UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported) July 16, 2009
TEMPUR-PEDIC
INTERNATIONAL INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-31922
|
33-1022198
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
1713
Jaggie Fox Way
Lexington,
Kentucky 40511
(Address
of principal executive offices) (Zip Code)
(800)
878-8889
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
|
Item
2.02 Results from Operations and Financial
Condition
|
On July 16, 2009, Tempur-Pedic
International Inc. (the Company) issued a press release to announce its
financial results for the second quarter, ended June 30, 2009. A copy
of this press release is furnished herewith as Exhibit 99.1 and incorporated by
reference herein.
The
information in this report (including Exhibit 99.1) shall not be deemed to be
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the Exchange Act), or otherwise subject to the liability of that
section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
|
|
Item
7.01 Regulation FD
Disclosure
|
The information furnished under Item
2.02 of this Form 8-K, including Exhibit 99.1 furnished herewith, is hereby
incorporated by reference under this Item 7.01 as if fully set forth
herein.
Item
9.01 Financial Statements and Exhibits
(d) Exhibits
|
Exhibit
|
Description
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| Tempur-Pedic International Inc. | |||
|
Date:
July 16, 2009
|
By:
|
/s/ DALE E. WILLIAMS | |
| Name: Dale E. Williams | |||
| Title: Executive Vice President, Chief Financial Officer & Secretary | |||
|
EXHIBIT
INDEX
|
|
Exhibit
|
Description
|
TEMPUR-PEDIC
REPORTS SECOND QUARTER EARNINGS
|
|
|
-
Reports EPS of $0.22
|
|
|
|
-
Gross Profit Margin Increases 220 Basis Points to
46.6%
|
LEXINGTON, KY, July 16, 2009 –
Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer
and distributor of premium mattresses and pillows worldwide, today announced
financial results for the second quarter ended June 30, 2009. The Company also
confirmed its financial guidance for 2009.
SECOND
QUARTER FINANCIAL SUMMARY
|
·
|
Earnings
per share (EPS) were $0.22 per diluted share in the second quarter of 2009
as compared to $0.27 per diluted share in the second quarter of 2008. The
Company reported net income of $16.9 million for the second quarter of
2009 as compared to net income of $20.2 million in the second quarter of
2008.
|
|
·
|
Net
sales declined 22% to $185.2 million in the second quarter of 2009 from
$238.7 million in the second quarter of 2008. On a constant currency
basis, net sales declined 19%. Net sales in the domestic segment declined
19%, while international segment net sales declined 29%. On a constant
currency basis, international segment net sales declined
19%.
|
|
·
|
Mattress
sales declined 24% globally. Mattress sales declined 20% in the domestic
segment and 31% in the international segment. On a constant currency
basis, international mattress sales declined 21%. Pillow sales declined
17% globally. Pillow sales declined 12% domestically and 20%
internationally. On a constant currency basis, international pillow sales
declined 12%.
|
|
·
|
Gross
profit margin was 46.6% as compared to 44.4% in the second quarter of
2008. The gross profit margin increased as a result of lower commodity
costs, improved efficiencies in manufacturing and improved pricing,
partially offset by fixed cost de-leverage related to lower production
volumes.
|
|
·
|
Operating
profit margin was 15.7% as compared to 15.2% in the second quarter of
2008. The Company reduced operating expenses by $12.5 million to $57.2
million in the second quarter of 2009 from $69.7 million in the second
quarter of 2008.
|
|
·
|
Reflecting
the Company’s continued focus on generating cash, the Company generated
$39.5 million of operating cash flow in the second quarter of
2009.
|
|
·
|
During
the quarter, the Company reduced Total debt by $31.0 million to $369.0
million and increased cash by $3.8 million to $25.0. As of June 30, 2009,
the Company’s ratio of Funded debt to EBITDA was 2.29 times, well within
the covenant in its credit facility, which requires that this ratio not
exceed 3.00 times. For additional information about EBITDA and Funded debt
(which are non-GAAP measures), please refer to the reconciliation and
other information included in the attached
schedule.
|
Chief
Executive Officer Mark Sarvary commented, “During the second quarter, our
initiatives to drive sales and margins continued to show progress. Our
productivity projects helped us expand gross margins with improvement compared
to last year and last quarter. Our focus on cash flow continued to display the
strength of our business model as we lowered debt $31 million during the
quarter. We believe we are well positioned for growth when the economy
recovers.”
