-- Reports Fourth Quarter EPS of $0.38 -- Company Announces $100
Million Share Repurchase Program LEXINGTON, Ky., Jan. 26
/PRNewswire-FirstCall/ -- Tempur-Pedic International Inc.
(NYSE:TPX), the leading manufacturer, marketer and distributor of
premium mattresses and pillows worldwide, today announced financial
results for the fourth quarter and year ended December 31, 2009.
The Company also announced a $100 million share repurchase program
and confirmed its financial guidance for 2010. FOURTH QUARTER
FINANCIAL SUMMARY -- Earnings per share (EPS) were $0.38 per
diluted share in the fourth quarter of 2009 as compared to adjusted
EPS of $0.17 per diluted share in the fourth quarter of 2008. GAAP
EPS in the fourth quarter of 2008 was $0.01, and reflects the $11.6
million tax provision related to the Company's repatriation of
foreign earnings. The Company reported net income of $29.1 million
for the fourth quarter of 2009 as compared to adjusted net income
of $12.7 million in the fourth quarter of 2008. GAAP net income in
the fourth quarter of 2008 was $1.1 million. For additional
information regarding adjusted EPS and adjusted net income (which
are non-GAAP measures), please refer to the reconciliation and
other information included in the attached schedule. -- Net sales
increased 29% to $244.8 million in the fourth quarter of 2009 from
$189.1 million in the fourth quarter of 2008. On a constant
currency basis, net sales increased 24%. Net sales in the domestic
segment increased 40%, while international segment net sales
increased 15%. On a constant currency basis, international segment
net sales increased 3%. -- Mattress sales increased 26% globally.
Mattress sales increased 34% in the domestic segment and 12% in the
international segment. On a constant currency basis, international
mattress sales were essentially unchanged. Pillow sales increased
23% globally. Pillow sales increased 39% domestically and 13%
internationally. On a constant currency basis, international pillow
sales increased 1%. -- Gross profit margin was 48.5% as compared to
43.0% in the fourth quarter of 2008. The gross profit margin
increased as a result of improved efficiencies in manufacturing,
lower commodity costs, fixed cost leverage related to higher
production volumes and improved pricing, partially offset by
geographic mix and new product introductions. -- Operating profit
margin was 19.3% as compared to 13.4% in the fourth quarter of
2008. -- The Company generated $14.6 million of operating cash flow
in the fourth quarter of 2009. -- During the quarter, the Company
reduced Total debt by $17.5 million to $297.5 million. As of
December 31, 2009, the Company's ratio of Funded debt to EBITDA was
1.68 times, well within the covenant in its credit facility, which
requires that this ratio not exceed 3.00 times. For additional
information about EBITDA and Funded debt (which are non-GAAP
measures) please refer to the reconciliation and other information
included in the attached schedule. FULL YEAR 2009 FINANCIAL SUMMARY
-- Earnings per share (EPS) were $1.12 per diluted share for the
full year 2009 as compared to adjusted EPS of $0.94 per diluted
share for the full year 2008. GAAP EPS was $0.79 for the full year
2008, and includes the $11.6 million tax provision related to the
repatriation of foreign earnings. -- Net sales declined 10% to
$831.2 million for the full year 2009 from $927.8 million for the
full year 2008. On a constant currency basis, net sales declined
9%. Net sales in the domestic segment declined 8%, while
international segment net sales declined 14%. On a constant
currency basis, international segment net sales declined 11%. --
Gross profit margin was 47.4% for the full year 2009 as compared to
43.2% for the full year 2008. The gross profit margin increased as
a result of improved efficiencies in manufacturing, lower commodity
costs, and improved pricing, partially offset by fixed cost
de-leverage related to lower production volumes. -- Operating
profit margin was 17.4% as compared to 14.4% for the full year
2008. -- For the full year 2009, the Company lowered Total debt by
$121.9 million to $297.5 million. Chief Executive Officer Mark
Sarvary commented, "Our fourth quarter and full year results
reflect a gradual improvement in the macro environment together
with success from sales and marketing initiatives. Our recent
product introductions and our new advertising campaign combined
with continued productivity improvements should allow us to build
on this performance in 2010." Chief Financial Officer Dale Williams
commented, "With respect to the authorization of a new share
repurchase program, we note that during 2009 we substantially
reduced both our total debt and leverage ratio. We view share
repurchases as an excellent means to return value to stockholders
over the long term." Share Repurchase Program The Board of
Directors authorized the repurchase of up to $100 million of shares
of the Company's common stock. Stock repurchases under this program
may be made through open market transactions, negotiated purchases
or otherwise, at times and in such amounts as management and a
committee of the Board deem appropriate. The timing and actual
number of shares repurchased will depend on a variety of factors
including price, financing and regulatory requirements and other
market conditions. Repurchases may also be made under a Rule 10b5-1
plan, which would permit shares to be repurchased when the Company
might otherwise be precluded from doing so under insider trading
laws. This share repurchase program replaces the Company's prior
share repurchase authorization, and may be limited, suspended or
terminated at any time without prior notice. Financial Guidance The
Company confirmed its full year 2010 guidance for net sales and
earnings per share. It currently expects net sales for 2010 to
range from $950 million to $970 million. It currently expects EPS
for 2010 to range from $1.40 to $1.50 per diluted share. The
Company noted its expectations are based on information available
at the time of this release, and are subject to changing
conditions, many of which are outside the Company's control. The
Company noted its EPS guidance does not assume any benefit from a
potential reduction in shares outstanding related to its share
repurchase program. Conference Call Information Tempur-Pedic
International will host a live conference call to discuss financial
results today, January 26, 2010 at 5:00 p.m. Eastern Time. The
dial-in number for the conference call is 888-293-6960. The dial-in
number for international callers is 719-325-2289. The call is also
being webcast and can be accessed on the investor relations section
of the Company's website, http://www.tempurpedic.com/. After the
conference call, a webcast replay will remain available on the
investor relations section of the Company's website for 30 days.
