.0
|
|
|
120.6
|
|
|
84.6
|
|
||||
Income from continuing operations
|
29.0
|
|
|
42.7
|
|
|
72.4
|
|
|
46.7
|
|
||||
Net income attributable to Tempur Sealy International, Inc.
|
28.4
|
|
|
41.6
|
|
|
73.3
|
|
|
46.2
|
|
||||
Basic earnings per common share for continuing operations
|
$
|
0.53
|
|
|
$
|
0.78
|
|
|
$
|
1.33
|
|
|
$
|
0.87
|
|
Diluted earnings per common share for continuing operations
|
$
|
0.52
|
|
|
$
|
0.76
|
|
|
$
|
1.30
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
637.4
|
|
|
$
|
659.9
|
|
|
$
|
729.5
|
|
|
$
|
676.1
|
|
Gross profit
|
264.7
|
|
|
272.8
|
|
|
300.0
|
|
|
283.2
|
|
||||
Operating income
|
55.7
|
|
|
58.0
|
|
|
84.7
|
|
|
57.9
|
|
||||
Income from continuing operations
|
25.6
|
|
|
26.6
|
|
|
44.1
|
|
|
19.1
|
|
||||
Net income attributable to Tempur Sealy International, Inc.
|
23.1
|
|
|
22.8
|
|
|
42.3
|
|
|
12.3
|
|
||||
Basic earnings per common share for continuing operations
|
$
|
0.48
|
|
|
$
|
0.52
|
|
|
$
|
0.83
|
|
|
$
|
0.35
|
|
Diluted earnings per common share for continuing operations
|
$
|
0.47
|
|
|
$
|
0.52
|
|
|
$
|
0.82
|
|
|
$
|
0.35
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
2,387.1
|
|
|
$
|
793.5
|
|
|
$
|
(74.6
|
)
|
|
$
|
3,106.0
|
|
Cost of sales
|
—
|
|
|
1,390.6
|
|
|
447.8
|
|
|
(74.6
|
)
|
|
1,763.8
|
|
|||||
Gross profit
|
—
|
|
|
996.5
|
|
|
345.7
|
|
|
—
|
|
|
1,342.2
|
|
|||||
Selling and marketing expenses
|
11.2
|
|
|
466.0
|
|
|
189.2
|
|
|
(0.1
|
)
|
|
666.3
|
|
|||||
General, administrative and other expenses
|
17.4
|
|
|
242.8
|
|
|
57.7
|
|
|
(2.6
|
)
|
|
315.3
|
|
|||||
Customer-related charges
|
—
|
|
|
29.8
|
|
|
—
|
|
|
—
|
|
|
29.8
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(15.9
|
)
|
|
—
|
|
|
(15.9
|
)
|
|||||
Operating (loss) income
|
(28.6
|
)
|
|
257.9
|
|
|
114.7
|
|
|
2.7
|
|
|
346.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third party interest expense, net
|
56.3
|
|
|
26.7
|
|
|
2.7
|
|
|
—
|
|
|
85.7
|
|
|||||
Intercompany interest (income) expense, net
|
(9.8
|
)
|
|
13.2
|
|
|
(3.4
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense (income), net
|
46.5
|
|
|
39.9
|
|
|
(0.7
|
)
|
|
—
|
|
|
85.7
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(7.6
|
)
|
|
1.6
|
|
|
1.5
|
|
|
(4.5
|
)
|
|||||
Total other expense, net
|
46.5
|
|
|
32.3
|
|
|
0.9
|
|
|
1.5
|
|
|
81.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
250.7
|
|
|
84.3
|
|
|
—
|
|
|
(335.0
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
175.6
|
|
|
309.9
|
|
|
113.8
|
|
|
(333.8
|
)
|
|
265.5
|
|
|||||
Income tax benefit (provision)
|
13.8
|
|
|
(59.2
|
)
|
|
(29.5
|
)
|
|
0.2
|
|
|
(74.7
|
)
|
|||||
Income from continuing operations
|
189.4
|
|
|
250.7
|
|
|
84.3
|
|
|
(333.6
|
)
|
|
190.8
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|||||
Net income before non-controlling interests
|
189.4
|
|
|
250.7
|
|
|
84.3
|
|
|
(335.0
|
)
|
|
189.4
|
|
|||||
Less: Net loss attributable to non-controlling interest
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
189.5
|
|
|
$
|
250.7
|
|
|
$
|
84.4
|
|
|
$
|
(335.1
|
)
|
|
$
|
189.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
197.1
|
|
|
$
|
251.9
|
|
|
$
|
90.8
|
|
|
$
|
(342.7
|
)
|
|
$
|
197.1
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
2,000.9
|
|
|
$
|
800.5
|
|
|
$
|
(98.5
|
)
|
|
$
|
2,702.9
|
|
Cost of sales
|
—
|
|
|
1,208.3
|
|
|
464.3
|
|
|
(90.4
|
)
|
|
1,582.2
|
|
|||||
Gross profit
|
—
|
|
|
792.6
|
|
|
336.2
|
|
|
(8.1
|
)
|
|
1,120.7
|
|
|||||
Selling and marketing expenses
|
8.4
|
|
|
