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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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33-1022198
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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||||||||||||
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2016
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2015
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2016
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2015
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Net sales
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$
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832.4
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$
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880.0
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$
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2,357.8
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$
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2,383.9
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Cost of sales
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470.3
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520.4
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1,367.8
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1,448.1
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Gross profit
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362.1
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359.6
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990.0
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935.8
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Selling and marketing expenses
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175.2
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175.6
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498.1
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498.0
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||||
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General, administrative and other expenses
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64.0
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79.8
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207.6
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242.6
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||||
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Equity income in earnings of unconsolidated affiliates
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(2.4
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)
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(2.0
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)
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(8.6
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(8.4
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)
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||||
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Royalty income, net of royalty expense
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(5.8
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)
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(4.7
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)
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(15.1
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)
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(13.7
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)
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||||
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Operating income
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131.1
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110.9
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308.0
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217.3
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Other expense, net:
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Interest expense, net
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20.5
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33.2
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65.0
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74.1
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||||
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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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Other expense, net
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0.3
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11.8
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—
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12.7
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Total other expense, net
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20.8
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45.0
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112.2
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86.8
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Income before income taxes
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110.3
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65.9
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195.8
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130.5
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Income tax provision
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(33.7
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)
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(25.0
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)
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(60.2
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)
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(43.6
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)
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Net income before non-controlling interest
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76.6
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40.9
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135.6
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86.9
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Less: Net (loss) income attributable to non-controlling interest
(1),(2)
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(1.2
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)
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0.7
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(3.1
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2.1
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Net income attributable to Tempur Sealy International, Inc.
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$
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77.8
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$
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40.2
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$
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138.7
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$
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84.8
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Earnings per common share:
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Basic
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$
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1.34
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$
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0.65
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$
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2.31
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$
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1.38
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Diluted
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$
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1.32
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$
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0.64
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$
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2.28
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$
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1.36
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Weighted average common shares outstanding:
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Basic
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58.2
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62.1
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60.1
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61.4
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Diluted
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58.8
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62.9
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60.8
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62.5
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(1)
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Net (loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the three months ended September 30, 2016 and 2015 represented $(1.2) million and $0.5 million, respectively. Net (loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the nine months ended September 30, 2016 and 2015 represented $(3.1) million and $1.0 million, respectively.
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(2)
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As of September 30, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, for the three and nine months ended September 30, 2015, the Company recorded a $0.2 million and $1.1 million adjustment, net of tax, respectively, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of September 30, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary for the three or nine months ended September 30, 2016.
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2016
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2015
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2016
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2015
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Net income before non-controlling interest
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$
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76.6
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$
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40.9
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$
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135.6
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$
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86.9
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Other comprehensive (loss) income before tax, net of tax
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Foreign currency translation adjustments
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(5.0
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(19.0
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11.8
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(49.4
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)
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||||
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Net change in unrecognized gain on interest rate swap, net of tax
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—
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0.2
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—
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0.5
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||||
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Pension expense, net of tax
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—
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—
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—
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(0.1
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)
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||||
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Unrealized (loss) gain on cash flow hedging derivatives, net of tax
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(0.2
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)
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3.2
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(6.1
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4.4
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||||
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Other comprehensive (loss) income, net of tax
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(5.2
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)
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(15.6
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)
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5.7
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(44.6
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)
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||||
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Comprehensive income
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71.4
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25.3
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141.3
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42.3
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||||
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Less: Comprehensive (loss) income attributable to non-controlling interest
(1),(2)
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(1.2
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)
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0.7
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(3.1
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)
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2.1
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||||
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Comprehensive income attributable to Tempur Sealy International, Inc.
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$
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72.6
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$
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24.6
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$
|
144.4
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$
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40.2
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(1)
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Net (loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the three months ended September 30, 2016 and 2015 represented $(1.2) million and $0.5 million, respectively. Net (loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the nine months ended September 30, 2016 and 2015 represented $(3.1) million and $1.0 million, respectively.
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(2)
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As of September 30, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, for the three and nine months ended September 30, 2015, the Company recorded a $0.2 million and $1.1 million adjustment, net of tax, respectively, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of September 30, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary for the three or nine months ended September 30, 2016.
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September 30, 2016
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December 31, 2015
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||||
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(Unaudited)
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||||
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ASSETS
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|
||||
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|
||||
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Current Assets:
|
|
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|
||||
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Cash and cash equivalents
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$
|
89.0
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$
|
153.9
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Accounts receivable, net
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404.3
|
|
|
379.4
|
|
||
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Inventories, net
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214.3
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|
199.2
|
|
||
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Prepaid expenses and other current assets
|
61.7
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|
76.6
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|
||
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Total Current Assets
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769.3
|
|
|
809.1
|
|
||
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Property, plant and equipment, net
|
365.1
|
|
|
361.7
|
|
||
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Goodwill
|
719.7
|
|
|
709.4
|
|
||
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Other intangible assets, net
|
686.3
|
|
|
695.4
|
|
||
|
Deferred income taxes
|
25.4
|
|
|
12.2
|
|
||
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Other non-current assets
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180.4
|
|
|
67.7
|
|
||
|
Total Assets
|
$
|
2,746.2
|
|
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$
|
2,655.5
|
|
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||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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|
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||
|
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|
||||
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Current Liabilities:
|
|
|
|
|
|
||
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Accounts payable
|
$
|
237.9
|
|
|
$
|
266.3
|
|
|
Accrued expenses and other current liabilities
|
285.1
|
|
|
254.0
|
|
||
|
Income taxes payable
|
23.1
|
|
|
11.2
|
|
||
|
Current portion of long-term debt
|
66.1
|
|
|
181.5
|
|
||
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Total Current Liabilities
|
612.2
|
|
|
713.0
|
|
||
|
Long-term debt, net
|
1,619.0
|
|
|
1,273.3
|
|
||
|
Deferred income taxes
|
192.2
|
|
|
195.4
|
|
||
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Other non-current liabilities
|
162.2
|
|
|
171.2
|
|
||
|
Total Liabilities
|
2,585.6
|
|
|
2,352.9
|
|
||
|
|
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|
||||
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Commitments and contingencies—see Note 8
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|
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|
||
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|
||||
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Redeemable non-controlling interest
|
9.3
|
|
|
12.4
|
|
||
|
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|
||||
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Total Stockholders’ Equity
|
151.3
|
|
|
290.2
|
|
||
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Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity
|
$
|
2,746.2
|
|
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$
|
2,655.5
|
|
|
|
Nine Months Ended
|
||||||
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|
September 30,
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||||||
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2016
|
|
2015
|
||||
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CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
|
Net income before non-controlling interest
|
$
|
135.6
|
|
|
$
|
86.9
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
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Depreciation and amortization
|
54.3
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|
|
54.9
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|
||
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Amortization of stock-based compensation
|
15.3
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|
|
16.4
|
|
||
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Amortization of deferred financing costs
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3.0
|
|
|
18.7
|
|
||
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Bad debt expense
|
3.2
|
|
|
4.4
|
|
||
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Deferred income taxes
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(15.7
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)
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|
(21.4
|
)
|
||
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Dividends received from unconsolidated affiliates
|
7.3
|
|
|
3.0
|
|
||
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Equity income in earnings of unconsolidated affiliates
|
(8.6
|
)
|
|
(8.4
|
)
|
||
|
Non-cash interest expense on 8.0% Sealy Notes
|
4.0
|
|
|
4.5
|
|
||
|
Loss on extinguishment of debt
|
47.2
|
|
|
—
|
|
||
|
Loss on sale of assets
|
0.8
|
|
|
1.2
|
|
||
|
Foreign currency adjustments and other
|
(1.5
|
)
|
|
4.7
|
|
||
|
Changes in operating assets and liabilities
|
(135.1
|
)
|
|
(31.7
|
)
|
||
|
Net cash provided by operating activities
|
109.8
|
|
|
133.2
|
|
||
|
|
|
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|
||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
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Purchases of property, plant and equipment
|
(41.9
|
)
|
|
(51.1
|
)
|
||
|
Proceeds from disposition of business and other
|
—
|
|
|
6.9
|
|
||
|
Net cash used in investing activities
|
(41.9
|
)
|
|
(44.2
|
)
|
||
|
|
|
|
|
||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
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Proceeds from borrowings under long-term debt obligations
|
1,871.5
|
|
|
855.4
|
|
||
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Repayments of borrowings under long-term debt obligations
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(1,659.3
|
)
|
|
(974.4
|
)
|
||
|
Proceeds from exercise of stock options
|
15.2
|
|
|
16.7
|
|
||
|
Excess tax benefit from stock-based compensation
|
6.0
|
|
|
19.7
|
|
||
|
Treasury stock repurchased
|
(319.7
|
)
|
|
(1.3
|
)
|
||
|
Payment of deferred financing costs
|
(6.6
|
)
|
|
(6.4
|
)
|
||
|
Fees paid to lenders
|
(7.8
|
)
|
|
—
|
|
||
|
Call premium on 2020 Senior Notes
|
(23.6
|
)
|
|
—
|
|
||
|
Proceeds from purchase of treasury shares by CEO
|
—
|
|
|
5.0
|
|
||
|
Other
|
0.1
|
|
|
(2.1
|
)
|
||
|
Net cash used in financing activities
|
(124.2
|
)
|
|
(87.4
|
)
|
||
|
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(8.6
|
)
|
|
7.7
|
|
||
|
(Decrease) increase in cash and cash equivalents
|
(64.9
|
)
|
|
9.3
|
|
||
|
CASH AND CASH EQUIVALENTS, beginning of period
|
153.9
|
|
|
62.5
|
|
||
|
CASH AND CASH EQUIVALENTS, end of period
|
$
|
89.0
|
|
|
$
|
71.8
|
|
|
|
|
|
|
||||
|
Supplemental cash flow information:
|
|
|
|
|
|
||
|
Cash paid during the period for:
|
|
|
|
|
|
||
|
Interest
|
$
|
41.0
|
|
|
$
|
41.6
|
|
|
Income taxes, net of refunds
|
57.2
|
|
|
64.6
|
|
||
|
|
September 30,
|
|
December 31,
|
||||
|
(in millions)
|
2016
|
|
2015
|
||||
|
Finished goods
|
$
|
137.3
|
|
|
$
|
126.7
|
|
|
Work-in-process
|
12.4
|
|
|
14.0
|
|
||
|
Raw materials and supplies
|
64.6
|
|
|
58.5
|
|
||
|
|
$
|
214.3
|
|
|
$
|
199.2
|
|
|
(in millions)
|
|
||
|
Balance as of December 31, 2015
|
$
|
28.5
|
|
|
Amounts accrued
|
100.6
|
|
|
|
Returns charged to accrual
|
(96.2
|
)
|
|
|
Balance as of September 30, 2016
|
$
|
32.9
|
|
|
(in millions)
|
|
||
|
Balance as of December 31, 2015
|
$
|
29.6
|
|
|
Amounts accrued
|
29.2
|
|
|
|
Warranties charged to accrual
|
(25.5
|
)
|
|
|
Balance as of September 30, 2016
|
$
|
33.3
|
|
|
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
||||||
|
Balance as of December 31, 2015
|
$
|
562.8
|
|
|
$
|
146.6
|
|
|
$
|
709.4
|
|
|
Foreign currency translation
|
3.4
|
|
|
6.9
|
|
|
10.3
|
|
|||
|
Balance as of September 30, 2016
|
$
|
566.2
|
|
|
$
|
153.5
|
|
|
$
|
719.7
|
|
|
(in millions, except percentages)
|
September 30, 2016
|
|
December 31, 2015
|
|
|
||||||||
|
Debt:
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Maturity Date
|
||||
|
2016 Credit Agreement
|
|
|
|
|
|
|
|
|
|
||||
|
Term A Facility
|
$
|
592.5
|
|
|
(1)
|
|
$
|
—
|
|
|
N/A
|
|
April 6, 2021
|
|
2012 Credit Agreement
|
|
|
|
|
|
|
|
|
|
||||
|
Term A Facility
|
—
|
|
|
N/A
|
|
409.4
|
|
|
(2)
|
|
|
||
|
Term B Facility
|
—
|
|
|
N/A
|
|
100.1
|
|
|
(3)
|
|
|
||
|
2026 Senior Notes
|
600.0
|
|
|
5.500%
|
|
—
|
|
|
N/A
|
|
June 15, 2026
|
||
|
2023 Senior Notes
|
450.0
|
|
|
5.625%
|
|
450.0
|
|
|
5.625%
|
|
October 15, 2023
|
||
|
2020 Senior Notes
|
—
|
|
|
N/A
|
|
375.0
|
|
|
6.875%
|
|
|
||
|
8.0% Sealy Notes
|
—
|
|
|
8.0%
|
|
111.1
|
|
|
8.0%
|
|
|
||
|
Capital lease obligations and other
|
53.5
|
|
|
|
|
34.0
|
|
|
|
|
Various
|
||
|
Total debt
|
1,696.0
|
|
|
|
|
1,479.6
|
|
|
|
|
|
||
|
Less: deferred financing costs
|
(10.9
|
)
|
|
|
|
(24.8
|
)
|
|
|
|
|
||
|
Total debt, net
|
1,685.1
|
|
|
|
|
1,454.8
|
|
|
|
|
|
||
|
Less: current portion
|
(66.1
|
)
|
|
|
|
(181.5
|
)
|
|
|
|
|
||
|
Total long-term debt, net
|
$
|
1,619.0
|
|
|
|
|
$
|
1,273.3
|
|
|
|
|
|
|
(1)
|
Interest at LIBOR plus applicable margin of 1.50% as of September 30, 2016.