Forward-looking Statements This release contains "forward-looking
statements," within the meaning of federal securities laws, which
include information concerning one or more of the Company's plans,
objectives, goals, strategies, and other information that is not
historical information. When used in this release, the words
"estimates," "expects," "anticipates," "projects," "plans,"
"intends," "believes," and variations of such words or similar
expressions are intended to identify forward-looking statements.
These forward-looking statements include, without limitation,
statements relating to the Company's expectations for building on
its 2009 performance in 2010, and for net sales and earnings per
share for 2010. All forward looking statements are based upon
current expectations and beliefs and various assumptions. There can
be no assurance that the Company will realize these expectations or
that these beliefs will prove correct. There are a number of risks
and uncertainties that could cause actual results to differ
materially from the forward-looking statements contained in this
release. Numerous factors, many of which are beyond the Company's
control, could cause actual results to differ materially from those
expressed as forward-looking statements. These risk factors include
general economic, financial and industry conditions, particularly
in the retail sector, as well as consumer confidence and the
availability of consumer financing; uncertainties arising from
global events; the effects of changes in foreign exchange rates on
the Company's reported earnings; consumer acceptance of the
Company's products; industry competition; the efficiency and
effectiveness of the Company's advertising campaigns and other
marketing programs; the Company's ability to increase sales
productivity within existing retail accounts and to further
penetrate the Company's domestic retail channel, including the
timing of opening or expanding within large retail accounts; the
Company's ability to address issues in certain underperforming
international markets; the Company's ability to continuously
improve and expand its product line, maintain efficient, timely and
cost-effective production and delivery of its products, and manage
its growth; changes in foreign tax rates, including the ability to
utilize tax loss carry forwards; and rising commodity costs.
Additional information concerning these and other risks and
uncertainties are discussed in the Company's filings with the
Securities and Exchange Commission, including without limitation
the Company's annual report on Form 10-K under the headings
"Special Note Regarding Forward-Looking Statements" and "Risk
Factors." Any forward-looking statement speaks only as of the date
on which it is made, and the Company undertakes no obligation to
update any forward-looking statements for any reason, including to
reflect events or circumstances after the date on which such
statements are made or to reflect the occurrence of anticipated or
unanticipated events or circumstances. About the Company
Tempur-Pedic International Inc. (NYSE:TPX) manufactures and
distributes mattresses and pillows made from its proprietary
TEMPUR(R) pressure-relieving material. It is the worldwide leader
in premium and specialty sleep. The Company is focused on
developing, manufacturing and marketing advanced sleep surfaces
that help improve the quality of life for people around the world.
The Company's products are currently sold in over 80 countries
under the TEMPUR(R) and Tempur-Pedic(R) brand names. World
headquarters for Tempur-Pedic International is in Lexington, KY.
