form8k.htm


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) April 19, 2012

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 April 19, 2012, Tempur-Pedic International Inc. issued a press release to announce its financial results for the first quarter ended March 31, 2012 and confirmed guidance for the 2012 fiscal year. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated herein by reference.
 
    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
 99.1    Press Release dated April 19, 2012, entitled “Tempur-Pedic Reports Record First Quarter 2012 Sales and Earnings”
 
 
 

 
 
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.  
       
April 19, 2012
By:
/s/ DALE E. WILLIAMS  
    Dale E. Williams  
    Executive Vice President & Chief Financial Officer  
       

 
 

 
 
EXHIBIT INDEX
 
Exhibit   Description
99.1   Press Release dated April 19, 2012, entitled “Tempur-Pedic Reports Record First Quarter 2012 Sales and Earnings”

 



 
ex911.htm
GRAPHIC
TEMPUR-PEDIC REPORTS RECORD FIRST QUARTER SALES AND EARNINGS
 
Reports First Quarter Sales Up 18% and EPS Up 26% at $0.86
 
LEXINGTON, KY, April 19, 2012 – Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the first quarter ended March 31, 2012. The Company also confirmed financial guidance for 2012.

FIRST QUARTER FINANCIAL SUMMARY
 
    Earnings per diluted share (EPS) were $0.86 in the first quarter of 2012 as compared to EPS of $0.68 per diluted share in the first quarter of 2011. The Company reported net income of $56.2 million for the first quarter of 2012 as compared to net income of $48.3 million in the first quarter of 2011. First quarter net income had a net benefit of $2 million from the resolution of foreign tax matters.
     
   ● Net sales increased 18% to $384.4 million in the first quarter of 2012 from $325.8 million in the first quarter of 2011. On a constant currency basis, net sales increased 19%. Net sales in the North American segment increased 17% and international segment net sales increased 19%. On a constant currency basis, international segment net sales increased 22%.
     
   ● Mattress sales increased 18% globally. Mattress sales increased 15% in the North American segment and increased 26% in the international segment. On a constant currency basis, international mattress sales increased 29%. Pillow sales increased 20% globally. Pillow sales increased 22% in North America and 17% internationally. On a constant currency basis, international pillow sales increased 19%.
     
   ● Gross profit margin was 53.6% as compared to 52.3% in the first quarter of 2011. The gross profit margin increased as a result of improved efficiencies in manufacturing and distribution and fixed cost leverage related to higher production volumes, partially offset by higher new product costs.
     
   ● Operating profit margin was 22.4% as compared to 23.1% in the first quarter of 2011 reflecting the Company’s strategic investments to drive growth, including brand advertising.
     
   ● The Company generated $44.6 million of operating cash flow as compared to $55.7 million in the first quarter of 2011.
     
   ● During the first quarter of 2012, the Company purchased 0.2 million shares of its common stock for a total cost of $12 million. As of March 31, 2012, the Company had $238 million available under its existing share repurchase authorization.
 
Chief Executive Officer Mark Sarvary commented, “In the first quarter we delivered solid financial performance, enhanced our product range with the introduction of TEMPUR-Simplicity and increased our investment in advertising by 37% to $47 million. We are excited about the rollout of our new dealer programs beginning in the second quarter.”
 
Financial Guidance
The Company confirmed its full year 2012 guidance for net sales and earnings per share. It expects net sales for 2012 to range from $1.60 billion to $1.65 billion. It expects EPS for 2012 to range from $3.80 to $3.95 per diluted share. The Company noted its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company’s control. The Company noted its EPS guidance does not assume any benefit from a potential further reduction in shares outstanding related to its share repurchase program.
 
Conference Call Information
Tempur-Pedic International will host a live conference call to discuss financial results today, April 19, 2012 at 5:00 p.m. Eastern Time. The dial-in number for the conference call is 800-850-2903. The dial-in number for international callers is 224-357-2399. The call is also being webcast and can be accessed on the investor relations section of the Company's website, http://www.tempurpedic.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company’s website for 30 days.
 
Forward-looking Statements
This release contains "forward-looking statements,” within the meaning of federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company’s plans to increase its rate of investment in areas to drive growth, the Company’s R&D strategy and expected product launches and expectations for net sales and earnings per share for 2012. All forward looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct.