|
|
(2)
|
Interest at LIBOR plus applicable margin of 2.00% as of December 31, 2015.
|
|
(3)
|
Interest at LIBOR, subject to a 0.75% floor plus applicable margin of 2.75% as of December 31, 2015.
|
|
|
|
Fair Value
|
||||||
|
(in millions)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
|
2020 Senior Notes
|
|
$
|
—
|
|
|
$
|
393.8
|
|
|
2023 Senior Notes
|
|
477.0
|
|
|
453.4
|
|
||
|
2026 Senior Notes
|
|
618.0
|
|
|
—
|
|
||
|
8.0% Sealy Notes
|
|
—
|
|
|
112.7
|
|
||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
Foreign Currency Translation
|
|
|
|
|
|
|
|
||||||||
|
Balance at beginning of period
|
$
|
(98.6
|
)
|
|
$
|
(84.4
|
)
|
|
$
|
(115.4
|
)
|
|
$
|
(54.0
|
)
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Foreign currency translation adjustments
(1)
|
(5.0
|
)
|
|
(19.0
|
)
|
|
11.8
|
|
|
(49.4
|
)
|
||||
|
Balance at end of period
|
$
|
(103.6
|
)
|
|
$
|
(103.4
|
)
|
|
$
|
(103.6
|
)
|
|
$
|
(103.4
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest Rate Swap Agreement
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at beginning of period
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net change from period revaluations
|
—
|
|
|
0.8
|
|
|
—
|
|
|
2.3
|
|
||||
|
Tax expense
(2)
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.9
|
)
|
||||
|
Total other comprehensive income before reclassifications, net of tax
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
Net amount reclassified to earnings
(3)
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
(1.5
|
)
|
||||
|
Tax benefit
(2)
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.6
|
|
||||
|
Total amount reclassified from AOCL, net of tax
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
|
$
|
(0.9
|
)
|
|
Total other comprehensive income, net of tax
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.5
|
|
||||
|
Balance at end of period
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Pensions
|
|
|
|
|
|
|
|
||||||||
|
Balance at beginning of period
|
$
|
(1.4
|
)
|
|
$
|
(2.5
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(2.4
|
)
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
|
Net change from period revaluations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
|
Balance at end of period
|
$
|
(1.4
|
)
|
|
$
|
(2.5
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Foreign Exchange Forward Contracts
|
|
|
|
|
|
|
|
||||||||
|
Balance at beginning of period
|
$
|
0.7
|
|
|
$
|
2.5
|
|
|
$
|
6.6
|
|
|
$
|
1.3
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
|
Net change from period revaluations
|
0.8
|
|
|
6.6
|
|
|
(4.5
|
)
|
|
11.4
|
|
||||
|
Tax (expense) benefit
(2)
|
(0.2
|
)
|
|
(1.7
|
)
|
|
1.2
|
|
|
(2.9
|
)
|
||||
|
Total other comprehensive income (loss) before reclassifications, net of tax
|
$
|
0.6
|
|
|
$
|
4.9
|
|
|
$
|
(3.3
|
)
|
|
$
|
8.5
|
|
|
Net amount reclassified to earnings
(4)
|
(1.1
|
)
|
|
(2.3
|
)
|
|
(3.8
|
)
|
|
(5.5
|
)
|
||||
|
Tax benefit
(2)
|
0.3
|
|
|
0.6
|
|
|
1.0
|
|
|
1.4
|
|
||||
|
Total amount reclassified from AOCL, net of tax
|
$
|
(0.8
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
(2.8
|
)
|
|
$
|
(4.1
|
)
|
|
Total other comprehensive (loss) income
|
(0.2
|
)
|
|
3.2
|
|
|
(6.1
|
)
|
|
4.4
|
|
||||
|
Balance at end of period
|
$
|
0.5
|
|
|
$
|
5.7
|
|
|
$
|
0.5
|
|
|
$
|
5.7
|
|
|
(1)
|
In 2016 and 2015, no amounts were reclassified to earnings.
|
|
(2)
|
These amounts were included in the income tax provision on the accompanying Condensed Consolidated Statements of Income.
|
|
(3)
|
This amount was included in interest expense, net on the accompanying Condensed Consolidated Statements of Income.
|
|
(4)
|
This amount was included in cost of sales on the accompanying Condensed Consolidated Statements of Income.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
PRSU expense
|
$
|
1.8
|
|
|
$
|
3.0
|
|
|
$
|
6.0
|
|
|
$
|
10.4
|
|
|
Option expense
|
1.2
|
|
|
1.4
|
|
|
4.0
|
|
|
4.8
|
|
||||
|
RSU/DSU expense
|
1.7
|
|
|
0.5
|
|
|
5.3
|
|
|
1.2
|
|
||||
|
Total stock-based compensation expense
|
$
|
4.7
|
|
|
$
|
4.9
|
|
|
$
|
15.3
|
|
|
$
|
16.4
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
(in millions, except per common share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
Numerator:
|
|
|
|
|
|
|
|
||||||||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
77.8
|
|
|
$
|
40.2
|
|
|
$
|
138.7
|
|
|
$
|
84.8
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Denominator for basic earnings per common share-weighted average shares
|
58.2
|
|
|
62.1
|
|
|
60.1
|
|
|
61.4
|
|
||||
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
||||||
|
Employee stock-based compensation
|
0.6
|
|
|
0.8
|
|
|
0.7
|
|
|
1.1
|
|
||||
|
Denominator for diluted earnings per common share-adjusted weighted average shares
|
58.8
|
|
|
62.9
|
|
|
60.8
|
|
|
62.5
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per common share
|
$
|
1.34
|
|
|
$
|
0.65
|
|
|
$
|
2.31
|
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Diluted earnings per common share
|
$
|
1.32
|
|
|
$
|
0.64
|
|
|
$
|
2.28
|
|
|
$
|
1.36
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
(in millions)
|
2016
|
|
2015
|
||||
|
North America
|
$
|
2,521.2
|
|
|
$
|
2,533.1
|
|
|
International
|
604.8
|
|
|
477.1
|
|
||
|
Corporate
|
665.6
|
|
|
775.0
|
|
||
|
Inter-segment eliminations
|
(1,045.4
|
)
|
|
(1,129.7
|
)
|
||
|
Total assets
|
$
|
2,746.2
|
|
|
$
|
2,655.5
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
(in millions)
|
2016
|
|
2015
|
||||
|
North America
|
$
|
240.0
|
|
|
$
|
239.2
|
|
|
International
|
54.9
|
|
|
54.8
|
|
||
|
Corporate
|
70.2
|
|
|
67.7
|
|
||
|
Total property, plant and equipment, net
|
$
|
365.1
|
|
|
$
|
361.7
|
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Bedding sales
|
$
|
667.6
|
|
|
$
|
106.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
773.7
|
|
|
Other sales
|
30.9
|
|
|
27.8
|
|
|
—
|
|
|
—
|
|
|
58.7
|
|
|||||
|
Net sales
|
698.5
|
|
|
133.9
|
|
|
—
|
|
|
—
|
|
|
832.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Inter-segment sales
|
$
|
1.0
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
|
Inter-segment royalty expense (income)
|
1.8
|
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Gross profit
|
290.1
|
|
|
72.0
|
|
|
—
|
|
|
—
|
|
|
362.1
|
|
|||||
|
Operating income (loss)
|
128.3
|
|
|
25.6
|
|
|
(22.8
|
)
|
|
—
|
|
|
131.1
|
|
|||||
|
Income (loss) before income taxes
|
127.1
|
|
|
23.6
|
|
|
(40.4
|
)
|
|
—
|
|
|
110.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Depreciation and amortization
(1)
|
$
|
10.8
|
|
|
$
|
4.0
|
|
|
$
|
8.2
|
|
|
$
|
—
|
|
|
$
|
23.0
|
|
|
Capital expenditures
|
10.7
|
|
|
3.6
|
|
|
3.3
|
|
|
—
|
|
|
17.6
|
|
|||||
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Bedding sales
|
$
|
690.8
|
|
|
$
|
110.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
801.0
|
|
|
Other sales
|
50.4
|
|
|
28.6
|
|
|
—
|
|
|
—
|
|
|
79.0
|
|
|||||
|
Net sales
|
741.2
|
|
|
138.8
|
|
|
—
|
|
|
—
|
|
|
880.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Inter-segment sales
|
$
|
1.0
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
|
Inter-segment royalty expense (income)
|
2.0
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Gross profit
|
287.7
|
|
|
71.9
|
|
|
—
|
|
|
—
|
|
|
359.6
|
|
|||||
|
Operating income (loss)
|
118.4
|
|
|
23.0
|
|
|
(30.5
|
)
|
|
—
