View:
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) October 21, 2004
TEMPUR-PEDIC INTERNATIONAL INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 001-31922 33-1022198
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) 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):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 21, 2004, Tempur-Pedic International Inc. issued a press
release to announce its financial results for the third quarter ended September
30, 2004, including certain non-GAAP financial results, and to raise its
guidance for the full year 2004. This press release includes reconciliations of
such non-GAAP financial measures to the most directly comparable GAAP financial
measures and 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 "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference in any filing
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.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
99.1. Press release dated October 21, 2004, titled "Tempur-Pedic
International Reports Record Third Quarter Revenue and Earnings; Raises Guidance
for 2004".
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.
Date: October 21, 2004
Tempur-Pedic International Inc.
By: /s/ Robert B. Trussell, Jr.
--------------------------------------------
Name: Robert B. Trussell, Jr.
Title: President and Chief Executive Officer
EXHIBIT INDEX
Exhibit Description
- ------- -----------------------------------------------------------------------
99.1 Press release dated October 21, 2004, titled "Tempur-Pedic
International Reports Record Third Quarter Revenue and Earnings; Raises
Guidance for 2004".
Exhibit 99.1
Tempur-Pedic International Reports Record Third Quarter Net Sales and
Earnings; Raises Guidance for 2004
Achieves Net Sales Growth of 47%, Pro Forma Net Income of $0.23 Per Share,
GAAP Net Income of $0.22 Per Share
Provides Net Sales and EPS Guidance for 2005
LEXINGTON, Ky., Oct. 21 /PRNewswire-FirstCall/ -- Tempur-Pedic
International Inc. (NYSE: TPX), the market-leading manufacturer, marketer and
distributor of premium visco-elastic mattresses and pillows worldwide, today
announced record net sales and earnings for the third quarter ended September
30, 2004.
Third Quarter 2004 Highlights
* Pro forma net income rose 93% to $23.7 million or $0.23 per diluted
share from $12.3 million or $0.13 per diluted share in the third
quarter of 2003. The Company reported third quarter net income under
GAAP of $22.4 million, or $0.22 per diluted share compared to $0.3
million or $0.00 per diluted share in the third quarter of 2003.
* Net sales rose 47% to $181.7 million from $123.6 million in the third
quarter of 2003.
* Operating margin increased to 24% from 18% in the third quarter of
2003.
* Net sales in the Company's retail channel increased 77% in the U.S. and
63% worldwide.
* Mattress net sales increased 69% on unit growth of 52%.
"The third quarter was another outstanding period for Tempur-Pedic
International," said Robert Trussell, President and Chief Executive Officer.
"Our record financial performance exceeded our internal expectations,
reflecting consumers' growing interest and awareness of our brand. It also
reflects management's ability to execute on the Company's key strategies and
growth plans.
"During the quarter, we grew across all four of our sales channels, with
particularly strong increases in furniture retail store sales. We added a
total of approximately 300 new furniture retail stores in the U.S., bringing
total U.S. furniture stores to 3,900 as of September 30, 2004.
Internationally, we added placements in approximately 280 stores during the
quarter. Total mattress net sales rose 69% in the third quarter of 2004,
driven primarily by the growth in net sales to furniture retail stores and the
continuing success of our newest premium models, and we continued to achieve
significant productivity improvements in our manufacturing operations and to
leverage our fixed operating expenses.
"Tempur-Pedic International has developed an exceptional line of products
with outstanding customer satisfaction, global distribution in over 60
countries, and a highly effective business model. Our goal is to 'change the
way the world sleeps' and, in the process, to take full advantage of the many
growth opportunities that exist. After taking into account bedding industry
seasonal trends and our Company's strong results, we are raising our financial
guidance for the full year 2004. We currently expect the Company's net sales
to range between $660 million -- $665 million, and pro forma diluted net
income per share to range between $0.77 -- $0.79. In addition, based on the
continued strong performance of the business, we currently estimate net sales
for 2005 will range between $810 million -- $830 million and pro forma diluted
net income per share for 2005 will range between $0.95 -- $1.00."
The Company notes that 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.