392.0
|
|
|
199.8
|
|
|
(12.4
|
)
|
|
587.8
|
|
|||||
General, administrative and other expenses
|
17.8
|
|
|
204.6
|
|
|
57.4
|
|
|
(6.8
|
)
|
|
273.0
|
|
|||||
Customer-related charges
|
—
|
|
|
21.2
|
|
|
—
|
|
|
—
|
|
|
21.2
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(17.6
|
)
|
|
—
|
|
|
(17.6
|
)
|
|||||
Operating (loss) income
|
(26.2
|
)
|
|
174.8
|
|
|
96.6
|
|
|
11.1
|
|
|
256.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third party interest expense, net
|
59.2
|
|
|
30.2
|
|
|
4.6
|
|
|
(1.7
|
)
|
|
92.3
|
|
|||||
Intercompany interest (income) expense, net
|
(6.9
|
)
|
|
10.8
|
|
|
(3.9
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
52.3
|
|
|
41.0
|
|
|
0.7
|
|
|
(1.7
|
)
|
|
92.3
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(9.9
|
)
|
|
13.9
|
|
|
(5.0
|
)
|
|
(1.0
|
)
|
|||||
Total other expense, net
|
52.3
|
|
|
31.1
|
|
|
14.6
|
|
|
(6.7
|
)
|
|
91.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
162.0
|
|
|
26.6
|
|
|
—
|
|
|
(188.6
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
83.5
|
|
|
170.3
|
|
|
82.0
|
|
|
(170.8
|
)
|
|
165.0
|
|
|||||
Income tax benefit (provision)
|
14.1
|
|
|
(8.3
|
)
|
|
(55.4
|
)
|
|
—
|
|
|
(49.6
|
)
|
|||||
Income from continuing operations
|
97.6
|
|
|
162.0
|
|
|
26.6
|
|
|
(170.8
|
)
|
|
115.4
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(17.8
|
)
|
|
(17.8
|
)
|
|||||
Net income before non-controlling interests
|
97.6
|
|
|
162.0
|
|
|
26.6
|
|
|
(188.6
|
)
|
|
97.6
|
|
|||||
Less: Net loss attributable to non-controlling interests
|
(2.9
|
)
|
|
(2.6
|
)
|
|
(0.3
|
)
|
|
2.9
|
|
|
(2.9
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
100.5
|
|
|
$
|
164.6
|
|
|
$
|
26.9
|
|
|
$
|
(191.5
|
)
|
|
$
|
100.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
80.7
|
|
|
$
|
164.2
|
|
|
$
|
7.5
|
|
|
$
|
(171.7
|
)
|
|
$
|
80.7
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,961.2
|
|
|
$
|
862.5
|
|
|
$
|
(123.1
|
)
|
|
$
|
2,700.6
|
|
Cost of sales
|
—
|
|
|
1,185.4
|
|
|
497.6
|
|
|
(103.4
|
)
|
|
1,579.6
|
|
|||||
Gross profit
|
—
|
|
|
775.8
|
|
|
364.9
|
|
|
(19.7
|
)
|
|
1,121.0
|
|
|||||
Selling and marketing expenses
|
5.6
|
|
|
406.8
|
|
|
188.9
|
|
|
(15.2
|
)
|
|
586.1
|
|
|||||
General, administrative and other expenses
|
17.5
|
|
|
176.6
|
|
|
78.9
|
|
|
(11.6
|
)
|
|
261.4
|
|
|||||
Customer-related charges
|
(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
|
|
|
7.1
|
|
|
295.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third party interest expense, net
|
59.6
|
|
|
26.0
|
|
|
22.4
|
|
|
(20.7
|
)
|
|
87.3
|
|
|||||
Intercompany interest (income) expense, net
|
(4.7
|
)
|
|
8.3
|
|
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
54.9
|
|
|
34.3
|
|
|
18.8
|
|
|
(20.7
|
)
|
|
87.3
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(17.2
|
)
|
|
9.2
|
|
|
0.8
|
|
|
(7.2
|
)
|
|||||
Total other expense, net
|
54.9
|
|
|
17.1
|
|
|
28.0
|
|
|
(19.9
|
)
|
|
80.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
193.1
|
|
|
51.3
|
|
|
—
|
|
|
(244.4
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
123.5
|
|
|
225.7
|
|
|
83.6
|
|
|
(217.4
|
)
|
|
215.4
|
|
|||||
Income tax benefit (provision)
|
17.2
|
|
|
(32.6
|
)
|
|
(32.3
|
)
|
|
3.9
|
|
|
(43.8
|
)
|
|||||
Income from continuing operations
|
140.7
|
|
|
193.1
|
|
|
51.3
|
|
|
(213.5
|
)
|
|
171.6
|
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(30.9
|
)
|
|
(30.9
|
)
|
|||||
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 attributable to Tempur Sealy International, Inc.