2009
Financial Guidance
The
Company confirmed its prior guidance ranges for EPS and net sales for full year
2009. The Company continues to expect EPS to range from $0.70 to $0.90 per
diluted share. The Company continues to expect net sales to range from $700
million to $740 million. The Company noted its expectations are based on
information available at the time of this release, and are subject to changing
conditions, many of which are outside the Company’s control.
Conference
Call Information
Tempur-Pedic
International will host a live conference call to discuss financial results
today, July 16, 2009 at 5:00 p.m. Eastern Time. The dial-in number for the
conference call is 877-419-6593. The call is also being webcast and can be
accessed on the investor relations section of the Company’s website, www.tempurpedic.com.
For those
who cannot listen to the live broadcast, a telephone replay of the call will be
available from July 16, 2009 at 8:00 p.m. Eastern Time through July 23, 2009. To
listen to the replay, dial 888-203-1112, participant code 7809604.
Forward-looking
Statements
This
release contains "forward-looking statements,” within the meaning of federal
securities laws, which include information concerning one or more of the
Company's plans, objectives, goals, strategies, and other information that is
not historical information. When used in this release, the words "estimates,"
"expects," "anticipates," "projects," "plans," "intends," "believes," and
variations of such words or similar expressions are intended to identify
forward-looking statements. These forward-looking statements include, without
limitation, statements relating to the Company’s positioning for future growth
and the Company’s expectations regarding net sales and earnings per share for
2009. All forward looking statements are based upon current expectations and
beliefs and various assumptions. There can be no assurance that the Company will
realize these expectations or that these beliefs will prove
correct.
There are
a number of risks and uncertainties that could cause actual results to differ
materially from the forward-looking statements contained in this release.
Numerous factors, many of which are beyond the Company's control, could cause
actual results to differ materially from those expressed as forward-looking
statements. These risk factors include general economic,
financial and industry conditions, particularly in the retail sector,
as well as consumer confidence and the availability of consumer financing; the
Company’s ability to reduce expenses to align with reduced sales levels;
uncertainties arising from global events; the effects of changes in foreign
exchange rates on the Company’s reported earnings; consumer acceptance of the
Company’s products; industry competition; the efficiency and effectiveness of
the Company’s advertising campaigns and other marketing programs; the Company’s
ability to increase sales productivity within existing retail accounts and to
further penetrate the Company’s domestic retail channel, including the timing of
opening or expanding within large retail accounts; the Company’s ability to
address issues in certain underperforming international markets; the Company’s
ability to continuously improve and expand its product line, maintain efficient,
timely and cost-effective production and delivery of its products, and manage
its growth; changes in foreign tax rates, including the ability to utilize tax
loss carry forwards; and rising commodity costs. Additional information
concerning these and other risks and uncertainties are discussed in the
Company's filings with the Securities and Exchange Commission, including without
limitation the Company's annual report on Form 10-K under the headings "Special
Note Regarding Forward-Looking Statements" and "Risk Factors." Any
forward-looking statement speaks only as of the date on which it is made, and
the Company undertakes no obligation to update any forward-looking statements
for any reason, including to reflect events or circumstances after the date on
which such statements are made or to reflect the occurrence of anticipated or
unanticipated events or circumstances.
About
the Company
Tempur-Pedic
International Inc. (NYSE: TPX) manufactures and distributes
mattresses and pillows made from its proprietary TEMPUR® pressure-relieving
material. It is the worldwide leader in premium and specialty sleep. The Company
is focused on developing, manufacturing and marketing advanced sleep surfaces
that help improve the quality of life for people around the world. The Company’s
products are currently sold in over 70 countries under the TEMPUR® and
Tempur-Pedic® brand names. World headquarters for Tempur-Pedic International is
in Lexington, KY. For more information, visit http://www.tempurpedic.com or call
800-805-3635.