There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from those expressed as forward-looking statements. These risk factors include general economic, financial  and industry conditions, particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; uncertainties arising from global events; the effects of changes in foreign exchange rates on the Company’s reported earnings; consumer acceptance of the Company’s products; industry competition; the efficiency and effectiveness of the Company’s advertising campaigns and other marketing programs; the Company’s ability to increase sales productivity within existing retail accounts and to further penetrate the Company’s retail channel, including the timing of opening or expanding within large retail accounts; the Company’s ability to expand brand awareness, distribution and new products in 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; the effects of strategic investments on our operations; 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 80 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:
Mark Rupe
Vice President
Tempur-Pedic International
800-805-3635
investor.relations@tempurpedic.com

 
 
 

 
 
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per common share amounts)
 
 
Three Months Ended
     
 
March 31,
     
   
2012
   
2011
 
 Change %
 
Net sales
$
384,393
 
$
325,838
 
     18%
 
Cost of sales
 
178,407
   
155,528
     
Gross profit
 
205,986
   
170,310
 
     21%
 
Selling and marketing expenses
 
83,299
   
64,370
     
General, administrative and other expenses
 
36,622
   
30,660
     
Operating income
 
86,065
   
75,280
 
     14%
 
                 
Other expense, net:
               
 Interest expense, net
 
(4,066
)
 
(2,539
)    
 Other expense, net
 
(441
)
 
(603
   
Total other expense
 
(4,507
)
 
(3,142
   
                 
Income before income taxes
 
81,558
   
72,138
 
     13%
 
Income tax provision
 
25,340
   
23,878
     
     Net income
$
56,218
 
$
48,260
 
     16%
 
                 
Earnings per common share:
               
 Basic
$
0.88
 
$
0.70
     
 Diluted
$
0.86
 
$
0.68
     
Weighted average common shares outstanding:
               
 Basic
 
63,881
   
68,565
     
 Diluted
 
65,684
   
70,871
     
 
 
 

 

 TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)

 
March 31,
 
December 31,
 
 
2012
 
2011
 
ASSETS
           
             
Current Assets:
           
     Cash and cash equivalents
$
134,016
 
$
111,367
 
     Accounts receivable, net
 
152,961
   
142,412
 
     Inventories
 
97,670
   
91,212
 
     Prepaid expenses and other current assets
 
25,423
   
20,088
 
     Deferred income taxes
 
15,834
   
14,391
 
Total Current Assets
 
425,904
   
379,470
 
     Property, plant and equipment, net
 
161,000
   
160,502
 
     Goodwill
 
213,824
   
213,273
 
     Other intangible assets, net
 
65,261
   
66,491
 
     Other non-current assets
 
8,471
   
8,904
 
Total Assets
$
874,460
 
$
828,640
 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY
           
             
Current Liabilities:
           
     Accounts payable
$
67,622
 
$
69,936
 
     Accrued expenses and other current liabilities
 
70,712
   
76,636
 
     Income taxes payable
 
28,260
   
20,506
 
Total Current Liabilities
 
166,594
   
167,078
 
     Long-term debt
 
565,000
   
585,000
 
     Deferred income taxes
 
20,105
   
24,227
 
     Other non-current liabilities
 
22,350
   
21,544
 
Total Liabilities
 
774,049
   
797,849
 
Total Stockholders’ Equity
 
100,411
   
30,791
 
Total Liabilities and Stockholders’ Equity
$
874,460
 
$
828,640
 
 
 
 

 

TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)

 
Three Months Ended
    March 31,  
   
2012
   
2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
$
56,218
 
$
48,260
 
Adjustments to reconcile net income to net cash provided by operating activities:
           
              Depreciation and amortization
 
8,690
   
8,341
 
              Amortization of stock-based compensation
 
4,362
   
2,729
 
              Amortization of deferred financing costs
 
353
   
173
 
              Bad debt expense
 
(12
)
 
670
 
              Deferred income taxes
 
(5,565
)
 
(962
)
              Foreign currency adjustments and other
 
1,097
   
(442
)
              Changes in operating assets and liabilities
 
(20,585
)
 
(3,044
)
Net cash provided by operating activities
 
44,558
   
55,725
 
             
CASH FLOWS FROM INVESTING ACTIVITIES:
           
Purchases of property, plant and equipment
 
(6,638
)
 
(5,215
)
Other
 
23
   
171
 
Net cash used by investing activities
 
(6,615
)
 