Third Quarter 2004 Financial Summary
Third quarter 2004 net sales were $181.7 million, 47% higher than third
quarter 2003 net sales. The Company also reported third quarter pro forma net
income of $23.7 million, or $0.23 per diluted share, compared with pro forma
net income of $12.3 million, or $0.13 per diluted share, for the third quarter
2003, which represents an increase in pro forma net income of 93% and 77% on a
pro forma per diluted share basis. The Company reported third quarter net
income under Generally Accepted Accounting Principles ("GAAP") of $22.4
million, or $0.22 per diluted share compared to $0.3 million or $0.00 per
diluted share in the third quarter of 2003. For a full discussion of the pro
forma adjustments, see the Supplemental Information included later in this
press release.
Conference Call Information
As previously announced, Tempur-Pedic International is hosting a live
conference call featuring President and Chief Executive Officer Robert
Trussell and Chief Financial Officer Dale Williams to discuss third quarter
results today, October 21, at 5:00 p.m. Eastern Time (2 p.m. Pacific Time).
The dial-in number for the conference call is 877-278-2335 or 706-634-0167.
The call is also being webcast, and can be accessed at
http://www.tempurpedic.com.
For those who cannot listen to the live broadcast, a replay of the call
will be available from October 21, 2004 at 8:00 p.m. Eastern Time through
October 28, 2004, and can be accessed by dialing 706-645-9291, conference ID
#1386982.
An archived webcast will also be available on the Tempur-Pedic
International investor relations website at http://www.tempurpedic.com/ir.
Forward-Looking Statements
This release contains "forward-looking statements," which include
information concerning one or more of the Company's plans, objectives, goals,
strategies, future revenues and performance, capital expenditures, financing
needs 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. All forward-
looking statements, including, without limitation, management's expectations
regarding continued growth and its net sales and pro forma and GAAP net income
for 2004 and 2005, 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. Certain of these risk factors 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 "Business-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 to reflect events or circumstances after the date on which
it is 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
Swedish Mattresses and Neck Pillows(TM) made from the revolutionary Tempur(R)
pressure-relieving material, a visco-elastic material that conforms to the
body to provide support and help alleviate pressure points. Products are
currently sold in 60 countries under the Tempur(R) and Tempur-Pedic(R) brand
names. World headquarters for Tempur-Pedic International are in Lexington, KY.
For more information, visit http://www.tempurpedic.com or call
800-805-3635. To visit Tempur-Pedic's celebrity connection, visit
http://www.mattressofthestars.com.
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
Chg% Chg%
2004 2003 2004 2003
(unaudited)(unaudited) (unaudited)(unaudited)
Net sales $181,737 $123,555 47% $486,460 $342,359 42%
Cost of sales 85,657 60,170 228,228 158,805
Gross profit 96,080 63,385 52% 258,232 183,554 41%
Selling expenses 34,911 26,429 101,519 75,499
General and
administrative
expenses 17,683 13,452 48,974 34,655
Research and
development
expenses 651 777 1,381 1,191
Operating income 42,835 22,727 89% 106,358 72,209 47%
Other income
(expense), net:
Interest expense,
net (6,220) (5,584) (17,865) (13,743)
Loss on debt
extinguishment -- (13,669) (5,381) (13,669)
Other income
(expense), net (175) (969) 21 (1,476)
Total other expense,
net (6,395) (20,222) (23,225) (28,888)
Income before
income taxes 36,440 2,505 83,133 43,321 92%
Income tax
provision 14,029 2,180 32,006 17,331
Net income $22,411 $ 325 $51,127 $25,990 97%
Basic earnings
per share $0.23 $0.04 $0.52 $3.21 (84%)
Diluted earnings
per share $0.22 $0.00 $0.50 $.28 79%
Dilutive weighted
average shares
outstanding
(in thousands) 103,036 96,005 102,933 93,143
Supplemental Information
Pro Forma Net Income and Other Financial Data
To further provide investors useful information, pro forma net income is
presented and represents the Company's GAAP net income before non-cash stock-
based compensation expense of $1.3 million and $1.6 million for the three
months ended September 30, 2004 and 2003, respectively, and $4.3 million and
$1.7 million for the nine months ended September 30, 2004 and 2003,
respectively. The Company has unearned non-cash stock-based compensation of
$4.7 million as of September 30, 2004 that will be recognized as expense in
future periods. In addition to these pro forma adjustments, GAAP net income
includes, and pro forma net income excludes, a loss on debt extinguishment
totaling $3.3 million, net of tax, for the nine months ended September 30,
2004 relating to the Company's redemption in January 2004 of $52.5 million
aggregate principal amount of the outstanding 10 1/4% Senior Subordinated
Notes due 2010 issued by its subsidiaries Tempur-Pedic, Inc. and Tempur
Production USA, Inc. For the three and nine months ended September 30, 2003,
GAAP net income includes, and pro forma net income excludes, transaction
related expenses totaling $10.4 million, net of tax, relating to the write-off
of deferred financing fess, original issue discount and prepayment penalties
relating to the Company's re-capitalization in August 2003, and these amounts
are included in loss on debt extinguishment, net of tax.