|
$
|
179.4
|
|
|
$
|
193.0
|
|
|
$
|
89.9
|
|
|
$
|
(282.9
|
)
|
|
$
|
179.4
|
|
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)
|
|
100,317
|
|
|
$
|
44.11
|
|
|
—
|
|
Amended and Restated 2013 Equity Incentive Plan (2)
|
|
4,165,274
|
|
|
61.75
|
|
|
2,948,158
|
|
|
Total
|
|
4,265,591
|
|
|
$
|
105.86
|
|
|
2,948,158
|
|
(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 1,268,462 shares issuable under restricted stock units and deferred stock units. Additionally, this number includes 1,701,245 performance restricted stock units which reflects a maximum payout of the awards granted. The Company expects that in early March 2019 the Compensation Committee of the Board of Directors will formally determine that the Company did not have $600.0 million or more in Adjusted EBITDA for 2019 in accordance with the 2019 Aspirational Plan PRSUs. As a result, half of the total outstanding PRSUs above will be forfeited as of this date. 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:
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
Consolidated Statements of Income for the years ended December 31, 2019, 2018 and 2017
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
|
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2019, 2018 and 2017
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
|
|
|
Notes to the Consolidated Financial Statements
|
|
|
|
|
2.
|
Financial Statement Schedule:
|
|
|
Schedule II—Valuation and Qualifying Accounts
|
|
|
|
|
|
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.
|
|
|
|
|
3.
|
Exhibits:
|
(b)
|
|
EXHIBIT INDEX
|
3.1
|
|
3.2
|
|
3.3
|
|
3.4
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
|
10.11
|
|
10.12
|
|
10.13†
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19
|
|
10.20
|
|
10.21
|
|
10.22
|
|
10.23
|
|
10.24
|
|
10.25
|
|
10.26
|
|
10.27
|
|
10.28
|
10.29
|
|
10.30
|
|
10.31
|
|
10.32
|
|
10.33
|
|
10.34
|
|
10.35
|
|
10.36
|
|
10.37
|
|
10.38
|
|
10.39
|
|
10.40
|
|
10.41
|
|
10.42
|
|
10.43
|
|
10.44
|
|
10.45
|
|
10.46
|
|
10.47
|
|
10.48
|
|
10.49
|
|
10.50
|
|
10.51
|
|
10.52
|
|
10.53
|
|
10.54
|
|
10.55
|
|
10.56
|
|
10.57
|
(1)
|
Incorporated by reference.
|
(2)
|
Indicates management contract or compensatory plan or arrangement.
|
(3)
|
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.
|
|
|
|
|
Additions
|
|
|
|
|
|||||||||
Description
|
|
Balance at
Beginning of
Period
|
|
Charges to
Costs and
Expenses
|
|
Charged to Other
Accounts
|
|
Deductions
|
|
Balance at
End of
Period
|
|||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Year Ended December 31, 2017
|
|
$
|
20.9
|
|
|
9.8
|
|
|
—
|
|
|
(6.0
|
)
|
|
$
|
24.7
|
|
Year Ended December 31, 2018
|
|
$
|
24.7
|
|
|
31.3
|
|
|
—
|
|
|
(8.4
|
)
|
|
$
|
47.6
|
|
Year Ended December 31, 2019
|
|
$
|
47.6
|
|
|
29.3
|
|
|
—
|
|
|
(5.0
|
)
|
|
$
|
71.9
|
|
|
|
|
|
Additions
|
|
|
|
|
|||||||||
Description
|
|
Balance at
Beginning of
Period
|
|
Charges to
Costs and
Expenses
|
|
Charged to Other
Accounts
|
|
Deductions
|
|
Balance at
End of
Period
|
|||||||
Valuation allowance for deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Year Ended December 31, 2017
|
|
$
|
45.2
|
|
|
9.9
|
|
|
—
|
|
|
—
|
|
|
$
|
55.1
|
|
Year Ended December 31, 2018
|
|
$
|
55.1
|
|
|
9.5
|
|
|
—
|
|
|
(21.5
|
)
|
|
$
|
43.1
|
|
Year Ended December 31, 2019
|
|
$
|
43.1
|
|
|
0.8
|
|
|
—
|
|
|
(13.9
|
)
|
|
$
|
30.0
|
|
|
|
TEMPUR SEALY INTERNATIONAL, INC.