For more information, visit http://www.tempurpedic.com/ or call
800-805-3635. TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Income (In thousands, except per common
share amounts) Three Months Ended December 31, ------------ 2009
2008 Chg % ---- ---- ----- Net sales $244,794 $189,121 29% Cost of
sales 125,953 107,752 ------- ------- Gross profit 118,841 81,369
46% Selling and marketing expenses 45,105 34,444 General,
administrative and other expenses 26,510 21,604 ------ ------
Operating income 47,226 25,321 87% Other expense, net: Interest
expense, net (3,990) (5,493) Other income (expense), net 37 (324)
--- ---- Total other expense (3,953) (5,817) Income before income
taxes 43,273 19,504 122% Income tax provision 14,159 18,449 ------
------ Net income $29,114 $1,055 2,660% ======= ====== Earnings per
common share: Basic $0.39 $0.01 ===== ===== Diluted $0.38 $0.01
===== ===== Weighted average common shares outstanding: Basic
75,029 74,833 ====== ====== Diluted 77,028 74,920 ====== ======
Twelve Months Ended December 31, ------------ 2009 2008 Chg % ----
---- ----- Net sales $831,156 $927,818 (10%) Cost of sales 437,414
526,861 ------- ------- Gross profit 393,742 400,957 (2%) Selling
and marketing expenses 153,440 172,350 General, administrative and
other expenses 95,357 94,743 ------ ------ Operating income 144,945
133,864 8% Other expense, net: Interest expense, net (17,349)
(25,123) Other income (expense), net 441 (1,319) --- ------ Total
other expense (16,908) (26,442) Income before income taxes 128,037
107,422 19% Income tax provision 43,044 48,554 ------ ------ Net
income $84,993 $58,868 44% ======= ======= Earnings per common
share: Basic $1.13 $0.79 ===== ===== Diluted $1.12 $0.79 =====
===== Weighted average common shares outstanding: Basic 74,934
74,737 ====== ====== Diluted 76,048 74,909 ====== ======
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES Consolidated
Balance Sheets (In thousands) December December 31, 31, 2009 2008
---- ---- ASSETS Current Assets: Cash and cash equivalents $14,042
$15,385 Accounts receivable, net 105,576 99,811 Inventories 57,686
60,497 Prepaid expenses and other current assets 11,268 9,233
Deferred income taxes 20,411 11,888 ------ ------ Total Current
Assets 208,983 196,814 Property, plant and equipment, net 172,497
185,843 Goodwill 193,391 192,569 Other intangible assets, net
64,717 66,823 Other non-current assets 3,791 4,482 ----- -----
Total Assets $643,379 $646,531 ======== ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $47,761
$41,355 Accrued expenses and other current liabilities 81,452
65,316 Income taxes payable 7,312 7,783 ----- ----- Total Current
Liabilities 136,525 114,454 Long-term debt 297,470 419,341 Deferred
income taxes 29,865 28,371 Other non-current liabilities 7,226
11,922 ----- ------ Total Liabilities 471,086 574,088 Stockholders'
Equity: Common stock, $.01 par value; 300,000 shares authorized;
99,215 shares issued as of December 31, 2009 and 2008, respectively
992 992 Additional paid in capital 298,842 291,018 Retained
earnings 365,727 281,422 Accumulated other comprehensive loss
(8,004) (12,590) Treasury stock at cost; 24,103 and 24,382 shares
as of December 31, 2009 and 2008, respectively (485,264) (488,399)
-------- -------- Total Stockholders' Equity 172,293 72,443 -------
------ Total Liabilities and Stockholders' Equity $643,379 $646,531
======== ======== TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (In thousands) Twelve Months
Ended December 31, ------------ 2009 2008 ---- ---- CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $84,993 $58,868 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 31,424 32,756 Amortization of stock-
based compensation 8,789 8,041 Amortization of deferred financing
costs 692 1,060 Bad debt expense 5,936 8,110 Deferred income taxes
(9,810) 2,423 Foreign currency adjustments (115) (1,183) Loss on
sale of equipment and other 564 666 Changes in operating assets and
liabilities: Accounts receivable (10,542) 51,231 Inventories 3,738
45,758 Prepaid expenses and other current assets (1,884) 1,695
Accounts payable 7,808 (15,676) Accrued expenses and other 14,044
535 Income taxes payable (651) 4,110 ---- ----- Net cash provided
by operating activities 134,986 198,394 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of property, plant and equipment (14,303)
(10,494) Acquisition of business, net of cash acquired - (1,529)
Proceeds from escrow settlement - 7,141 Other - (486) --- ---- Net
cash used by investing activities (14,303) (5,368) CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from long-term revolving credit
facility 109,333 127,383 Repayments of long-term revolving credit
facility (230,036) (251,536) Repayments of long-term debt - (1,359)
Repayment of Series A Industrial Revenue Bonds - (57,785) Proceeds
from issuance of common stock 1,623 695 Excess tax benefit from
stock based compensation 359 399 Dividend paid to stockholders -
(17,933) Other - (14) --- --- Net cash used by financing activities
(118,721) (200,150) NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (3,305) (10,806) ------ ------- Decrease in cash
and cash equivalents (1,343) (17,930) CASH AND CASH EQUIVALENTS,
beginning of period 15,385 33,315 ------ ------ CASH AND CASH
EQUIVALENTS, end of period $14,042 $15,385 ======= ======= Summary
of Channel Sales The Company generates sales through four
distribution channels: retail, direct, healthcare and third party.
The retail channel sells to furniture, specialty and department
stores globally. The direct channel sells directly to consumers.