Investor
Relations Contact:
Barry
Hytinen
Vice
President, Investor Relations and Financial Planning & Analysis
800-805-3635
TEMPUR-PEDIC
INTERNATIONAL INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Income
(In
thousands, except per common share amounts)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||||||||||
|
2009
|
2008
|
Chg
%
|
2009
|
2008
|
Chg
%
|
|||||||||||||||||||
|
Net
sales
|
$ | 185,176 | $ | 238,661 |
(22)%
|
$ | 362,280 | $ | 485,883 | (25)% | ||||||||||||||
|
Cost
of sales
|
98,845 | 132,645 | 194,088 | 271,786 | ||||||||||||||||||||
|
Gross
profit
|
86,331 | 106,016 | (19)% | 168,192 | 214,097 | (21)% | ||||||||||||||||||
|
Selling
and marketing expenses
|
35,191 | 44,787 | 69,063 | 97,950 | ||||||||||||||||||||
|
General,
administrative and other expenses
|
21,978 | 24,910 | 44,086 | 50,495 | ||||||||||||||||||||
|
Operating
income
|
29,162 | 36,319 | (20)% | 55,043 | 65,652 | (16)% | ||||||||||||||||||
|
Other
income (expense), net:
|
||||||||||||||||||||||||
|
Interest
expense, net
|
(4,477 | ) | (5,645 | ) | (9,048 | ) | (13,336 | ) | ||||||||||||||||
|
Other
income (expense), net
|
270 | (72 | ) | 618 | (1,091 | ) | ||||||||||||||||||
|
Total
other expense
|
(4,207 | ) | (5,717 | ) | (8,430 | ) | (14,427 | ) | ||||||||||||||||
|
Income
before income taxes
|
24,955 | 30,602 | (19)% | 46,613 | 51,225 | (9)% | ||||||||||||||||||
|
Income
tax provision
|
8,098 | 10,374 | 16,418 | 17,483 | ||||||||||||||||||||
|
Net
income
|
$ | 16,857 | $ | 20,228 | (17)% | $ | 30,195 | $ | 33,742 | (11)% | ||||||||||||||
|
Earnings
per common share:
|
||||||||||||||||||||||||
|
Basic
|
$ | 0.23 | $ | 0.27 | $ | 0.40 | $ | 0.45 | ||||||||||||||||
|
Diluted
|
$ | 0.22 | $ | 0.27 | $ | 0.40 | $ | 0.45 | ||||||||||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||||||||||
|
Basic
|
74,894 | 74,740 | 74,884 | 74,665 | ||||||||||||||||||||
|
Diluted
|
75,493 | 74,931 | 75,036 | 74,872 | ||||||||||||||||||||
TEMPUR-PEDIC
INTERNATIONAL INC. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(In
thousands)
|
June
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 24,974 | $ | 15,385 | ||||
|
Accounts
receivable, net
|
91,002 | 99,811 | ||||||
|
Inventories
|
51,570 | 60,497 | ||||||
|
Prepaid
expenses and other current assets
|
11,675 | 9,233 | ||||||
|
Deferred
income taxes
|
18,043 | 11,888 | ||||||
|
Total
Current Assets
|
197,264 | 196,814 | ||||||
|
Property,
plant and equipment, net
|
176,867 | 185,843 | ||||||
|
Goodwill
|
192,998 | 192,569 | ||||||
|
Other
intangible assets, net
|
65,820 | 66,823 | ||||||
|
Other
non-current assets
|
3,758 | 4,482 | ||||||
|
Total
Assets
|
$ | 636,707 | $ | 646,531 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$ | 38,496 | $ | 41,355 | ||||
|
Accrued
expenses and other current liabilities
|
78,365 | 65,316 | ||||||
|
Income
taxes payable
|
3,061 | 7,783 | ||||||
|
Total
Current Liabilities