|
|
|
110.9
|
|
|||||
|
Income (loss) before income taxes
|
114.4
|
|
|
1.7
|
|
|
(50.2
|
)
|
|
—
|
|
|
65.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Depreciation and amortization
(1)
|
$
|
11.3
|
|
|
$
|
4.0
|
|
|
$
|
7.7
|
|
|
$
|
—
|
|
|
$
|
23.0
|
|
|
Capital expenditures
|
5.6
|
|
|
4.4
|
|
|
7.1
|
|
|
—
|
|
|
17.1
|
|
|||||
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Bedding sales
|
$
|
1,858.2
|
|
|
$
|
327.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,186.0
|
|
|
Other sales
|
88.5
|
|
|
83.3
|
|
|
—
|
|
|
—
|
|
|
171.8
|
|
|||||
|
Net sales
|
1,946.7
|
|
|
411.1
|
|
|
—
|
|
|
—
|
|
|
2,357.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Inter-segment sales
|
$
|
3.5
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
(3.9
|
)
|
|
$
|
—
|
|
|
Inter-segment royalty expense (income)
|
5.6
|
|
|
(5.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Gross profit
|
771.9
|
|
|
218.1
|
|
|
—
|
|
|
—
|
|
|
990.0
|
|
|||||
|
Operating income (loss)
|
308.9
|
|
|
76.1
|
|
|
(77.0
|
)
|
|
—
|
|
|
308.0
|
|
|||||
|
Income (loss) before income taxes
|
304.3
|
|
|
69.0
|
|
|
(177.5
|
)
|
|
—
|
|
|
195.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Depreciation and amortization
(1)
|
$
|
32.1
|
|
|
$
|
11.7
|
|
|
$
|
25.8
|
|
|
$
|
—
|
|
|
$
|
69.6
|
|
|
Capital expenditures
|
22.0
|
|
|
8.3
|
|
|
11.6
|
|
|
—
|
|
|
41.9
|
|
|||||
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Bedding sales
|
$
|
1,854.2
|
|
|
$
|
333.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,188.1
|
|
|
Other sales
|
111.4
|
|
|
84.4
|
|
|
—
|
|
|
—
|
|
|
195.8
|
|
|||||
|
Net sales
|
1,965.6
|
|
|
418.3
|
|
|
—
|
|
|
—
|
|
|
2,383.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Inter-segment sales
|
$
|
4.5
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
(5.0
|
)
|
|
$
|
—
|
|
|
Inter-segment royalty expense (income)
|
5.3
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Gross profit
|
718.2
|
|
|
217.6
|
|
|
—
|
|
|
—
|
|
|
935.8
|
|
|||||
|
Operating income (loss)
|
240.9
|
|
|
72.0
|
|
|
(95.6
|
)
|
|
—
|
|
|
217.3
|
|
|||||
|
Income (loss) before income taxes
|
233.0
|
|
|
47.8
|
|
|
(150.3
|
)
|
|
—
|
|
|
130.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Depreciation and amortization
(1)
|
$
|
33.5
|
|
|
$
|
12.1
|
|
|
$
|
25.7
|
|
|
$
|
—
|
|
|
$
|
71.3
|
|
|
Capital expenditures
|
23.7
|
|
|
9.8
|
|
|
17.6
|
|
|
—
|
|
|
51.1
|
|
|||||
|
|
September 30,
|
|
December 31,
|
||||
|
(in millions)
|
2016
|
|
2015
|
||||
|
United States
|
$
|
303.2
|
|
|
$
|
300.1
|
|
|
Canada
|
7.0
|
|
|
6.8
|
|
||
|
Other International
|
54.9
|
|
|
54.8
|
|
||
|
Total property, plant and equipment, net
|
$
|
365.1
|
|
|
$
|
361.7
|
|
|
Total International
|
$
|
61.9
|
|
|
$
|
61.6
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
United States
|
$
|
641.4
|
|
|
$
|
684.8
|
|
|
$
|
1,792.7
|
|
|
$
|
1,813.4
|
|
|
Canada
|
57.1
|
|
|
56.4
|
|
|
154.0
|
|
|
152.2
|
|
||||
|
Other International
|
133.9
|
|
|
138.8
|
|
|
411.1
|
|
|
418.3
|
|
||||
|
Total net sales
|
$
|
832.4
|
|
|
$
|
880.0
|
|
|
$
|
2,357.8
|
|
|
$
|
2,383.9
|
|
|
Total International
|
$
|
191.0
|
|
|
$
|
195.2
|
|
|
$
|
565.1
|
|
|
$
|
570.5
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Net sales
|
$
|
—
|
|
|
$
|
656.0
|
|
|
$
|
191.5
|
|
|
$
|
(15.1
|
)
|
|
$
|
832.4
|
|
|
Cost of sales
|
—
|
|
|
381.1
|
|
|
104.3
|
|
|
(15.1
|
)
|
|
470.3
|
|
|||||
|
Gross profit
|
—
|
|
|
274.9
|
|
|
87.2
|
|
|
—
|
|
|
362.1
|
|
|||||
|
Selling and marketing expenses
|
1.0
|
|
|
129.6
|
|
|
44.6
|
|
|
—
|
|
|
175.2
|
|
|||||
|
General, administrative and other expenses
|
4.0
|
|
|
44.5
|
|
|
15.5
|
|
|
—
|
|
|
64.0
|
|
|||||
|
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|
—
|
|
|
(2.4
|
)
|
|||||
|
Royalty income, net of royalty expense
|
—
|
|
|
(5.6
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(5.8
|
)
|
|||||
|
Operating (loss) income
|
(5.0
|
)
|
|
106.4
|
|
|
29.7
|
|
|
—
|
|
|
131.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Third party interest expense, net
|
15.0
|
|
|
4.7
|
|
|
0.8
|
|
|
—
|
|
|
20.5
|
|
|||||
|
Intercompany interest (income) expense, net
|
(1.0
|
)
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|||||
|
Interest expense, net
|
14.0
|
|
|
4.7
|
|
|
1.8
|
|
|
—
|
|
|
20.5
|
|
|||||
|
Other expense, net
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||||
|
Total other expense, net
|
14.0
|
|
|
4.7
|
|
|
2.1
|
|
|
—
|
|
|
20.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income from equity investees
|
89.0
|
|
|
21.1
|
|
|
—
|
|
|
(110.1
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income before income taxes
|
70.0
|
|
|
122.8
|
|
|
27.6
|
|
|
(110.1
|
)
|
|
110.3
|
|
|||||
|
Income tax benefit (provision)
|
6.6
|
|
|
(33.8
|
)
|
|
(6.5
|
)
|
|
—
|
|
|
(33.7
|
)
|
|||||
|
Net income before non-controlling interest
|
76.6
|
|
|
89.0
|
|
|
21.1
|
|
|
(110.1
|
)
|
|
76.6
|
|
|||||
|
Less: Net loss attributable to non-controlling interest
|
(1.2
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
1.2
|
|
|
(1.2
|
)
|
|||||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
77.8
|
|
|
$
|
90.2
|
|
|
$
|
21.1
|
|
|
$
|
(111.3
|
)
|
|
$
|
77.8
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
72.6
|
|
|
$
|
90.5
|
|
|
$
|
15.8
|
|
|
$
|
(106.3
|
)
|
|
$
|
72.6
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Net sales
|
$
|
—
|
|
|
$
|
697.8
|
|
|
$
|
195.6
|
|
|
$
|
(13.4
|
)
|
|
$
|
880.0
|
|
|
Cost of sales
|
—
|
|
|
427.2
|
|
|
106.6
|
|
|
(13.4
|
)
|
|
520.4
|
|
|||||
|
Gross profit
|
—
|
|
|
270.6
|
|
|
89.0
|
|
|
—
|
|
|
359.6
|
|
|||||
|
Selling and marketing expenses
|
1.1
|
|
|
129.4
|
|
|
45.1
|
|
|
—
|
|
|
175.6
|
|
|||||
|
General, administrative and other expenses
|
4.2
|
|
|
59.1
|
|
|
16.5
|
|
|
—
|
|
|
79.8
|
|
|||||
|
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
(2.0
|
)
|
|||||
|
Royalty income, net of royalty expense
|
—
|
|
|
(4.7
|
)
|
|
—
|
|
|
—
|
|
|
(4.7
|
)
|
|||||
|
Operating (loss) income
|
(5.3
|
)
|
|
86.8
|
|
|
29.4
|
|
|
—
|
|
|
110.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Third party interest expense, net
|
6.7
|
|
|
25.8
|
|
|
0.7
|
|
|
—
|
|
|
33.2
|
|
|||||
|
Intercompany interest expense (income), net
|
8.3
|
|
|
(8.9
|
)
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|||||
|
Interest expense, net
|
15.0
|
|
|
16.9
|
|
|
1.3
|
|
|
—
|
|
|
33.2
|
|
|||||
|
Other (income) expense, net
|
—
|
|
|
(8.6
|
)
|
|
20.4
|
|
|
—
|
|
|
11.8
|
|
|||||
|
Total other expense, net
|
15.0
|
|
|
8.3
|
|
|
21.7
|
|
|
—
|
|
|
45.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income from equity investees
|
55.0
|
|
|
1.4
|
|
|
—
|
|
|
(56.4
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income before income taxes
|
34.7
|
|
|
79.9
|
|
|
7.7
|
|
|
(56.4
|
)
|
|
65.9
|
|
|||||
|
Income tax benefit (provision)
|
6.2
|
|
|
(24.9
|
)
|
|
(6.3
|
)
|
|
—
|
|
|
(25.0
|
)
|
|||||
|
Net income before non-controlling interest
|
40.9
|
|
|
55.0
|
|
|
1.4
|
|
|
(56.4
|
)
|
|
40.9
|
|
|||||
|
Less: Net income attributable to non-controlling interest
|
0.7
|
|
|
0.7
|
|
|
—
|
|
|
(0.7
|
)
|
|
0.7
|
|
|||||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
40.2
|
|
|
$
|
54.3
|
|
|
$
|
1.4
|
|
|
$
|
(55.7
|
)
|
|
$
|
40.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Comprehensive income (loss) attributable to Tempur Sealy International, Inc.