(Registrant)
|
||
|
|
|
|
|
Date: February 21, 2020
|
|
By:
|
|
/S/ Scott L. Thompson
|
|
|
|
|
Scott L. Thompson
Chairman, President and Chief Executive Officer
|
Signature
|
|
Capacity
|
|
|
|
/S/ SCOTT L. THOMPSON
|
|
Chairman, President and Chief Executive Officer (Principal Executive Officer)
|
Scott L. Thompson
|
|
|
|
|
|
/S/ BHASKAR RAO
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
Bhaskar Rao
|
|
|
|
|
|
/S/ EVELYN S. DILSAVER
|
|
Director
|
Evelyn S. Dilsaver
|
|
|
|
|
|
/S/ CATHY R. GATES
|
|
Director
|
Cathy R. Gates
|
|
|
|
|
|
/S/ JOHN A. HEIL
|
|
Director
|
John A. Heil
|
|
|
|
|
|
/S/ JON L. LUTHER
|
|
Director
|
Jon L. Luther
|
|
|
|
|
|
/S/ RICHARD W. NEU
|
|
Director
|
Richard W. Neu
|
|
|
|
|
|
/S/ ARIK W. RUCHIM
|
|
Director
|
Arik W. Ruchim
|
|
|
|
|
|
/S/ ROBERT B. TRUSSELL, JR.
|
|
Director
|
Robert B. Trussell, Jr.
|
|
•
|
The Notes would have effectively ranked junior to $472.5 million of secured indebtedness of the Company and the subsidiaries guaranteeing the Notes (including outstanding letters of credit, plus up to an additional $487.8 million available for borrowing under our 2019 Credit Agreement and Accounts Receivable Securitization); and
|
•
|
The Notes would have effectively ranked junior to $403.5 million of liabilities of our non-guarantor subsidiaries (excluding intercompany liabilities).
|
|
(1) the outstanding voting stock of the Company is reclassified into or exchanged for other voting stock of the Company or for voting stock of the surviving corporation or transferee, and
|
•
|
incur additional indebtedness or provide guarantees in respect of obligations of other persons;
|
•
|
pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;
|
•
|
prepay, redeem or repurchase subordinated debt;
|
•
|
make loans or investments;
|
•
|
sell or otherwise dispose of certain assets;
|
•
|
incur liens;
|
•
|
restrict dividends, loans or asset transfers from our subsidiaries;
|
•
|
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
|
•
|
enter into a new or different line of business; and
|
•
|
enter into certain transactions with our affiliates.
|
(a)
|
the Notes have Investment Grade Ratings from both Rating Agencies, and
|
(b)
|
no Default or Event of Default has occurred and is continuing under the Note Indentures,
|
(A)
|
60% of the book value of the inventory of the Company and the Restricted Subsidiaries, and
|
(B)
|
85% of the book value of the accounts receivable of the Company and the Restricted Subsidiaries (including any Receivables Entity that is a Restricted Subsidiary),
|
(a)
|
since the beginning of that period the Company or any Restricted Subsidiary has Incurred any Debt that remains outstanding or repaid any Debt, or
|
(b)
|
the transaction giving rise to the need to calculate the Consolidated Fixed Charges Coverage Ratio involves an Incurrence or repayment of Debt,
|
(a)
|
since the beginning of that period the Company or any Restricted Subsidiary shall have made any asset sale or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property which constitutes all or substantially all of an operating unit of a business,
|
(b)
|
the transaction giving rise to the need to calculate the Consolidated Fixed Charges Coverage Ratio involves an asset sale, Investment or acquisition, or
|
(c)
|
since the beginning of that period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of that period) shall have made such an asset sale, Investment or acquisition,
|
(a)
|
(x) the aggregate amount of all Debt of the Company and its Restricted Subsidiaries secured by liens at the date of determination (on a pro-forma basis reflecting any Incurrence of Debt and repayment of Debt made on such date), less
|
(a)
|
(x) the aggregate amount of all Debt of the Company and its Restricted Subsidiaries secured by liens at the date of determination (on a pro-forma basis reflecting any Incurrence of Debt and repayment of Debt made on such date), less
|
(b)
|
the aggregate amount of EBITDA for the Company for the four full fiscal quarters, treated as one period, ending prior such date of determination for which internal financial statements of the Company are available,
|
(2)
|
debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which the Person is responsible or liable;
|
(1)
|
with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation;
|
(2)
|
with respect to Debt secured by a Lien on an asset of such Person but not otherwise the obligation, contingent or otherwise, of such Person, the lesser of (x) the fair market value of such asset on the date the Lien attached and (y) the amount of such Debt;
|
(3)
|
with respect to any Debt issued with original issue discount, the face amount of such Debt less the remaining unamortized portion of the original issue discount of such Debt;
|
(4)
|
with respect to any Hedging Obligation, zero if the Hedging Obligation has been incurred pursuant to clause (g), (h) or (i) of the second paragraph of the covenant described under “-Certain Covenants-Limitation on Debt,” or otherwise the net amount payable if such Hedging Obligation terminated at that time due to default by such Person; and
|
(5)
|
otherwise, the outstanding principal amount thereof.