|
119,922 | 114,454 | ||||||
|
Long-term
debt
|
369,000 | 419,341 | ||||||
|
Deferred
income taxes
|
28,888 | 28,371 | ||||||
|
Other
non-current liabilities
|
9,711 | 11,922 | ||||||
|
Total
Liabilities
|
527,521 | 574,088 | ||||||
|
Total
Stockholders’ Equity
|
109,186 | 72,443 | ||||||
|
Total
Liabilities and Stockholders’ Equity
|
$ | 636,707 | $ | 646,531 | ||||
TEMPUR-PEDIC
INTERNATIONAL INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
|
Six
Months Ended
|
||||||||
|
June
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
income
|
$ | 30,195 | $ | 33,742 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
15,514 | 16,685 | ||||||
|
Amortization
of stock-based compensation
|
4,093 | 4,041 | ||||||
|
Amortization
of deferred financing costs
|
345 | 714 | ||||||
|
Bad
debt expense
|
3,864 | 3,439 | ||||||
|
Deferred
income taxes
|
(6,148 | ) | (958 | ) | ||||
|
Foreign
currency adjustments
|
193 | 524 | ||||||
|
(Gain)
Loss on sale of equipment and other
|
(45 | ) | 345 | |||||
|
Changes
in operating assets and liabilities
|
17,439 | 37,776 | ||||||
|
Net
cash provided by operating activities
|
65,450 | 96,308 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchases
of property, plant and equipment
|
(4,728 | ) | (6,328 | ) | ||||
|
Acquisition
of business, net of cash acquired
|
— | (1,522 | ) | |||||
|
Other
|
(155 | ) | (411 | ) | ||||
|
Net
cash used by investing activities
|
(4,883 | ) | (8,261 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds
from long-term revolving credit facility
|
83,797 | 70,732 | ||||||
|
Repayments
of long-term revolving credit facility
|
(133,036 | ) | (57,244 | ) | ||||
|
Repayments
of long-term debt
|
— | (1,359 | ) | |||||
|
Repayment
of Series A Industrial Revenue Bonds
|
— | (57,785 | ) | |||||
|
Proceeds
from issuance of common stock
|
— | 695 | ||||||
|
Excess
tax benefit from stock based compensation
|
— | 366 | ||||||
|
Dividend
paid to stockholders
|
— | (11,946 | ) | |||||
|
Other
|
— | (14 | ) | |||||
|
Net
cash used by financing activities
|
(49,239 | ) | (56,555 | ) | ||||
|
NET
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(1,739 | ) | 3,546 | |||||
|
Increase
in cash and cash equivalents
|
9,589 | 35,038 | ||||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
15,385 | 33,315 | ||||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 24,974 | $ | 68,353 | ||||
Summary
of Channel Sales
The
Company generates sales through four distribution channels: retail, direct,
healthcare and third party. The retail channel sells to furniture,
specialty and department stores globally. The direct channel sells
directly to consumers. The healthcare channel sells to hospitals,
nursing homes, healthcare professionals and medical retailers. The
third party channel sells to distributors in countries where Tempur-Pedic
International does not operate its own distribution company.