|
$
|
24.6
|
|
|
$
|
53.9
|
|
|
$
|
(21.3
|
)
|
|
$
|
(32.6
|
)
|
|
$
|
24.6
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Net sales
|
$
|
—
|
|
|
$
|
1,835.0
|
|
|
$
|
566.4
|
|
|
$
|
(43.6
|
)
|
|
$
|
2,357.8
|
|
|
Cost of sales
|
—
|
|
|
1,106.3
|
|
|
305.1
|
|
|
(43.6
|
)
|
|
1,367.8
|
|
|||||
|
Gross profit
|
—
|
|
|
728.7
|
|
|
261.3
|
|
|
—
|
|
|
990.0
|
|
|||||
|
Selling and marketing expenses
|
3.7
|
|
|
358.0
|
|
|
136.4
|
|
|
—
|
|
|
498.1
|
|
|||||
|
General, administrative and other expenses
|
12.8
|
|
|
146.3
|
|
|
48.5
|
|
|
—
|
|
|
207.6
|
|
|||||
|
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(8.6
|
)
|
|
—
|
|
|
(8.6
|
)
|
|||||
|
Royalty income, net of royalty expense
|
—
|
|
|
(15.1
|
)
|
|
—
|
|
|
—
|
|
|
(15.1
|
)
|
|||||
|
Operating (loss) income
|
(16.5
|
)
|
|
239.5
|
|
|
85.0
|
|
|
—
|
|
|
308.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Third party interest expense, net
|
51.1
|
|
|
11.7
|
|
|
2.2
|
|
|
—
|
|
|
65.0
|
|
|||||
|
Intercompany interest (income) expense, net
|
(3.1
|
)
|
|
(0.1
|
)
|
|
3.2
|
|
|
—
|
|
|
—
|
|
|||||
|
Interest expense, net
|
48.0
|
|
|
11.6
|
|
|
5.4
|
|
|
—
|
|
|
65.0
|
|
|||||
|
Loss on extinguishment of debt
|
34.3
|
|
|
12.9
|
|
|
—
|
|
|
—
|
|
|
47.2
|
|
|||||
|
Other (income) expense, net
|
—
|
|
|
(1.4
|
)
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|||||
|
Total other expense, net
|
82.3
|
|
|
23.1
|
|
|
6.8
|
|
|
—
|
|
|
112.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income from equity investees
|
200.8
|
|
|
62.3
|
|
|
—
|
|
|
(263.1
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income before income taxes
|
102.0
|
|
|
278.7
|
|
|
78.2
|
|
|
(263.1
|
)
|
|
195.8
|
|
|||||
|
Income tax benefit (provision)
|
33.6
|
|
|
(77.9
|
)
|
|
(15.9
|
)
|
|
—
|
|
|
(60.2
|
)
|
|||||
|
Net income before non-controlling interest
|
135.6
|
|
|
200.8
|
|
|
62.3
|
|
|
(263.1
|
)
|
|
135.6
|
|
|||||
|
Less: Net loss attributable to non-controlling interest
|
(3.1
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
3.1
|
|
|
(3.1
|
)
|
|||||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
138.7
|
|
|
$
|
203.9
|
|
|
$
|
62.3
|
|
|
$
|
(266.2
|
)
|
|
$
|
138.7
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
144.4
|
|
|
$
|
204.9
|
|
|
$
|
67.2
|
|
|
$
|
(272.1
|
)
|
|
$
|
144.4
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Net sales
|
$
|
—
|
|
|
$
|
1,849.2
|
|
|
$
|
572.7
|
|
|
$
|
(38.0
|
)
|
|
$
|
2,383.9
|
|
|
Cost of sales
|
—
|
|
|
1,173.6
|
|
|
312.5
|
|
|
(38.0
|
)
|
|
1,448.1
|
|
|||||
|
Gross profit
|
—
|
|
|
675.6
|
|
|
260.2
|
|
|
—
|
|
|
935.8
|
|
|||||
|
Selling and marketing expenses
|
2.8
|
|
|
358.1
|
|
|
137.1
|
|
|
—
|
|
|
498.0
|
|
|||||
|
General, administrative and other expenses
|
15.3
|
|
|
177.5
|
|
|
49.8
|
|
|
—
|
|
|
242.6
|
|
|||||
|
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(8.4
|
)
|
|
—
|
|
|
(8.4
|
)
|
|||||
|
Royalty income, net of royalty expense
|
—
|
|
|
(13.7
|
)
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|||||
|
Operating (loss) income
|
(18.1
|
)
|
|
153.7
|
|
|
81.7
|
|
|
—
|
|
|
217.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Third party interest expense, net
|
20.1
|
|
|
52.0
|
|
|
2.0
|
|
|
—
|
|
|
74.1
|
|
|||||
|
Intercompany interest expense (income), net
|
24.6
|
|
|
(26.5
|
)
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|||||
|
Interest expense, net
|
44.7
|
|
|
25.5
|
|
|
3.9
|
|
|
—
|
|
|
74.1
|
|
|||||
|
Other (income) expense, net
|
—
|
|
|
(8.2
|
)
|
|
20.9
|
|
|
—
|
|
|
12.7
|
|
|||||
|
Total other expense, net
|
44.7
|
|
|
17.3
|
|
|
24.8
|
|
|
—
|
|
|
86.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income from equity investees
|
130.0
|
|
|
40.1
|
|
|
—
|
|
|
(170.1
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income before income taxes
|
67.2
|
|
|
176.5
|
|
|
56.9
|
|
|
(170.1
|
)
|
|
130.5
|
|
|||||
|
Income tax benefit (provision)
|
19.7
|
|
|
(46.5
|
)
|
|
(16.8
|
)
|
|
—
|
|
|
(43.6
|
)
|
|||||
|
Net income before non-controlling interest
|
86.9
|
|
|
130.0
|
|
|
40.1
|
|
|
(170.1
|
)
|
|
86.9
|
|
|||||
|
Less: Net income attributable to non-controlling interest
|
2.1
|
|
|
2.1
|
|
|
—
|
|
|
(2.1
|
)
|
|
2.1
|
|
|||||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
84.8
|
|
|
$
|
127.9
|
|
|
$
|
40.1
|
|
|
$
|
(168.0
|
)
|
|
$
|
84.8
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Comprehensive income (loss) attributable to Tempur Sealy International, Inc.
|
$
|
40.2
|
|
|
$
|
127.5
|
|
|
$
|
(14.0
|
)
|
|
$
|
(113.5
|
)
|
|
$
|
40.2
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
33.6
|
|
|
$
|
55.4
|
|
|
$
|
—
|
|
|
$
|
89.0
|
|
|
Accounts receivable, net
|
—
|
|
|
265.7
|
|
|
138.6
|
|
|
—
|
|
|
404.3
|
|
|||||
|
Inventories, net
|
—
|
|
|
154.5
|
|
|
59.8
|
|
|
—
|
|
|
214.3
|
|
|||||
|
Income taxes receivable
|
229.0
|
|
|
—
|
|
|
—
|
|
|
(229.0
|
)
|
|
—
|
|
|||||
|
Prepaid expenses and other current assets
|
0.2
|
|
|
40.2
|
|
|
21.3
|
|
|
—
|
|
|
61.7
|
|
|||||
|
Total Current Assets
|
229.2
|
|
|
494.0
|
|
|
275.1
|
|
|
(229.0
|
)
|
|
769.3
|
|
|||||
|
Property, plant and equipment, net
|
—
|
|
|
303.2
|
|
|
61.9
|
|
|
—
|
|
|
365.1
|
|
|||||
|
Goodwill
|
—
|
|
|
501.4
|
|
|
218.3
|
|
|
—
|
|
|
719.7
|
|
|||||
|
Other intangible assets, net
|
—
|
|
|
602.8
|
|
|
83.5
|
|
|
—
|
|
|
686.3
|
|
|||||
|
Deferred income taxes
|
19.6
|
|
|
—
|
|
|
25.4
|
|
|
(19.6
|
)
|
|
25.4
|
|
|||||
|
Other non-current assets
|
—
|
|
|
31.9
|
|
|
148.5
|
|
|
—
|
|
|
180.4
|
|
|||||
|
Net investment in subsidiaries
|
2,164.3
|
|
|
48.9
|
|
|
—
|
|
|
(2,213.2
|
)
|
|
—
|
|
|||||
|
Due from affiliates
|
414.7
|
|
|
1,632.5
|
|
|
4.0
|
|
|
(2,051.2
|
)
|
|
—
|
|
|||||
|
Total Assets
|
$
|
2,827.8
|
|
|
$
|
3,614.7
|
|
|
$
|
816.7
|
|
|
$
|
(4,513.0
|
)
|
|
$
|
2,746.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Accounts payable
|
$
|
1.6
|
|
|
$
|
185.3
|
|
|
$
|
51.0
|
|
|
$
|
—
|
|
|
$
|
237.9
|
|
|
Accrued expenses and other current liabilities
|
23.3
|
|
|
190.2
|
|
|
71.6
|
|
|
—
|
|
|
285.1
|
|
|||||
|
Income taxes payable
|
—
|
|
|
242.2
|
|
|
9.9
|
|
|
(229.0
|
)
|
|
23.1
|
|
|||||
|
Current portion of long-term debt
|
—
|
|
|
32.3
|
|
|
33.8
|
|
|
—
|
|
|
66.1
|
|
|||||
|
Total Current Liabilities
|
24.9
|
|
|
650.0
|
|
|
166.3
|
|
|
(229.0
|
)
|
|
612.2
|
|
|||||
|
Long-term debt, net
|
1,040.1
|
|
|
578.9
|
|
|
—
|
|
|
—
|
|
|
1,619.0
|
|
|||||
|
Deferred income taxes
|
—
|
|
|
190.1
|
|
|
21.7
|
|
|
(19.6
|
)
|
|
192.2
|
|
|||||
|
Other non-current liabilities
|
—
|
|
|
30.1
|
|
|
132.1
|
|
|
—
|
|
|
162.2
|
|
|||||
|
Due to affiliates
|
1,602.2
|
|
|
1.3
|
|
|
447.7
|
|
|
(2,051.2
|
)
|
|
—
|
|
|||||
|
Total Liabilities
|
2,667.2
|
|
|
1,450.4
|
|
|
767.8
|
|
|
(2,299.8
|
)
|
|
2,585.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Redeemable non-controlling interest
|
9.3
|
|
|
9.3
|
|
|
—
|
|
|
(9.3
|
)
|
|
9.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total Stockholders’ Equity
|
151.3
|
|
|
2,155.0
|
|
|
48.9
|
|
|
(2,203.9
|
)
|
|
151.3
|
|
|||||
|
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity
|
$
|
2,827.8
|
|
|
$
|
3,614.7
|
|
|
$
|
816.7
|
|
|
$
|
(4,513.0
|
)
|
|
$
|
2,746.2
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
121.8
|
|
|
$
|
32.1
|
|
|
$
|
—
|
|
|
$
|
153.9
|
|
|
Accounts receivable, net
|
—
|
|
|
231.9
|
|
|
147.5
|
|
|
—
|
|
|
379.4
|
|
|||||
|
Inventories, net
|
—
|
|
|
145.3
|
|
|
53.9
|
|
|
—
|
|
|
199.2
|
|
|||||
|
Income taxes receivable
|
193.1
|
|
|
—
|
|
|
—
|
|
|
(193.1
|
)
|
|
—
|
|
|||||
|
Prepaid expenses and other current assets
|
—
|
|
|
43.5
|
|
|
33.1
|
|
|
—
|
|
|
76.6
|
|
|||||
|
Total Current Assets
|
193.1
|
|
|
542.5
|
|
|
266.6
|
|
|
(193.1
|
)
|
|
809.1
|
|
|||||
|
Property, plant and equipment, net
|
—
|
|
|
300.1
|
|
|
61.6
|
|
|
—
|
|
|
361.7
|
|
|||||
|
Goodwill
|
—
|
|
|
501.4
|
|
|
208.0
|
|
|
—
|
|
|
709.4
|
|
|||||
|
Other intangible assets, net
|
—
|
|
|
612.9
|
|
|
82.5
|
|
|
—
|
|
|
695.4
|
|
|||||
|
Deferred income taxes
|
16.0
|
|
|
—
|
|
|
12.2
|
|
|
(16.0
|
)
|
|
12.2
|
|
|||||
|
Other non-current assets
|
—
|
|
|
23.3
|
|
|
44.4
|
|
|
—
|
|
|
67.7
|
|
|||||
|
Net investment in subsidiaries
|
1,960.5
|
|
|
—
|
|
|
—
|
|
|
(1,960.5
|
)
|
|
—
|
|
|||||
|
Due from affiliates
|
548.1
|
|
|
1,655.3
|
|
|
4.8
|
|
|
(2,208.2
|
)
|
|
—
|
|
|||||
|
Total Assets
|
$
|
2,717.7
|
|
|
$
|
3,635.5
|
|
|
$
|
680.1
|
|
|
$
|
(4,377.8
|
)
|
|
$
|
2,655.5
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Accounts payable
|
$
|
—
|
|
|
$
|
212.2
|
|
|
$
|
54.1
|
|
|
$
|
—
|
|
|
$
|
266.3
|
|
|
Accrued expenses and other current liabilities
|
1.4
|
|
|
183.8
|
|
|
68.8
|
|
|
—
|
|
|
254.0
|
|
|||||
|
Income taxes payable
|
—
|
|
|
196.0
|
|
|
8.3
|
|
|
(193.1
|
)
|
|
11.2
|
|
|||||
|
Current portion of long-term debt
|
—
|
|
|
168.7
|
|
|
12.8
|
|
|
—
|
|
|
181.5
|
|
|||||
|
Total Current Liabilities
|
1.4
|
|
|
760.7
|
|
|
144.0
|
|
|
(193.1
|
)
|
|
713.0
|
|
|||||
|
Long-term debt, net
|
811.9
|
|
|
461.4
|
|
|
—
|
|
|
—
|
|
|
1,273.3
|
|
|||||
|
Deferred income taxes
|
—
|
|
|
189.8
|
|
|
21.6
|
|
|
(16.0
|
)
|
|
195.4
|
|
|||||
|
Other non-current liabilities
|
—
|
|
|
166.6
|
|
|
4.6
|
|
|
—
|
|
|
171.2
|
|
|||||
|
Due to affiliates
|
1,601.8
|
|
|
96.5
|
|
|
604.9
|
|
|
(2,303.2
|
)
|
|
—
|
|
|||||
|
Total Liabilities
|
2,415.1
|
|
|