(5,044
)
             
CASH FLOWS FROM FINANCING ACTIVITIES:
           
Proceeds from long-term revolving credit facility
 
31,500
   
11,000
 
Repayments of long-term revolving credit facility
 
(51,500
)
 
(23,000
)
        Proceeds from issuance of common stock
 
7,321
   
16,717
 
Excess tax benefit from stock based compensation
 
8,739
   
7,953
 
Treasury shares repurchased
 
(14,912
)
 
(61,107
)
Other
 
(293
)
 
 
Net cash used by financing activities
 
(19,145
)
 
(48,437
)
             
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
3,851
   
3,493
 
Increase in cash and cash equivalents
 
22,649
   
5,737
 
CASH AND CASH EQUIVALENTS, beginning of period
 
111,367
   
53,623
 
CASH AND CASH EQUIVALENTS, end of period
$
134,016
 
$
59,360
 
 
 
 

 

Summary of Channel Sales

The following table highlights net sales information, by channel and by segment:

(In thousands)
 
   
CONSOLIDATED
 
NORTH AMERICA
 
INTERNATIONAL
 
   
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
   
 March 31,
 
 March 31,
 
 March 31,
 
   
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
Retail
 
$
337,754
 
$
284,430
 
$
241,570
 
$
208,148
 
$
96,184
 
$
76,282
 
Direct
   
30,868
   
23,190
   
24,251
   
17,960
   
6,617
   
5,230
 
Healthcare
   
8,253
   
8,997
   
3,146
   
2,895
   
5,107
   
6,102
 
Third Party
   
7,518
   
9,221
   
   
   
7,518
   
9,221
 
   
$
384,393
 
$
325,838
 
$
268,967
 
$
229,003
 
$
115,426
 
$
96,835
 

Summary of Product Sales

The following table highlights net sales information, by product and by segment:

(In thousands)
 
   
CONSOLIDATED
 
NORTH AMERICA
 
INTERNATIONAL
 
    Three Months Ended   Three Months Ended  
Three Months Ended
 
     March 31,   March 31,     March 31,  
        2012       2011       2012       2011       2012       2011  
Mattresses
 
$
256,175
 
$
217,336
 
$
183,480
 
$
159,445
 
 $
72,695
 
 $
57,891
 
Pillows
   
41,492
   
34,712
   
21,423
   
17,589
   
20,069
   
17,123
 
Other
   
86,726
   
73,790
   
64,064
   
51,969
   
22,662
   
21,821
 
   
$
384,393
 
$
325,838
 
$
268,967
 
$
229,003
 
 $
115,426
 
 $
96,835
 
 
 
 

 

TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation of  EBITDA to Net Income and Funded debt to Total debt
Non-GAAP Measures
(In thousands)

The Company provides information regarding earnings before interest, taxes, depreciation, and amortization (EBITDA) and Funded debt which are not recognized terms under U.S. GAAP (Generally Accepted Accounting Principles) and do not purport to be alternatives to Net income as a measure of operating performance or Total debt. A reconciliation of EBITDA to the Company’s Net income and a reconciliation of Total debt to Funded 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 Net income to EBITDA

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 June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2012, as well as the twelve months ended March 31, 2012:
 
  Three Months Ended     Twelve Months Ended  
  June 30, 2011   September 30, 2011   December 31, 2011      March 31, 2012     March 31, 2012  
 GAAP Net income  $  53,084    $   61,949    $  56,315    $  56,218    $   227,566  
 Plus:                              
         Interest expense    2,646      3,265      3,498      4,066      13,475  
         Income taxes    26,982      31,164      26,759      25,340      110,245  
         Depreciation & Amortization    13,239      12,166      14,513      13,052      52,970  
 EBITDA  $   95,951    $   108,544    $   101,085    $  98,676    $  404,256  
 
Reconciliation of Total debt to Funded debt

The following table sets forth the reconciliation of the Company’s reported Total debt to the calculation of Funded debt as of March 31, 2012:
 
   
As of
 
   
March 31, 2012
 
GAAP basis Total debt
$
565,000
 
Plus:
     
         Letters of credit outstanding
 
1,025
 
Funded debt
$
566,025
 

Calculation of Funded debt to EBITDA
 
   
As of
 
   
March 31, 2012
 
Funded debt
$
566,025
 
EBITDA
 
404,256
 
   
1.40 times