|
(i)
|
any debt that has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or Temporary Cash Investments (in an amount sufficient to satisfy all such indebtedness at maturity or redemption, as applicable, and all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of such indebtedness, and subject to no other liens, and the other applicable terms of the instrument governing such indebtedness;
|
(ii)
|
any obligations arising from agreements of a Person providing for indemnification, adjustment of purchase price, holdbacks, contingent payment obligations based on a final financial statement or performance of acquired or disposed of assets or similar obligations (other than guarantees of Debt), in each case incurred or assumed by such Person in connection with the acquisition or disposition of assets (including through mergers, consolidations or otherwise);
|
(iii)
|
accrued expenses or trade payables;
|
(iv)
|
contingent obligations incurred in the ordinary course of business and not in respect of borrowed money; and
|
(v)
|
deferred or prepaid revenues.
|
(1)
|
is Guaranteed by the Company or any subsidiary of the Company (excluding guarantees of obligations (other than the principal of, and interest on, Debt) pursuant to Standard Securitization Undertakings),
|
(2)
|
is recourse to or obligates the Company or any subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or
|
(3)
|
subjects any property or asset of the Company or any subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;
|
Title:
|
Senior Vice President, Chief Human Resources Officer
|
Exhibit A
|
Competitive Enterprises of the Company and its Affiliates
|
Ace
|
AH Beard
|
Auping
|
Ashley Sleep
|
Bedshed
|
Better Bed
|
Bohus
|
Botafogo
|
Boyd
|
Bruno
|
Carpe Diem
|
Carpenter
|
Carolina Mattress
|
Casper
|
Cauval Group
|
Chaide & Chaide
|
Classic Sleep Products
|
Coin
|
Colunex
|
Copel
|
Comforpedic
Comfort Group
|
Comfort Solutions
|
COFEL group
|
Correct
|
De Rucci
|
Diamona
|
Doremo Octaspring
|
Dorelan
|
Dreams
|
Drommeland
|
Dunlopillo
|
Duxiana
|
Eastborne
|
Eight Sleep
|
El Corte Ingles
|
Eminflex
|
Englander
|
Eve
|
Falafella
|
Flex Group of Companies
|
Foamex
|
Forty Winks
|
Furniture Village
|
France Bed
|
Future Foam
|
Harrisons
|
Harvey Norman Group
|
Hastens
|
Helix Sleep
|
Hilding Anders Group
|
Hyundai Retail Group
|
Hypnos
|
IBC
|
Jysk Group
|
KayMed
|
King Koil
|
Kingsdown
|
Koala
|
Lady Americana
|
Land and Sky
|
Leesa Sleep
|
Leggett & Platt
|
Lo Monaco
|
Lotte Retail Group
|
Luna
|
Lutz Group
|
Magniflex
|
Metzler
|
Mlily
|
Myers
|
Nature’s Sleep (GhostBed)
|
Nectar
|
Optimo
|
Ortobom
|
Per Dormire
|
Purple, Inc.