1,675.0
|
|
|
775.1
|
|
|
(2,512.3
|
)
|
|
2,352.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Redeemable non-controlling interest
|
12.4
|
|
|
12.4
|
|
|
—
|
|
|
(12.4
|
)
|
|
12.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total Stockholders’ Equity
|
290.2
|
|
|
1,948.1
|
|
|
(95.0
|
)
|
|
(1,853.1
|
)
|
|
290.2
|
|
|||||
|
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity
|
$
|
2,717.7
|
|
|
$
|
3,635.5
|
|
|
$
|
680.1
|
|
|
$
|
(4,377.8
|
)
|
|
$
|
2,655.5
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Net cash (used in) provided by operating activities
|
$
|
(30.4
|
)
|
|
$
|
38.2
|
|
|
$
|
102.0
|
|
|
$
|
—
|
|
|
$
|
109.8
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Purchases of property, plant and equipment
|
—
|
|
|
(33.2
|
)
|
|
(8.7
|
)
|
|
—
|
|
|
(41.9
|
)
|
|||||
|
Contributions (paid to) received from subsidiaries and affiliates
|
—
|
|
|
(76.8
|
)
|
|
76.8
|
|
|
—
|
|
|
—
|
|
|||||
|
Net cash (used in) provided by investing activities
|
—
|
|
|
(110.0
|
)
|
|
68.1
|
|
|
—
|
|
|
(41.9
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Proceeds from borrowings under long-term debt obligations
|
600.0
|
|
|
1,214.6
|
|
|
56.9
|
|
|
—
|
|
|
1,871.5
|
|
|||||
|
Repayments of borrowings under long-term debt obligations
|
(375.0
|
)
|
|
(1,246.6
|
)
|
|
(37.7
|
)
|
|
—
|
|
|
(1,659.3
|
)
|
|||||
|
Net activity in investment in and advances from (to) subsidiaries and affiliates
|
136.5
|
|
|
22.6
|
|
|
(159.1
|
)
|
|
|
|
—
|
|
||||||
|
Proceeds from exercise of stock options
|
15.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.2
|
|
|||||
|
Excess tax benefit from stock-based compensation
|
6.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.0
|
|
|||||
|
Treasury stock repurchased
|
(319.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(319.7
|
)
|
|||||
|
Payment of deferred financing costs
|
(3.0
|
)
|
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
|||||
|
Fees paid to lenders
|
(6.0
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
(7.8
|
)
|
|||||
|
Call premium on 2020 Senior Notes
|
(23.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23.6
|
)
|
|||||
|
Other
|
—
|
|
|
(1.6
|
)
|
|
1.7
|
|
|
—
|
|
|
0.1
|
|
|||||
|
Net cash provided by (used in) financing activities
|
30.4
|
|
|
(16.4
|
)
|
|
(138.2
|
)
|
|
—
|
|
|
(124.2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
—
|
|
|
—
|
|
|
(8.6
|
)
|
|
—
|
|
|
(8.6
|
)
|
|||||
|
(Decrease) increase in cash and cash equivalents
|
—
|
|
|
(88.2
|
)
|
|
23.3
|
|
|
—
|
|
|
(64.9
|
)
|
|||||
|
CASH AND CASH EQUIVALENTS, beginning of period
|
—
|
|
|
121.8
|
|
|
32.1
|
|
|
—
|
|
|
153.9
|
|
|||||
|
CASH AND CASH EQUIVALENTS, end of period
|
$
|
—
|
|
|
$
|
33.6
|
|
|
$
|
55.4
|
|
|
$
|
—
|
|
|
$
|
89.0
|
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
Net cash (used in) provided by operating activities
|
$
|
(63.3
|
)
|
|
$
|
158.5
|
|
|
$
|
38.0
|
|
|
$
|
—
|
|
|
$
|
133.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Purchases of property, plant and equipment
|
—
|
|
|
(40.3
|
)
|
|
(10.8
|
)
|
|
—
|
|
|
(51.1
|
)
|
|||||
|
Proceeds from disposition of business and other
|
—
|
|
|
7.2
|
|
|
(0.3
|
)
|
|
|
|
6.9
|
|
||||||
|
Net cash used in investing activities
|
—
|
|
|
(33.1
|
)
|
|
(11.1
|
)
|
|
—
|
|
|
(44.2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Proceeds from borrowings under long-term debt obligations
|
—
|
|
|
852.9
|
|
|
2.5
|
|
|
—
|
|
|
855.4
|
|
|||||
|
Repayments of borrowings under long-term debt obligations
|
—
|
|
|
(974.4
|
)
|
|
—
|
|
|
—
|
|
|
(974.4
|
)
|
|||||
|
Net activity in investment in and advances from (to) subsidiaries and affiliates
|
22.8
|
|
|
19.5
|
|
|
(42.3
|
)
|
|
—
|
|
|
—
|
|
|||||
|
Proceeds from exercise of stock options
|
16.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.7
|
|
|||||
|
Excess tax benefit from stock-based compensation
|
19.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19.7
|
|
|||||
|
Treasury stock repurchased
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|||||
|
Payment of deferred financing costs
|
|
|
|
(6.4
|
)
|
|
—
|
|
|
—
|
|
|
(6.4
|
)
|
|||||
|
Proceeds from purchase of treasury shares by CEO
|
5.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|||||
|
Other
|
—
|
|
|
(2.5
|
)
|
|
0.4
|
|
|
—
|
|
|
(2.1
|
)
|
|||||
|
Net cash provided by (used in) financing activities
|
62.9
|
|
|
(110.9
|
)
|
|
(39.4
|
)
|
|
—
|
|
|
(87.4
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
—
|
|
|
—
|
|
|
7.7
|
|
|
—
|
|
|
7.7
|
|
|||||
|
(Decrease) increase in cash and cash equivalents
|
(0.4
|
)
|
|
14.5
|
|
|
(4.8
|
)
|
|
—
|
|
|
9.3
|
|
|||||
|
CASH AND CASH EQUIVALENTS, beginning of period
|
0.4
|
|
|
25.5
|
|
|
36.6
|
|
|
—
|
|
|
62.5
|
|
|||||
|
CASH AND CASH EQUIVALENTS, end of period
|
$
|
—
|
|
|
$
|
40.0
|
|
|
$
|
31.8
|
|
|
$
|
—
|
|
|
$
|
71.8
|
|
|
•
|
an overview of our business;
|
|
•
|
factors impacting results of operations;
|
|
•
|
results of operations including our net sales and costs in the periods presented as well as changes between periods;
|
|
•
|
expected sources of liquidity for future operations; and
|
|
•
|
our use of certain non-GAAP financial measures.
|
|
•
|
Total net sales decreased
5.4%
to
$832.4 million
from
$880.0 million
in the
third
quarter of 2015. On a constant currency basis, which is a non-GAAP financial measure, total net sales decreased 4.6%, with a decrease of 5.8% in the North America business segment and an increase of 1.8% in the International business segment.
|
|
•
|
Gross margin was
43.5%
as compared to
40.9%
in the
third
quarter of 2015.
|
|
•
|
Operating income increased
18.2%
to
$131.1 million
, or
15.7%
of net sales, as compared to
$110.9 million
, or
12.6%
of net sales, in the
third
quarter of
2015
. Operating income in the
third
quarter of 2015 included $5.5 million of integration costs, $5.2 million of additional costs related to executive management transition and retention compensation and $2.4 million of restructuring costs.
|
|
•
|
Net income increased
93.5%
to
$77.8 million
as compared to
$40.2 million
in the
third
quarter of
2015
.
|
|
•
|
Earnings before interest, tax, depreciation and amortization ("EBITDA") increased
27.7%
to
$155.0 million
as compared to
$121.4 million
for the
third
quarter of
2015
. EBITDA increased
8.9%
as compared to adjusted EBITDA, which is a non-GAAP financial measure, of
$142.3 million
in the
third
quarter of
2015
.
|
|
•
|
Earnings per diluted share ("EPS") increased
106.3%
to
$1.32
as compared to
$0.64
in the
third
quarter of
2015
.
|
|
•
|
Net sales decreased 1.1% to $2,357.8 million from $2,383.9 million in the nine months ended September 30, 2015. On a constant currency basis, total net sales increased 0.4%.
|
|
•
|
Net income increased 63.6% to $138.7 million from $84.8 million in the nine months ended September 30, 2015.
|
|
•
|
EPS increased 67.6% to $2.28 from $1.36 in the nine months ended September 30, 2015.
|
|
|
Three Months Ended September 30,
|
||||||||||||
|
(in millions, except per share amounts)
|
2016
|
|
2015
|
||||||||||
|
Net sales
|
$
|
832.4
|
|
|
100.0
|
%
|
|
$
|
880.0
|
|
|
100.0
|
%
|
|
Cost of sales
|
470.3
|
|
|
56.5
|
|
|
520.4
|
|
|
59.1
|
|
||
|
Gross profit
|
362.1
|
|
|
43.5
|
|
|
359.6
|
|
|
40.9
|
|
||
|
Selling and marketing expenses
|
175.2
|
|
|
21.0
|
|
|
175.6
|
|
|
20.0
|
|
||
|
General, administrative and other expenses
|
64.0
|
|
|
7.7
|
|
|
79.8
|
|
|
9.0
|
|
||
|
Equity income in earnings of unconsolidated affiliates
|
(2.4
|
)
|
|
(0.2
|
)
|
|
(2.0
|
)
|
|
(0.2
|
)
|
||
|
Royalty income, net of royalty expense
|
(5.8
|
)
|
|
(0.7
|
)
|
|
(4.7
|
)
|
|
(0.5
|
)
|
||
|
Operating income
|
131.1
|
|
|
15.7
|
|
|
110.9
|
|
|
12.6
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||
|
Interest expense, net
|
20.5
|
|
|
2.5
|
|
|
33.2
|
|
|
3.8
|
|
||
|
Other expense, net
|
0.3
|
|
|
—
|
|
|
11.8
|
|
|
1.3
|
|
||
|
Total other expense, net
|
20.8
|
|
|
2.5
|
|
|
45.0
|
|
|
5.1
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income taxes
|
110.3
|
|
|
13.3
|
|
|
65.9
|
|
|
7.5
|
|
||
|
Income tax provision
|
(33.7
|
)
|
|
(4.1
|
)
|
|
(25.0
|
)
|
|
(2.8
|
)
|
||
|
Net income before non-controlling interest
|
76.6
|
|
|
9.2
|
|
|
40.9
|
|
|
4.7
|
|
||
|
Less: Net (loss) income attributable to non-controlling interest
(1)
|
(1.2
|
)
|
|
(0.1
|
)
|
|
0.7
|
|
|
0.1
|
|
||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
77.8
|
|
|
9.3
|
%
|
|
$
|
40.2
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings per common share:
|
|
|
|
|
|
|
|
||||||
|
Basic
|
$
|
1.34
|
|
|
|
|
$
|
0.65
|
|
|
|
||
|
Diluted
|
$
|
1.32
|
|
|
|
|
$
|
0.64
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||
|
Basic
|
58.2
|
|
|
|
|
62.1
|
|
|
|
||||
|
Diluted
|
58.8
|
|
|
|
|
62.9
|
|
|
|
||||
|
(1)
|
Net (loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the three months ended September 30, 2016 and 2015 represented $(1.2) million and $0.5 million, respectively. As of September 30, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, for the three months ended September 30, 2015, the Company recorded a $0.2 million adjustment, net of tax, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of September 30, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary for the three months ended September 30, 2016.