The healthcare channel sells to hospitals, nursing homes,
healthcare professionals and medical retailers. The third party
channel sells to distributors in countries where Tempur-Pedic
International does not operate its own distribution company. The
following table highlights net sales information, by channel and by
segment, for the fourth quarter of 2009 compared to 2008: (In
thousands) CONSOLIDATED DOMESTIC ------------ -------- Three Months
Ended Three Months Ended December 31, December 31, ------------
------------ 2009 2008 2009 2008 ---- ---- ---- ---- Retail
$205,184 $157,652 $130,808 $93,332 Direct 16,719 10,098 14,777
8,496 Healthcare 10,047 10,638 2,840 3,226 Third Party 12,844
10,733 3,444 3,342 ------ ------ ----- ----- Total $244,794
$189,121 $151,869 $108,396 ======== ======== ======== ========
INTERNATIONAL ------------- Three Months Ended December 31,
------------ 2009 2008 ---- ---- Retail $74,376 $64,320 Direct
1,942 1,602 Healthcare 7,207 7,412 Third Party 9,400 7,391 -----
----- Total $92,925 $80,725 ======= ======= Summary of Product
Sales A summary of net sales by product is reported below: (In
thousands) CONSOLIDATED DOMESTIC ------------ -------- Three Months
Ended Three Months Ended December 31, December 31, ------------
------------ 2009 2008 2009 2008 ---- ---- ---- ---- Mattresses
$156,665 $124,755 $101,792 $75,695 Pillows 32,079 25,990 14,724
10,591 Other 56,050 38,376 35,353 22,110 ------ ------ ------
------ Total $244,794 $189,121 $151,869 $108,396 ======== ========
======== ======== INTERNATIONAL ------------- Three Months Ended
December 31, ------------ 2009 2008 ---- ---- Mattresses $54,873
$49,060 Pillows 17,355 15,399 Other 20,697 16,266 ------ ------
Total $92,925 $80,725 ======= ======= TEMPUR-PEDIC INTERNATIONAL
INC. AND SUBSIDIARIES Reconciliation of Adjusted Net income,
Adjusted Earnings per share, EBITDA to Net Income and Funded debt
to Total debt Non-GAAP Measures (In thousands, except per common
share amounts) The Company provides information regarding Adjusted
Net income, Adjusted Earnings per share, EBITDA and Funded debt
which are not recognized terms under GAAP (Generally Accepted
Accounting Principles) and do not purport to be alternatives to Net
income as a measure of operating performance or Total debt. Because
not all companies use identical calculations, these presentations
may not be comparable to other similarly titled measures of other
companies. A reconciliation of Adjusted Net income, Adjusted
Earnings per share and EBITDA to the Company's Net income and
Earnings per share and a reconciliation of Funded debt to Total
debt are provided below. Management believes that the use of these
non-GAAP financial measures provides investors with additional
useful information with respect to the impact of the repatriation
of foreign earnings. Management also believes that the use of
EBITDA and Funded debt provides investors with useful information
with respect to the terms of the Company's credit facility.
Reconciliation of Adjusted Net income to Net income The following
table sets forth the reconciliation of the Company's reported Net
income for the twelve months ended December 31, 2008 to the
calculation of Adjusted Net income for the three and twelve months
ended December 31, 2008: Three Months Ended Twelve Months Ended
December 31, 2008 December 31, 2008 -----------------
----------------- GAAP Net income $1,055 $58,868 Plus: Tax
provision related to 11,631 11,631 repatriation of foreign earnings
------ ------ Adjusted Net income $12,686 $70,499 ======= =======
GAAP Earnings per share, diluted $0.01 $0.79 Tax provision related
to 0.16 0.15 repatriation of foreign earnings ---- ---- Adjusted
Earnings per share, diluted $0.17 $0.94 ===== ===== Reconciliation
of EBITDA to Net income The following table sets forth the
reconciliation of the Company's reported Net income to the
calculation of EBITDA for the twelve months ended December 31,
2009: Twelve Months Ended ------------------- December 31, 2009
----------------- GAAP Net income $84,993 Plus: Interest expense
17,349 Income taxes 43,044 Depreciation & amortization 40,213
EBITDA $185,599 ======== Reconciliation of Funded debt to Total
debt The following table sets forth the reconciliation of the
Company's reported Total debt to the calculation of Funded debt as
of December 31, 2009: As of December 31, 2009 -----------------
GAAP basis Total debt $297,470 Plus: Letters of credit outstanding
14,048 ------ Funded debt $311,518 ======== Calculation of Funded
debt to EBITDA As of December 31, 2009 ----------------- Funded
debt $311,518 EBITDA 185,599 ------- 1.68 times ==========
DATASOURCE: Tempur-Pedic International Inc. CONTACT: Barry Hytinen,
Vice President, Investor Relations and Financial Planning &
Analysis, +1-800-805-3635 Web Site: http://www.tempurpedic.com/
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