|
Natura
|
Natures Rest
|
Park Place
|
Permaflex
|
Pikolin Group
|
Recticel Group
|
Relyon
|
Restonic
|
Reverie
|
Rosen
|
Rowe
|
Saatva
|
Sapsa Bedding
|
Select Comfort
|
Sherwood Bedding
|
Silentnight
|
Simba
|
Serta Simmons Bedding/Beautyrest and any direct or indirect parent company
|
Sinomax
|
Sleep Innovations
|
Sleepmaker
|
Sleep Number
|
Spring Air
|
Steinhoff
|
Sterling
|
Stobel
|
Swiss Comfort
|
Swiss Sense
|
Tediber
|
Therapedic
|
Tuft and Needle
|
Whisper
|
Ashley
|
Mattress Firm/Steinhoff
|
Sleepy’s
|
Wayfair
|
Title:
|
Senior Vice President, Chief Human Resources Officer
|
Exhibit A
|
Competitive Enterprises of the Company and its Affiliates
|
Ace
|
AH Beard
|
Auping
|
Ashley Sleep
|
Bedshed
|
Better Bed
|
Bohus
|
Botafogo
|
Boyd
|
Bruno
|
Carpe Diem
|
Carpenter
|
Carolina Mattress
|
Casper
|
Cauval Group
|
Chaide & Chaide
|
Classic Sleep Products
|
Coin
|
Colunex
|
Copel
|
Comforpedic
Comfort Group
|
Comfort Solutions
|
COFEL group
|
Correct
|
De Rucci
|
Diamona
|
Doremo Octaspring
|
Dorelan
|
Dreams
|
Drommeland
|
Dunlopillo
|
Duxiana
|
Eastborne
|
El Corte Ingles
|
Eminflex
|
Englander
|
Eve
|
Falafella
|
Flex Group of Companies
|
Foamex
|
Forty Winks
|
Furniture Village
|
France Bed
|
Future Foam
|
Harrisons
|
Harvey Norman Group
|
Hastens
|
Helix Sleep
|
Hilding Anders Group
|
Hyundai Retail Group
|
Hypnos
|
IBC
|
Jysk Group
|
KayMed
|
King Koil
|
Kingsdown
|
Koala
|
Lady Americana
|
Land and Sky
|
Leesa Sleep
|
Leggett & Platt
|
Lo Monaco
|
Lotte Retail Group
|
Luna
|
Lutz Group
|
Magniflex
|
Metzler
|
Myers
|
Nature’s Sleep (GhostBed)
|
Optimo
|
Ortobom
|
Per Dormire
|
Purple, Inc.
|
Natura
|
Natures Rest
|
Park Place
|
Permaflex
|
Pikolin Group
|
Recticel Group
|
Relyon
|
Restonic
|
Reverie
|
Rosen
|
Rowe
|
Saatva
|
Sapsa Bedding
|
Select Comfort
|
Sherwood Bedding
|
Silentnight
|
Simba
|
Serta Simmons Bedding/Beautyrest and any direct or indirect parent company
|
Sinomax
|
Sleep Innovations
|
Sleepmaker
|
Sleep Number
|
Spring Air
|
Steinhoff
|
Sterling
|
Stobel
|
Swiss Comfort
|
Swiss Sense
|
Tediber
|
Therapedic
|
Tuft and Needle
|
Whisper
|
Ashley
|
Mattress Firm/Steinhoff
|
Sleepy’s
|
Wayfair
|
Ace
|
AH Beard
|
Auping
|
Ashley Sleep
|
Bedshed
|
Better Bed
|
Bohus
|
Botafogo
|
Boyd
|
Bruno
|
Carpe Diem
|
Carpenter
|
Carolina Mattress
|
Casper
|
Cauval Group
|
Chaide & Chaide
|
Classic Sleep Products
|
Coin
|
Colunex
|
Copel
|
Comforpedic
Comfort Group
|
Comfort Solutions
|
COFEL group
|
Correct
|
De Rucci
|
Diamona
|
Doremo Octaspring
|
Dorelan
|
Dreams
|
Drommeland
|
Dunlopillo
|
Duxiana
|
Eastborne
|
Eight Sleep
|
El Corte Ingles
|
Eminflex
|
Englander
|
Eve
|
Falafella
|
Flex Group of Companies
|
Foamex
|
Forty Winks
|
Furniture Village
|
France Bed
|
Future Foam
|
Harrisons
|
Harvey Norman Group
|
Hastens
|
Helix Sleep
|
Hilding Anders Group
|
Hyundai Retail Group
|
Hypnos
|
IBC
|
Jysk Group
|
KayMed
|
King Koil
|
Kingsdown
|
Koala
|
Lady Americana
|
Land and Sky
|
Leesa Sleep
|
Leggett & Platt
|
Lo Monaco
|
Lotte Retail Group
|
Luna
|
Lutz Group
|
Magniflex
|
Metzler
|
Mlily
|
Myers
|
Nature’s Sleep (GhostBed)
|
Nectar
|
Optimo
|
Ortobom
|
Per Dormire
|
Purple, Inc.