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
|
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
||||||||||||||||||
|
Net sales by channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Retail channel
|
$
|
753.7
|
|
|
$
|
800.3
|
|
|
$
|
663.1
|
|
|
$
|
703.3
|
|
|
$
|
90.6
|
|
|
$
|
97.0
|
|
|
Other channel
|
78.7
|
|
|
79.7
|
|
|
35.4
|
|
|
37.9
|
|
|
43.3
|
|
|
41.8
|
|
||||||
|
Total net sales
|
$
|
832.4
|
|
|
$
|
880.0
|
|
|
$
|
698.5
|
|
|
$
|
741.2
|
|
|
$
|
133.9
|
|
|
$
|
138.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net sales by product
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Bedding
|
$
|
773.7
|
|
|
$
|
801.0
|
|
|
$
|
667.6
|
|
|
$
|
690.8
|
|
|
$
|
106.1
|
|
|
$
|
110.2
|
|
|
Other products
|
58.7
|
|
|
79.0
|
|
|
30.9
|
|
|
50.4
|
|
|
27.8
|
|
|
28.6
|
|
||||||
|
Total net sales
|
$
|
832.4
|
|
|
$
|
880.0
|
|
|
$
|
698.5
|
|
|
$
|
741.2
|
|
|
$
|
133.9
|
|
|
$
|
138.8
|
|
|
•
|
North America
net sales
decreased
5.8%
. Net sales of Bedding products decreased $23.2 million, or 3.4%, primarily due to a decrease in net sales of our Tempur products. Tempur product net sales were impacted by three primary factors. The retail environment in the U.S. in the third quarter was less robust than we had expected. We also experienced some significant weakness in our largest national account, which is in the process of rebranding and remerchandising certain stores. In addition, we believe our advertising campaign overemphasized our new product introductions and did not adequately support our legacy Tempur products. Net sales of Other products decreased $19.5 million, or 38.7%, primarily as a result of a decline in net sales of pillows and products sold through Comfort Revolution.
|
|
•
|
International
net sales
decreased
3.5%
. On a constant currency basis, International net sales
increased
approximately
1.8%
, with growth across all major regions. The increase in net sales on a constant currency basis was primarily due to an increase in direct sales of our Tempur products in Asia-Pacific, and an increase in net sales of our Sealy products in Latin America. International Other channel sales increased 13.4% on a constant currency basis, primarily driven by increases in net sales through the Internet and our company-owned stores.
|
|
|
|
Three Months Ended September 30,
|
|
|
|||||||||||||
|
|
|
2016
|
|
2015
|
|
|
|||||||||||
|
(in millions, except percentages)
|
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
Margin Change
|
|||||||
|
North America
|
|
$
|
290.1
|
|
|
41.5
|
%
|
|
$
|
287.7
|
|
|
38.8
|
%
|
|
2.7
|
%
|
|
International
|
|
72.0
|
|
|
53.8
|
%
|
|
71.9
|
|
|
51.8
|
%
|
|
2.0
|
%
|
||
|
Consolidated gross margin
|
|
$
|
362.1
|
|
|
43.5
|
%
|
|
$
|
359.6
|
|
|
40.9
|
%
|
|
2.6
|
%
|
|
•
|
North America
gross margin increased 270 basis points. The increase was driven primarily by 170 basis points of operational efficiencies and 90 basis points due to pricing actions and product mix.
|
|
•
|
International
gross margin increased 200 basis points. The increase was driven primarily by 110 basis points of operational improvements and 90 basis points due to improved product mix.
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Advertising expenses
|
$
|
104.3
|
|
|
$
|
103.1
|
|
|
$
|
95.8
|
|
|
$
|
93.7
|
|
|
$
|
8.5
|
|
|
$
|
9.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other selling and marketing expenses
|
70.9
|
|
|
72.5
|
|
|
39.3
|
|
|
41.6
|
|
|
30.7
|
|
|
29.9
|
|
|
0.9
|
|
|
1.0
|
|
||||||||
|
General, administrative and other expenses
|
64.0
|
|
|
79.8
|
|
|
29.4
|
|
|
36.6
|
|
|
12.7
|
|
|
13.7
|
|
|
21.9
|
|
|
29.5
|
|
||||||||
|
Total operating expenses
|
$
|
239.2
|
|
|
$
|
255.4
|
|
|
$
|
164.5
|
|
|
$
|
171.9
|
|
|
$
|
51.9
|
|
|
$
|
53.0
|
|
|
$
|
22.8
|
|
|
$
|
30.5
|
|
|
•
|
North America
operating expenses decreased $7.4 million and remained relatively flat as a percentage of net sales. The decrease was primarily driven by decreased incentive compensation expenses, as well as lower overall operating expense management in selling and marketing expenses and general, administrative and other expenses. These decreases were offset by increased national advertising spend of $5.4 million.
|
|
•
|
International
operating expenses decreased slightly and remained relatively flat as a percentage of net sales.
|
|
•
|
Corporate
operating expenses decreased
$7.7 million
, or
25.2%
. In the third quarter of 2015, we incurred $4.9 million of additional costs related to executive management transition and retention compensation, $2.0 million of integration costs and $0.5 million of restructuring costs, which were not incurred in the third quarter of 2016.
|
|
|
|
Three Months Ended September 30,
|
|
|
|||||||||||||
|
|
|
2016
|
|
2015
|
|
|
|||||||||||
|
(in millions, except percentages)
|
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
Margin Change
|
|||||||
|
North America
|
|
$
|
128.3
|
|
|
18.4
|
%
|
|
$
|
118.4
|
|
|
16.0
|
%
|
|
2.4
|
%
|
|
International
|
|
25.6
|
|
|
19.1
|
%
|
|
23.0
|
|
|
16.6
|
%
|
|
2.5
|
%
|
||
|
|
|
153.9
|
|
|
|
|
141.4
|
|
|
|
|
|
|||||
|
Corporate expenses
|
|
(22.8
|
)
|
|
|
|
(30.5
|
)
|
|
|
|
|
|||||
|
Total operating income
|
|
$
|
131.1
|
|
|
15.7
|
%
|
|
$
|
110.9
|
|
|
12.6
|
%
|
|
3.1
|
%
|
|
•
|
North America
operating income increased $9.9 million and operating margin improved 240 basis points. The improvement in operating margin was primarily driven by improved gross margin of 270 basis points, offset slightly by a decrease in operating expense leverage of 40 basis points.
|
|
•
|
International
operating income increased $2.6 million and operating margin increased 250 basis points. The increase in operating margin was primarily driven by an increase in gross margin of 200 basis points and an increase in royalty income, net of royalty expense, of $1.0 million or 47.6%, which increased operating margin by 80 basis points.
|
|
•
|
Corporate
operating expenses decreased $7.7 million, as discussed above, which improved our consolidated operating margin by 90 basis points.
|
|
|
|
Three Months Ended September 30,
|
|||||||||
|
(in millions, except percentages)
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
Interest expense, net
|
|
$
|
20.5
|
|
|
$
|
33.2
|
|
|
(38.3
|
)%
|
|
|
|
Three Months Ended September 30,
|
|||||||||
|
(in millions, except percentages)
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
Income tax provision
|
|
$
|
33.7
|
|
|
$
|
25.0
|
|
|
34.8
|
%
|
|
Effective tax rate
|
|
30.6
|
%
|
|
37.9
|
%
|
|
|
|||
|
|
Nine Months Ended September 30,
|
||||||||||||
|
(in millions, except per share amounts)
|
2016
|
|
2015
|
||||||||||
|
Net sales
|
$
|
2,357.8
|
|
|
100.0
|
%
|
|
$
|
2,383.9
|
|
|
100.0
|
%
|
|
Cost of sales
|
1,367.8
|
|
|
58.0
|
|
|
1,448.1
|
|
|
60.7
|
|
||
|
Gross profit
|
990.0
|
|
|
42.0
|
|
|
935.8
|
|
|
39.3
|
|
||
|
Selling and marketing expenses
|
498.1
|
|
|
21.1
|
|
|
498.0
|
|
|
20.9
|
|
||
|
General, administrative and other expenses
|
207.6
|
|
|
8.8
|
|
|
242.6
|
|
|
10.2
|
|
||
|
Equity income in earnings of unconsolidated affiliates
|
(8.6
|
)
|
|
(0.4
|
)
|
|
(8.4
|
)
|
|
(0.3
|
)
|
||
|
Royalty income, net of royalty expense
|
(15.1
|
)
|
|
(0.6
|
)
|
|
(13.7
|
)
|
|
(0.6
|
)
|
||
|
Operating income
|
308.0
|
|
|
13.1
|
|
|
217.3
|
|
|
9.1
|
|
||
|
|
|
|
|
|
|
|
|
||||||
|
Other expense, net:
|
|
|
|
|
|
|
|
||||||
|
Interest expense, net
|
65.0
|
|
|
2.8
|
|
|
74.1
|
|
|
3.1
|
|
||
|
Loss on extinguishment of debt
|
47.2
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
||
|
Other expense, net
|
—
|
|
|
—
|
|
|
12.7
|
|
|
0.5
|
|
||
|
Total other expense, net
|
112.2
|
|
|
4.8
|
|
|
86.8
|
|
|
3.6
|
|
||
|
|
|
|
|
|
|
|
|
||||||
|
Income before income taxes
|
195.8
|
|
|
8.3
|
|
|
130.5
|
|
|
5.5
|
|
||
|
Income tax provision
|
(60.2
|
)
|
|
(2.5
|
)
|
|
(43.6
|
)
|
|
(1.9
|
)
|
||
|
Net income before non-controlling interest
|
135.6
|
|
|
5.8
|
|
|
86.9
|
|
|
3.7
|
|
||
|
Less: Net (loss) income attributable to non-controlling interest
(1)
|
(3.1
|
)
|
|
(0.1
|
)
|
|
2.1
|
|
|
0.1
|
|
||
|
Net income attributable to Tempur Sealy International, Inc.
|
$
|
138.7
|
|
|
5.9
|
%
|
|
$
|
84.8
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings per common share:
|
|
|
|
|
|
|
|
||||||
|
Basic
|
$
|
2.31
|
|
|
|
|
$
|
1.38
|
|
|
|
||
|
Diluted
|
$
|
2.28
|
|
|
|
|
$
|
1.36
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||
|
Basic
|
60.1
|
|
|
|
|
61.4
|
|
|
|
||||
|
Diluted
|
60.8
|
|
|
|
|
62.5
|
|
|
|
||||
|
(1)
|
Net (loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the nine months ended September 30, 2016 and 2015 represented $(3.1) million and $1.0 million, respectively. As of September 30, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, for the nine months ended September 30, 2015, the Company recorded a $1.1 million adjustment, net of tax, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of September 30, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary for the nine months ended September 30, 2016.