The
following table highlights net sales information, by channel and by segment, for
the second quarter of 2009 compared to 2008:
|
(In
thousands)
|
|||||||||||||||||||||
|
CONSOLIDATED
|
DOMESTIC
|
INTERNATIONAL
|
|||||||||||||||||||
|
Three
Months Ended
|
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||
|
June
30,
|
June
30,
|
June
30,
|
|||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
|
Retail
|
$ | 155,575 | $ | 199,323 | $ | 105,576 | $ | 130,069 | $ | 49,999 | $ | 69,254 | |||||||||
|
Direct
|
10,785 | 13,527 | 9,428 | 11,328 | 1,357 | 2,199 | |||||||||||||||
|
Healthcare
|
8,261 | 12,556 | 2,686 | 4,501 | 5,575 | 8,055 | |||||||||||||||
|
Third
Party
|
10,555 | 13,255 | 3,054 | 2,603 | 7,501 | 10,652 | |||||||||||||||
|
Total
|
$ | 185,176 | $ | 238,661 | $ | 120,744 | $ | 148,501 | $ | 64,432 | $ | 90,160 | |||||||||
Summary
of Product Sales
A summary
of net sales by product is reported below:
|
(In
thousands)
|
|||||||||||||||||||||
|
CONSOLIDATED
|
DOMESTIC
|
INTERNATIONAL
|
|||||||||||||||||||
|
Three
Months Ended
|
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||
|
June
30,
|
June
30,
|
June
30,
|
|||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
|
Mattresses
|
$ | 124,344 | $ | 163,634 | $ | 86,300 | $ | 108,369 | $ | 38,044 | $ | 55,265 | |||||||||
|
Pillows
|
24,006 | 28,877 | 11,029 | 12,583 | 12,977 | 16,294 | |||||||||||||||
|
Other
|
36,826 | 46,150 | 23,415 | 27,549 | 13,411 | 18,601 | |||||||||||||||
|
Total
|
$ | 185,176 | $ | 238,661 | $ | 120,744 | $ | 148,501 | $ | 64,432 | $ | 90,160 | |||||||||
TEMPUR-PEDIC
INTERNATIONAL INC. AND SUBSIDIARIES
EBITDA
to Net Income and Funded debt to Total debt
Non-GAAP
Measures
(In
thousands)
The
Company provides information regarding EBITDA and Funded debt which are not
recognized terms under GAAP (Generally Accepted Accounting Principles) and do
not purport to be alternatives to Net income as a measure of operating
performance or Total debt. Because not all companies use identical calculations,
these presentations may not be comparable to other similarly titled measures of
other companies. A reconciliation of EBITDA to the Company’s Net income and
reconciliation of Funded debt to Total debt are provided below. Management
believes that the use of EBITDA and Funded debt provides investors with useful
information with respect to the terms of the Company’s credit
facility.
Reconciliation
of EBITDA to Net income
The
following table sets forth the reconciliation of the Company’s reported Net
income to the calculation of EBITDA for each of the three months ended September
30, 2008, December 31, 2008, March 31, 2009 and June 30, 2009, as well as the
twelve months ended June 30, 2009:
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||||||||||||
|
September
30, 2008
|
December
31, 2008
|
March
31, 2009
|
June
30, 2009
|
June
30, 2009
|
|||||||||||||||
|
GAAP
Net income
|
$ | 24,071 | $ | 1,055 | $ | 13,338 | $ | 16,857 | $ | 55,321 | |||||||||
|
Plus:
|
|||||||||||||||||||
|
Interest
expense
|
6,294 | 5,493 | 4,571 | 4,477 | 20,835 | ||||||||||||||
|
Income
taxes
|
12,622 | 18,449 | 8,320 | 8,098 | 47,489 | ||||||||||||||
|
Depreciation &
amortization
|
10,222 | 9,849 | 9,630 | 9,977 | 39,678 | ||||||||||||||
|
EBITDA
|
$ | 53,209 | $ | 34,846 | $ | 35,859 | $ | 39,409 | $ | 163,323 | |||||||||
Reconciliation
of Funded debt to Total debt
The
following table sets forth the reconciliation of the Company’s reported Total
debt to the calculation of Funded debt as of June 30, 2009:
|
As
of
|
||||
|
June
30, 2009
|
||||
|
GAAP
basis Total debt
|
$ | 369,000 | ||
|
Plus:
|
||||
|
Letters
of credit outstanding
|
4,995 | |||
|
Funded
debt
|
$ | 373,995 | ||
Calculation
of Funded debt to EBITDA
|
As
of
|
||||
|
June
30, 2009
|
||||
|
Funded
debt
|
$ | 373,995 | ||
|
EBITDA
|
163,323 | |||
|
2.29
times
|
||||