|
Natura
|
Natures Rest
|
Park Place
|
Permaflex
|
Pikolin Group
|
Recticel Group
|
Relyon
|
Restonic
|
Reverie
|
Rosen
|
Rowe
|
Saatva
|
Sapsa Bedding
|
Select Comfort
|
Sherwood Bedding
|
Silentnight
|
Simba
|
Serta Simmons Bedding/Beautyrest and any direct or indirect parent company
|
Sinomax
|
Sleep Innovations
|
Sleepmaker
|
Sleep Number
|
Spring Air
|
Steinhoff
|
Sterling
|
Stobel
|
Swiss Comfort
|
Swiss Sense
|
Tediber
|
Therapedic
|
Tuft and Needle
|
Whisper
|
Ashley
|
Mattress Firm/Steinhoff
|
Sleepy’s
|
Wayfair
|
Recipient:
|
|
|
|
Number of Target Shares in Award:
|
|
|
|
Date of Award:
|
January 3, 2020
|
|
|
Designated Period:
|
The one (1) year period commencing January 1, 2020 and ending December 31, 2020
|
(i)
|
Death. If the Recipient dies at any time during the Designated Period or before the Determination Date, the PRSUs granted hereunder will vest immediately and the person or persons to whom the Recipient’s rights shall pass by will or the laws of descent and distribution shall be entitled to receive Shares equal to the number of Target Shares granted to the Recipient pursuant to this Award in lieu of any claim to the Final Shares (if any).
|
(ii)
|
Long-Term Disability. If the Company or an Affiliate of the Company terminates the Recipient’s employment as a result of long-term disability (within the meaning of Section 409A of the Code) at any time during the Designated Period or before the Determination Date, the PRSUs granted hereunder will vest immediately and Recipient shall be entitled to receive Shares equal to the number of Target Shares granted to the Recipient pursuant to this Award in lieu of any claim to the Final Shares (if any).
|
(iii)
|
By the Company or By the Recipient. If at any time during the Designated Period or before the Determination Date: (A) the Recipient ceases to be an employee of the Company or an Affiliate of the Company due to the Recipient’s termination by the Company or such Affiliate for any reason other than as provided in Section 5(a)(ii) or (B) if the Recipient resigns or otherwise terminates his or her employment for any reason, then the Recipient’s right to the PRSUs and the Shares issuable thereunder shall be forfeited, no Shares shall be issued and the PRSUs shall be cancelled.
|
(i)
|
Death. If the Recipient dies, the unvested PRSUs relating to the Final Award granted hereunder will vest immediately and the person or persons to whom the Recipient’s rights shall pass by will or the laws of descent and distribution shall be entitled to receive all of the Shares with respect thereto.
|
(ii)
|
Long-Term Disability. If the Company or an Affiliate of the Company terminates the Recipient’s employment as a result of long-term disability (within the meaning of Section 409A of the Code), the unvested PRSUs relating to the Final Award granted hereunder will vest immediately and Recipient shall be entitled to receive all of the Shares with respect thereto.
|
(iii)
|
By the Company or By the Recipient. If the Recipient ceases to be an employee of the Company or an Affiliate of the Company due to the Recipient’s termination by the Company or such Affiliate for any reason other than as provided in Section 5(b)(ii) or if the Recipient resigns or otherwise terminates his or her employment for any reason other than for an Approved Retirement, the Recipient’s right to the unvested PRSUs relating to the Final Award and the Shares issuable thereunder shall be forfeited, no Shares shall be issued and the unvested Performance Restricted Stock Units shall be cancelled. The term “Approved Retirement” is defined below.
|
(iv)
|
Approved Retirement. In the event of the Recipient’s Approved Retirement, the Compensation Committee (or any person delegated authority to act on its behalf in respect of the matter) may at its discretion consent to the continued vesting in accordance with Section 4 hereof (notwithstanding such Approved Retirement) until the third anniversary of the date of such Approved Retirement of all or part of the unvested PRSUs relating to the Final Award on such date, in which case Recipient’s right to the unvested PRSUs relating to the Final Award and the Shares issuable thereunder that would not vest upon or prior to such anniversary shall be forfeited, no Shares shall be issued and the unvested Performance Restricted Stock Units shall be cancelled at the time of such Approved Retirement. Notwithstanding the foregoing, no continued vesting shall occur, no Shares shall be issued and all of Recipient’s rights to the unvested PRSUs relating to the Final Award and related Shares issuable thereunder shall be forfeited, expire and terminate at the time of such Approved Retirement unless (i) the Company shall have received a release of all claims from the Recipient (a “Release and Waiver”) (and said Release and Waiver shall have become irrevocable in accordance with its terms) prior to the next applicable Vesting Date (or if earlier, the deadline established in the form of Release and Waiver delivered by the Company to Recipient for execution) and (ii) the Recipient shall have complied with the covenants set forth in Section 11 of this Agreement. If and to the extent the Compensation Committee shall for any reason decline to consent to continued vesting on the Recipient’s Approved Retirement, then the provisions of subsection 5(b)(iii) above shall instead apply.