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
|
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
||||||||||||||||||
|
Net sales by channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Retail channel
|
$
|
2,128.8
|
|
|
$
|
2,180.1
|
|
|
$
|
1,843.3
|
|
|
$
|
1,881.4
|
|
|
$
|
285.5
|
|
|
$
|
298.7
|
|
|
Other channel
|
229.0
|
|
|
203.8
|
|
|
103.4
|
|
|
84.2
|
|
|
125.6
|
|
|
119.6
|
|
||||||
|
Total net sales
|
$
|
2,357.8
|
|
|
$
|
2,383.9
|
|
|
$
|
1,946.7
|
|
|
$
|
1,965.6
|
|
|
$
|
411.1
|
|
|
$
|
418.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net sales by product
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Bedding
|
$
|
2,186.0
|
|
|
$
|
2,188.1
|
|
|
$
|
1,858.2
|
|
|
$
|
1,854.2
|
|
|
$
|
327.8
|
|
|
$
|
333.9
|
|
|
Other products
|
171.8
|
|
|
195.8
|
|
|
88.5
|
|
|
111.4
|
|
|
83.3
|
|
|
84.4
|
|
||||||
|
Total net sales
|
$
|
2,357.8
|
|
|
$
|
2,383.9
|
|
|
$
|
1,946.7
|
|
|
$
|
1,965.6
|
|
|
$
|
411.1
|
|
|
$
|
418.3
|
|
|
•
|
North America
net sales
decreased
1.0%
. On a constant currency basis, net sales
decreased
approximately
0.6%
. Net sales of Bedding products were relatively flat, primarily due to a decrease in net sales of our Tempur products. Tempur product net sales were impacted by three primary factors in the third quarter. The retail environment in the U.S. was less robust than we had expected. We also experienced some significant weakness in our largest national account, which is in the process of rebranding and remerchandising certain stores. In addition, we believe our advertising campaign overemphasized our new product introductions and did not adequately support our legacy Tempur products. Net sales of Other products decreased $22.9 million, or 20.6%, primarily as a result of a decline in net sales net sales of pillows and products sold through Comfort Revolution. Canada net sales increased 1.2%, and, on a constant currency basis, increased 5.8%.
|
|
•
|
International
net sales
decreased
1.7%
due to unfavorable foreign exchange rates. On a constant currency basis, International net sales
increased
approximately
5.1%
, with growth across all major regions. Constant currency growth in International was primarily driven by the success of new product introductions, an increase in direct sales of our Tempur products in Asia-Pacific and an increase in net sales of our Sealy products in Latin America. On a constant currency basis, International Other channel sales increased 15.9%, primarily driven by an increase in net sales through the Internet and our company-owned stores.
|
|
|
|
Nine Months Ended September 30,
|
|
|
|||||||||||||
|
|
|
2016
|
|
2015
|
|
|
|||||||||||
|
(in millions, except percentages)
|
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
Margin Change
|
|||||||
|
North America
|
|
$
|
771.9
|
|
|
39.7
|
%
|
|
$
|
718.2
|
|
|
36.5
|
%
|
|
3.2
|
%
|
|
International
|
|
218.1
|
|
|
53.1
|
%
|
|
217.6
|
|
|
52.0
|
%
|
|
1.1
|
%
|
||
|
Consolidated gross margin
|
|
$
|
990.0
|
|
|
42.0
|
%
|
|
$
|
935.8
|
|
|
39.3
|
%
|
|
2.7
|
%
|
|
•
|
North America
gross margin increased 320 basis points. The increase was driven primarily by 250 basis points of operational improvements, including sourcing improvements and decreased commodity costs, and 70 basis points due to pricing actions.
|
|
•
|
International
gross margin increased 110 basis points. The increase was driven by 100 basis points of operational improvements and 60 basis points of favorable channel mix, as we expand distribution through more profitable direct-to-consumer channels. These factors were partially offset by 70 basis points of discounts associated with promotional activity.
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Advertising expenses
|
$
|
275.1
|
|
|
$
|
280.2
|
|
|
$
|
247.9
|
|
|
$
|
251.7
|
|
|
$
|
27.2
|
|
|
$
|
28.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other selling and marketing expenses
|
223.0
|
|
|
217.8
|
|
|
127.8
|
|
|
124.2
|
|
|
91.6
|
|
|
90.8
|
|
|
3.6
|
|
|
2.8
|
|
||||||||
|
General, administrative and other expenses
|
207.6
|
|
|
242.6
|
|
|
93.7
|
|
|
108.0
|
|
|
40.3
|
|
|
41.7
|
|
|
73.6
|
|
|
92.9
|
|
||||||||
|
Total operating expenses
|
$
|
705.7
|
|
|
$
|
740.6
|
|
|
$
|
469.4
|
|
|
$
|
483.9
|
|
|
$
|
159.1
|
|
|
$
|
161.0
|
|
|
$
|
77.2
|
|
|
$
|
95.7
|
|
|
•
|
North America
operating expenses
decreased
$14.5 million
and decreased 50 basis points as a percentage of net sales. The decrease was primarily driven by decreased incentive compensation expenses, as well as lower overall operating expenses in selling and marketing expenses and general, administrative and other expenses.These decreases were offset by increased national advertising spend of $5.7 million.
|
|
•
|
International
operating expenses decreased slightly and remained relatively flat as a percentage of net sales.
|
|
•
|
Corporate
operating expenses decreased
$18.5 million
, or
19.3%
. In the nine months ended September 30, 2016, executive management transition and retention compensation decreased $9.3 million and integration costs decreased $3.1 million. In addition, in the first half of 2015 we incurred $6.3 million of additional costs related to our 2015 Annual Meeting which were not incurred in 2016.
|
|
|
|
Nine Months Ended September 30,
|
|
|
|||||||||||||
|
|
|
2016
|
|
2015
|
|
|
|||||||||||
|
(in millions, except percentages)
|
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
Margin Change
|
|||||||
|
North America
|
|
$
|
308.9
|
|
|
15.9
|
%
|
|
$
|
240.9
|
|
|
12.3
|
%
|
|
3.6
|
%
|
|
International
|
|
76.1
|
|
|
18.5
|
%
|
|
72.0
|
|
|
17.2
|
%
|
|
1.3
|
%
|
||
|
|
|
385.0
|
|
|
|
|
312.9
|
|
|
|
|
|
|||||
|
Corporate expenses
|
|
(77.0
|
)
|
|
|
|
(95.6
|
)
|
|
|
|
|
|||||
|
Total operating income
|
|
$
|
308.0
|
|
|
13.1
|
%
|
|
$
|
217.3
|
|
|
9.1
|
%
|
|
4.0
|
%
|
|
•
|
North America
operating income increased $68.0 million and operating margin improved 360 basis points. The improvement in operating margin was primarily driven by improved gross margin of 320 basis points and an improvement in operating expense leverage of 50 basis points.
|
|
•
|
International
operating income increased $4.1 million and operating margin improved 130 basis points. The improvement in operating margin was primarily driven by improved gross margin of 110 basis points.
|
|
•
|
Corporate
operating expenses decreased $18.6 million, as discussed above, which improved our consolidated operating margin by 80 basis points.
|
|
|
|
Nine Months Ended September 30,
|
|||||||||
|
(in millions, except percentages)
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
Interest expense, net
|
|
$
|
65.0
|
|
|
$
|
74.1
|
|
|
(12.3
|
)%
|
|
|
|
Nine Months Ended September 30,
|
|||||||||
|
(in millions, except percentages)
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
Income tax provision
|
|
$
|
60.2
|
|
|
$
|
43.6
|
|
|
38.1
|
%
|
|
Effective tax rate
|
|
30.7
|
%
|
|
33.4
|
%
|
|
|
|||
|
|
|
Nine Months Ended September 30,
|
||||||
|
(in millions)
|
|
2016
|
|
2015
|
||||
|
Net cash provided by (used in):
|
|
|
|
|
||||
|
Operating activities
|
|
$
|
109.8
|
|
|
$
|
133.2
|
|
|
Investing activities
|
|
(41.9
|
)
|
|
(44.2
|
)
|
||
|
Financing activities
|
|
(124.2
|
)
|
|
(87.4
|
)
|
||
|
(in millions, except percentages and per common share amounts)
|
Three Months Ended
|
|
% Change
|
|
% Change Constant Currency
(1)
|
||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|||||||||||
|
Net sales
|
$
|
832.4
|
|
|
$
|
880.0
|
|
|
(5.4
|
)%
|
|
(4.6
|
)%
|
|
Net income
|
77.8
|
|
|
40.2
|
|
|
93.5
|
%
|
|
98.5
|
%
|
||
|
EPS
|
1.32
|
|
|
0.64
|
|
|
106.3
|
%
|
|
110.9
|
%
|
||
|
Adjusted EPS
(1)
|
1.32
|
|
|
1.11
|
|
|
18.9
|
%
|
|
21.6
|
%
|
||
|
EBITDA
(1)
|
155.0
|
|
|
121.4
|
|
|
27.7
|
%
|
|
30.2
|
%
|
||
|
Adjusted EBITDA
(1)
|
155.0
|
|
|
142.3
|
|
|
8.9
|
%
|
|
11.1
|
%
|
||
|
(1)
|
Non-GAAP financial measure. Please refer to the reconciliations on the following tables. No adjustments were made to EPS or EBITDA in the three months ended September 30, 2016.
|
|
|
Three Months Ended
|
||||||
|
(in millions, except per share amounts)
|
September 30, 2016
|
|
September 30, 2015
|
||||
|
GAAP net income
|
$
|
77.8
|
|
|
$
|
40.2
|
|
|
German legal settlement
(1)
|
—
|
|
|
17.6
|
|
||
|
Interest expense
(2)
|
—
|
|
|
12.0
|
|
||
|
Other income
(3)
|
—
|
|
|
(9.5
|
)
|
||
|
Integration costs
(4)
|
—
|
|
|
6.1
|
|
||
|
Executive management transition and retention compensation
(5)
|
—
|
|
|
5.2
|
|
||
|
Restructuring costs
(6)
|
—
|
|
|
2.4
|
|
||
|
Tax adjustments
(7)
|
—
|
|
|
(4.1
|
)
|
||
|
Adjusted net income
|
$
|
77.8
|
|
|
$
|
69.9
|
|
|
|
|
|
|
||||
|
Adjusted earnings per common share, diluted
|
$
|
1.32
|
|
|
$
|
1.11
|
|
|
|
|
|
|
||||
|
Diluted shares outstanding
|
58.8
|
|
|
62.9
|
|
||
|
(1)
|
German legal settlement represents the previously announced €15.5 million ($17.6 million) settlement the Company reached in 2015 with the German FCO to fully resolve the FCO's antitrust investigation, and related legal fees.
|
|
(2)
|
Interest expense represents non-cash interest costs related to the accelerated amortization of deferred financing costs associated with the $493.8 million voluntary prepayment of the Company’s term loans, subsequent to the issuance by the Company of $450.0 million aggregate principal amount of 5.625% senior notes due 2023.
|
|
(3)
|
Other income includes income from a partial settlement of a legal dispute.
|
|
(4)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the Sealy Acquisition.
|
|
(5)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of the Company's executive officers following the 2015 Annual Meeting.
|
|
(6)
|
Restructuring costs represents costs associated with headcount reduction and store closures.