The Company believes that excluding non-cash stock-based compensation
expense and loss on debt extinguishment provides a measure that is more
representative of ongoing costs and therefore more comparable to the Company's
historical operations. The following is a reconciliation of GAAP net income
to pro forma net income and per share amounts:
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Pro Forma Net Income, and Other Financial
Data
($ in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(unaudited) (unaudited) (unaudited) (unaudited)
GAAP net income $22,411 $325 $ 51,127 $25,990
Non-cash stock-based
compensation expense 1,266 1,557 4,256 1,720
Loss on debt
extinguishment,
net of tax -- 10,401 3,309 10,401
Pro forma net income $23,677 $ 12,283 $ 58,692 $38,111
GAAP net income per
share, diluted $0.22 $0.00 $0.50 $0.28
Non-cash stock-based
compensation expense 0.01 0.02 0.04 0.02
Loss on debt
extinguishment,
net of tax 0.00 0.11 0.03 0.11
Pro forma net income
per share, diluted $0.23 $0.13 $0.57 $0.41
Other financial data
Depreciation and
amortization $7,229 $6,413 $ 21,194 $16,316
Net debt 270,722 369,485 270,722 369,485
Summary of Channel Sales
The Company generates sales through four distribution channels: retail,
direct, healthcare and third party. The retail channel sells to furniture,
specialty and department stores globally. The direct channel sells directly
to consumers. The healthcare channel sells to hospitals, nursing homes,
healthcare professionals and medical retailers. The third party channel sells
to distributors in countries where Tempur-Pedic International does not operate
its own distribution company.
The following table highlights net sales information, by channel and by
segment, for the third quarter:
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
($ in thousands) (unaudited) (unaudited) (unaudited)
2004 2003 2004 2003 2004 2003
By Sales
Channel
Retail $133,429 $82,042 $93,260 $52,806 $40,169 $29,236
Direct 24,767 20,762 21,300 18,340 3,467 2,422
Healthcare 11,442 10,730 2,793 2,622 8,649 8,108
Third Party 12,099 10,021 2,206 1,658 9,893 8,363
By Segment
Domestic $119,559 $75,426
International 62,178 48,129
Summary of Product Sales
A summary of net sales by product is reported below.
CONSOLIDATED DOMESTIC INTERNATIONAL
($ in thousands) Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
(unaudited) (unaudited) (unaudited)
2004 2003 2004 2003 2004 2003
Net Sales
Mattresses $119,754 $70,668 $85,406 $49,504 $34,348 $21,164
Pillows 33,036 31,385 14,076 12,838 18,960 18,547
Other 28,947 21,502 20,077 13,084 8,870 8,418
SOURCE Tempur-Pedic International Inc.
-0- 10/21/2004
/CONTACT: Dale Williams Chief Financial Officer of Tempur-Pedic
International Inc.,
1-800-805-3635/
/Web site: http://www.tempurpedic.com
http://www.mattressofthestars.com /
(TPX)
CO: Tempur-Pedic International Inc.
ST: Kentucky
IN: HOU CHM
SU: ERN CCA