|
(i)
|
“Approved Retirement” shall mean any Retirement of the Recipient the Compensation Committee determines in its sole discretion shall be treated as an “Approved Retirement” for purposes of this Agreement;
|
(ii)
|
“Change of Control” shall have the meaning set forth in the Plan, provided, that no event or transaction shall constitute a Change of Control for purposes of this Agreement unless it also qualifies as a change of control for purposes of Section 409A of the Code; and
|
(iii)
|
“Employee”, “employment”, “termination of employment” and “cease to be employed,” and other words or phrases of similar import, shall mean the continued provision of substantial services to the Company or any of its Affiliates (or the cessation or termination of such services) whether as an employee, consultant or director.
|
Entity
|
State or Country of Organization
|
Tempur World, LLC
|
Delaware
|
Tempur-Pedic Management, LLC
|
Delaware
|
Tempur Production USA, LLC
|
Virginia
|
Tempur-Pedic North America, LLC
|
Delaware
|
Tempur-Pedic Technologies, LLC
|
Delaware
|
Tempur Retail Stores, LLC
|
Delaware
|
Tempur Sealy Receivables, LLC
|
Delaware
|
Sleep Insurance, Inc.
|
Vermont
|
Tempur Sealy International Distribution, LLC
|
Delaware
|
Tempur Holdings B.V.
|
Netherlands
|
Dan-Foam ApS
|
Denmark
|
Tempur UK, Ltd.
|
United Kingdom
|
Tempur Japan Yugen Kaisha
|
Japan
|
Tempur Sealy International Limited
|
United Kingdom
|
Tempur Sealy France SAS
|
France
|
Tempur Sealy DACH GmbH fka
|
Germany
|
Tempur Singapore Pte Ltd.
|
Singapore
|
Tempur Sealy Benelux B.V.
|
Netherlands
|
Tempur Australia Pty. Ltd.
|
Australia
|
Tempur Korea Limited
|
Republic of Korea
|
Sealy Ecommerce, LLC
|
Delaware
|
Sealy Mattress Corporation
|
Delaware
|
Sealy Mattress Company
|
Ohio
|
Sealy Mattress Company of Puerto Rico
|
Ohio
|
Sealy, Inc.
|
Ohio
|
The Ohio Mattress Company Licensing and Components Group, Inc.
|
Delaware
|
Sealy Mattress Manufacturing Company, LLC.
|
Delaware
|
Sealy Technology LLC
|
North Carolina
|
Sleep Outfitters USA, LLC
|
Delaware
|
Comfort Revolution, LLC
|
Delaware
|
Burlington Mattress Co. LLC
|
Delaware
|
Sealy (Switzerland) Gmbh
|
Switzerland
|
Mattress Holdings International B.V.
|
The Netherlands
|
Sealy Canada, Ltd.
|
Alberta
|
Gestion Centurion Inc.
|
Quebec
|
Tempur Sealy Mexico S. de R.L. de C.V.
|
Mexico
|
Sealy Servicios de Mexico S.A. de C.V.
|
Mexico
|
Sealy Colchones de Mexico S.A. de C.V.
|
Mexico
|
(1)
|
Registration Statement (Form S-8 No. 333-160821) pertaining to the Tempur-Pedic International, Inc. Amended and Restated 2003 Equity Incentive Plan,
|
(2)
|
Registration Statement (Form S-8 No. 333-154966) pertaining to the Tempur-Pedic International, Inc. Amended and Restated 2003 Equity Incentive Plan,
|
(3)
|
Registration Statement (Form S-8 No. 333-111545) pertaining to the Tempur-Pedic International, Inc. 2003 Equity Incentive Plan, the 2003 Employee Stock Purchase Plan, and the 2002 Stock Option Plan,
|
(4)
|
Registration Statement (Form S-8 No. 333-192220) pertaining to the Tempur Sealy International, Inc. 2013 Equity Incentive Plan,
|
(5)
|
Registration Statement (Form S-8 No. 333-217901) pertaining to the Tempur Sealy International, Inc. Amended and Restated 2013 Equity Incentive Plan,
|
(6)
|
Registration Statement (Form S-4 No. 333-209511) of Tempur Sealy International, Inc., and
|
(7)
|
Registration Statement (Form S-4 No. 333-212943) of Tempur Sealy International, Inc.;
|
Date: February 21, 2020
|
By:
|
/S/ SCOTT L. THOMPSON
|
|
|
Scott L. Thompson
|
|
|
President and Chief Executive Officer
|
Date: February 21, 2020
|
By:
|
/S/ BHASKAR RAO
|
|
|
Bhaskar Rao
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
Date: February 21, 2020
|
|
/S/ SCOTT L. THOMPSON
|
|
|
Scott L. Thompson
President and Chief Executive Officer
|
|
|
|
Date: February 21, 2020
|
|
/S/ BHASKAR RAO
|
|
|
Bhaskar Rao
Executive Vice President and Chief Financial Officer
|