|
|
(7)
|
Tax adjustments represent adjustments associated with the aforementioned items and other discrete income tax events.
|
|
|
Three Months Ended September 30, 2016
|
|||||||||||||||||||||||
|
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
|
|
Margin
|
|
International
|
|
Margin
|
|
Corporate
|
|||||||||||
|
Net sales
|
$
|
832.4
|
|
|
|
|
$
|
698.5
|
|
|
|
|
$
|
133.9
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Gross profit
|
$
|
362.1
|
|
|
43.5
|
%
|
|
$
|
290.1
|
|
|
41.5
|
%
|
|
$
|
72.0
|
|
|
53.8
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Operating income (expense)
|
$
|
131.1
|
|
|
15.7
|
%
|
|
$
|
128.3
|
|
|
18.4
|
%
|
|
$
|
25.6
|
|
|
19.1
|
%
|
|
$
|
(22.8
|
)
|
|
|
Three Months Ended September 30, 2015
|
|||||||||||||||||||||||
|
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
(1) |
|
Margin
|
|
International
(2) |
|
Margin
|
|
Corporate
(3) |
|||||||||||
|
Net sales
|
$
|
880.0
|
|
|
|
|
$
|
741.2
|
|
|
|
|
$
|
138.8
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Gross profit
|
$
|
359.6
|
|
|
40.9
|
%
|
|
$
|
287.7
|
|
|
38.8
|
%
|
|
$
|
71.9
|
|
|
51.8
|
%
|
|
$
|
—
|
|
|
Adjustments
|
3.5
|
|
|
|
|
2.2
|
|
|
|
|
1.3
|
|
|
|
|
—
|
|
|||||||
|
Adjusted gross profit
|
$
|
363.1
|
|
|
41.3
|
%
|
|
$
|
289.9
|
|
|
39.1
|
%
|
|
$
|
73.2
|
|
|
52.7
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Operating income (expense)
|
$
|
110.9
|
|
|
12.6
|
%
|
|
$
|
118.4
|
|
|
16.0
|
%
|
|
$
|
23.0
|
|
|
16.6
|
%
|
|
$
|
(30.5
|
)
|
|
Adjustments
|
13.1
|
|
|
|
|
3.0
|
|
|
|
|
2.7
|
|
|
|
|
7.4
|
|
|||||||
|
Adjusted operating income (expense)
|
$
|
124.0
|
|
|
14.1
|
%
|
|
$
|
121.4
|
|
|
16.4
|
%
|
|
$
|
25.7
|
|
|
18.5
|
%
|
|
$
|
(23.1
|
)
|
|
(1)
|
Adjustments for the North America segment represent executive management retention costs, integration costs (which include compensation costs, professional fees and other charges related to the transition of manufacturing facilities) and other costs to support the continued alignment of the North America segment related to the Sealy Acquisition.
|
|
(2)
|
Adjustments for the International segment represent executive management retention costs and integration costs incurred in connection with the introduction of Sealy products in certain international markets.
|
|
(3)
|
Adjustments for Corporate represent executive management transition and retention costs and integration costs which include professional fees and other charges to align the business related to the Sealy Acquisition.
|
|
•
|
GAAP net income to EBITDA and adjusted EBITDA
|
|
•
|
Total debt to consolidated funded debt less qualified cash
|
|
•
|
Ratio of consolidated funded debt less qualified cash to adjusted EBITDA
|
|
|
Three Months Ended
|
||||||
|
(in millions)
|
September 30, 2016
|
|
September 30, 2015
|
||||
|
GAAP net income
|
$
|
77.8
|
|
|
$
|
40.2
|
|
|
Interest expense
|
20.5
|
|
|
33.2
|
|
||
|
Income taxes
|
33.7
|
|
|
25.0
|
|
||
|
Depreciation and amortization
|
23.0
|
|
|
23.0
|
|
||
|
EBITDA
|
$
|
155.0
|
|
|
$
|
121.4
|
|
|
Adjustments:
|
|
|
|
||||
|
German legal settlement
(1)
|
—
|
|
|
17.6
|
|
||
|
Other income
(2)
|
—
|
|
|
(9.5
|
)
|
||
|
Integration costs
(3)
|
—
|
|
|
6.1
|
|
||
|
Executive management transition and retention compensation
(4)
|
—
|
|
|
4.3
|
|
||
|
Restructuring costs
(5)
|
—
|
|
|
2.2
|
|
||
|
Redemption value adjustment on redeemable non-controlling interest, net of tax
(6)
|
—
|
|
|
0.2
|
|
||
|
Adjusted EBITDA
|
$
|
155.0
|
|
|
$
|
142.3
|
|
|
(1)
|
German legal settlement represents the previously announced €15.5 million ($17.6 million) settlement the Company reached in 2015 with the German FCO to fully resolve the FCO's antitrust investigation, and related legal fees.
|
|
(2)
|
Other income includes income from a partial settlement of a legal dispute.
|
|
(3)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the Sealy Acquisition.
|
|
(4)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of the Company's executive officers following the 2015 Annual Meeting.
|
|
(5)
|
Restructuring costs represents costs associated with headcount reduction and store closures.
|
|
(6)
|
Redemption value adjustment on redeemable non-controlling interest represents an adjustment to the carrying value of the redeemable non-controlling interest to its redemption value.
|
|
|
|
Trailing Twelve Months Ended
|
||||||
|
(in millions)
|
|
September 30, 2016
|
|
September 30, 2015
|
||||
|
Net income
|
|
$
|
127.4
|
|
|
$
|
131.4
|
|
|
Interest expense
|
|
87.0
|
|
|
95.5
|
|
||
|
Loss on extinguishment of debt
|
|
47.2
|
|
|
—
|
|
||
|
Income taxes
|
|
142.0
|
|
|
64.8
|
|
||
|
Depreciation and amortization
|
|
92.2
|
|
|
94.1
|
|
||
|
EBITDA
|
|
$
|
495.8
|
|
|
$
|
385.8
|
|
|
Adjustments
|
|
|
|
|
||||
|
Restructuring costs
(1)
|
|
9.7
|
|
|
2.2
|
|
||
|
Integration costs
(2)
|
|
6.3
|
|
|
42.9
|
|
||
|
Executive management transition and retention compensation
(3)
|
|
4.4
|
|
|
7.3
|
|
||
|
Pension settlement
(4)
|
|
1.3
|
|
|
—
|
|
||
|
Other income
(5)
|
|
—
|
|
|
(25.1
|
)
|
||
|
German legal settlement
(6)
|
|
—
|
|
|
17.6
|
|
||
|
2015 Annual Meeting costs
(7)
|
|
—
|
|
|
6.3
|
|
||
|
Financing costs
(8)
|
|
—
|
|
|
1.0
|
|
||
|
Redemption value adjustment on redeemable non-controlling interest, net of tax
(9)
|
|
(1.1
|
)
|
|
1.1
|
|
||
|
Adjusted EBITDA
|
|
$
|
516.4
|
|
|
$
|
439.1
|
|
|
|
|
|
|
|
||||
|
Consolidated funded debt less qualified cash
|
|
$
|
1,648.9
|
|
|
$
|
1,447.0
|
|
|
|
|
|
|
|
||||
|
Ratio of consolidated funded debt less qualified cash to Adjusted EBITDA
|
|
3.19 times
|
|
3.30 times
|
||||
|
(1)
|
Restructuring costs represents costs associated with headcount reduction and store closures.
|
|
(2)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the Sealy Acquisition.
|
|
(3)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of the Company's executive officers following the 2015 Annual Meeting.
|
|
(4)
|
Pension settlement represents pension expense recorded in conjunction with a settlement offered to terminated, vested participants in a defined benefit pension plan.
|
|
(5)
|
Other income includes income from a partial settlement of a legal dispute.
|
|
(6)
|
German legal settlement represents the previously announced €15.5 million ($17.6 million) settlement the Company reached in 2015 with the German FCO to fully resolve the FCO's antitrust investigation, and related legal fees.
|
|
(7)
|
2015 Annual Meeting costs represent additional costs related to the Company's 2015 Annual Meeting and related issues.
|
|
(8)
|
Financing costs represent costs incurred in connection with the amendment of the 2012 Credit Agreement.
|
|
(9)
|
Redemption value adjustment on redeemable non-controlling interest represents an adjustment to the carrying value of the redeemable non-controlling interest to its redemption value.
|
|
(in millions)
|
September 30, 2016
|
|
September 30, 2015
|
||||
|
Total debt, net
|
$
|
1,685.1
|
|
|
$
|
1,459.4
|
|
|
Plus: Deferred financing costs
(1)
|
10.9
|
|
|
26.9
|
|
||
|
Total debt
|
1,696.0
|
|
|
1,486.3
|
|
||
|
Plus: Letters of credit outstanding
|
19.8
|
|
|
19.8
|
|
||
|
Consolidated funded debt
|
$
|
1,715.8
|
|
|
$
|
1,506.1
|
|
|
Less:
|
|
|
|
||||
|
Domestic qualified cash
(2)
|
33.8
|
|
|
40.0
|
|
||
|
Foreign qualified cash
(2)
|
33.1
|
|
|
19.1
|
|
||
|
Consolidated funded debt less qualified cash
|
$
|
1,648.9
|
|
|
$
|
1,447.0
|
|
|
(1)
|
The Company presents deferred financing costs as a direct reduction from the carrying amount of the related debt in the Condensed Consolidated Balance Sheets. For purposes of determining total debt for financial covenants, the Company has added these costs back to total debt, net as calculated in the Condensed Consolidated Balance Sheets.
|
|
(2)
|
Qualified cash as defined in the 2016 Credit Agreement and 2012 Credit Agreement equals 100.0% of unrestricted domestic cash plus 60.0% of unrestricted foreign cash. For purposes of calculating leverage ratios, qualified cash is capped at $150.0 million.
|
|
Period
|
|
(a) Total number of shares purchased
|
|
(b) Average Price Paid per Share
|
|
(c) Total number of shares purchased as part of publicly announced plans or programs
|
|
(d) Maximum number of shares (or approximate dollar value) of shares that may yet be purchased under the plans or programs
(in millions)
|
|
|
July 1, 2016 - July 31, 2016
|
|
635,581
|
|
$58.53
|
|
635,581
|
|
$340.8
|
(2)
|
|
August 1, 2016 - August 31, 2016
|
|
726,683
|
|
$77.75
|
|
726,683
|
|
$284.3
|
|
|
September 1, 2016 - September 30, 2016
|
|
26,591
|
(1)
|
$79.11
|
(1)
|
25,285
|
|
$282.3
|
|
|
Total
|
|
1,388,855
|
|
|
|
1,387,549
|
|
|
|
|
(1)
|
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 first business day thereafter.
|
|
(2)
|
On July 27th, 2016, the Board increased the authorization under the Company's share repurchase program by an additional $200.0 million.
|
|
31.1
|
|
Certification of Chief Executive Officer, pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
|
Certification of Chief Financial Officer, pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1*
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.0
|
|
The following materials from Tempur Sealy International, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements.
|
|
(1)
|
|
Incorporated by reference.
|
|
(2)
|
|
Indicates management contract or compensatory plan or arrangement.
|
|
*
|
|
This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), 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, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
|
|
|
TEMPUR SEALY INTERNATIONAL, INC.
|
|
|
|
|
|
|
Date: November 4, 2016
|
By:
|
/s/ BARRY A. HYTINEN
|
|
|
|
Barry A. Hytinen
|
|
|
|
Executive Vice President and Chief Financial Officer
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|