Form 8-K

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 24, 2006

 


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):

 

¨ 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 7.01 Regulation FD Disclosure

Attached as Exhibit 99.1 to this report and furnished under this Item 7.01 are copies of slides used in investor presentations by Tempur-Pedic International Inc.

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 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Exhibit  

Description

99.1   Tempur-Pedic International Inc. October 2006 Investor Presentation


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 24, 2006

 

Tempur-Pedic International Inc.

By:  

/s/ H. Thomas Bryant

Name:   H. Thomas Bryant
Title:   President and Chief Financial Officer


EXHIBIT INDEX

 

Exhibit  

Description

99.1   Tempur-Pedic International Inc. October 2006 Investor Presentation
Tempur-Pedic International Inc. October 2006 Investor Presentation
Investor Presentation
October 2006
Exhibit 99.1


1
1
Forward-Looking Statements
This presentation may contain “forward-looking statements”
which include information concerning the
Company’s plans, objectives, goals, strategies, future revenues or performance, capital expenditures,
financing needs and other information that is not historical information.  When used in this
presentation, 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, initiatives to
increase sales, the
rollout and market acceptance of new products, initiatives to generate productivity improvements and
reduce costs, our investments to increase our global brand awareness, and management’s
expectations regarding its net sales, GAAP net income and capital expenditures for 2006, 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 presentation.  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 and industry conditions and
consumer confidence; 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 further penetrate the US retail
furniture 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 its product line, maintain efficient, timely and cost-effective production
and delivery of its products, and manage its growth; rising commodity costs; the market price for the
Company’s common stock prevailing from time to time; and the nature of other investment
opportunities presented to the Company from time to time. 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.


2
2
Business Review
Business Review
Leading producer of premium mattresses and pillows
Leading producer of premium mattresses and pillows
Proprietary formula and manufacturing process
Proprietary formula and manufacturing process
#1 visco-elastic market share
#1 visco-elastic market share
Highest profitability in our industry
Highest profitability in our industry
Global sales under the “TEMPUR®”
Global sales under the “TEMPUR®”
and “Tempur-Pedic®”
and “Tempur-Pedic®”
trademarks
trademarks
Truly international with sales in over 70 countries through 4 diverse channels
Truly international with sales in over 70 countries through 4 diverse channels
Premium segment (>$1,000) of ~$12 billion global wholesale mattress market
Premium segment (>$1,000) of ~$12 billion global wholesale mattress market
Believe premium represents ~50% of the U.S. market
Believe premium represents ~50% of the U.S. market
Fastest-growing segment
Fastest-growing segment
Tempur-Pedic products provide greater overall comfort and better quality sleep
Tempur-Pedic products provide greater overall comfort and better quality sleep
Temperature-sensitive and contours more naturally to the body
Temperature-sensitive and contours more naturally to the body
Recommended by more than 25,000 healthcare professionals
Recommended by more than 25,000 healthcare professionals


3
3
Seasoned Management Team
Seasoned Management Team
Name
Position
Prior Experience
Tom Bryant
CEO & President
CEO, Stairmaster Sports & Medical Products
President, Dunlop Maxfli
Johnson & Johnson (13 years)
Dale Williams
CFO
CFO, Honeywell Control Products
CFO, Saga Systems
CFO, GE Information Services; (15 years at GE)
Matt Clift
EVP, Operations
VP/GM Lexmark International
Lexmark/IBM (23 years)
Rick Anderson
EVP, North America
VP, Gillette
Gillette/P&G (23 years)
David Montgomery
EVP, International
President, Rubbermaid Europe
VP, Black & Decker Europe, Middle East, Africa


4
4
Product Overview


5
5
Tempur-Pedic Swedish Sleep System®
Tempur-Pedic Swedish Sleep System®
Therapeutic Benefits
Therapeutic Benefits
Excellent Pressure & Pain Management
Excellent Pressure & Pain Management
Manages pressure over the entire mattress surface
Manages pressure over the entire mattress surface
Open Cell Technology
Open Cell Technology
Unlike water, air and foam products, TEMPUR®
Unlike water, air and foam products, TEMPUR®
material promotes airflow
material promotes airflow
Body Conforming & Support
Body Conforming & Support
Neck and spine supported in the correct anatomical position
Neck and spine supported in the correct anatomical position
Safe and Healthy
Safe and Healthy
Antimicrobial and hypoallergenic
Antimicrobial and hypoallergenic
Resistant to dust mites, household allergens and mold
Resistant to dust mites, household allergens and mold
Maintenance Free
Maintenance Free
Never needs to be turned or serviced
Never needs to be turned or serviced


6
6
Diversity Across Products
Diversity Across Products
9M06 Sales: $121.9 million (18% of Total)
9M06 Sales: $121.9 million (18% of Total)
Retail Price:
Retail Price:
Adjustable Beds: $1,300 –
Adjustable Beds: $1,300 –
$2,800
$2,800
Other: $35 –
Other: $35 –
$150
$150
9M06 Sales: $87.5 million (12% of Total)
9M06 Sales: $87.5 million (12% of Total)
Retail Price: $70 –
Retail Price: $70 –
$165
$165
9M06 Sales: $479.1 million (70% of Total)
9M06 Sales: $479.1 million (70% of Total)
Queen Retail Price Point: $1,199 –
Queen Retail Price Point: $1,199 –
$5,499
$5,499
Pillows
Adjustable
Beds / Other
Mattresses


7
7
Vertically Integrated Business Model


8
8
Global, vertically integrated
manufacturer
State of the art, highly automated,
ISO-certified plants
>$200 million invested
Denmark (500K sq ft)
Duffield, VA (500K sq ft)
Albuquerque, NM (750K sq ft)
Manufacturing Facilities
Manufacturing Facilities
Note: New Mexico facility under construction and expected to open by year end 2006


9
9
Sleep In The News


10
10
Sleep In The News
Sleep In The News
Don’t lose sleep buying the perfect mattress
–By Janice Lieberman
“Companies try to help workers sleep more”
Sleep, Snoring and the Blues
–By SANJAY GUPTA
Sleep Deprivation: New Concerns; Four More Studies Show It Harms
Health
Who Needs Sleep?
When the gods of sleep have deserted you
“Sleep for longer if you want to stay healthy”
Not getting enough sleep can make you fat
–By Madelyn Fernstrom, Ph.D., CNS


11
11
Sleep In The News
Sleep In The News
U.S. Sleep Aid Industry Estimated To Be >$3B Annually …
And Growing!
Note: U.S. Sleep Aid Industry annual market size estimate based on management estimates and publicly available industry estimates for prescription and over-the-counter sleep aids.
Tempur-Pedic
is not sponsored by, associated with or affiliated with any of the entities depicted above.


12
12
Better Mattress …
Better Mattress …
Better Sleep!
Better Sleep!
“Sleep in the News”
“Sleep in the News”
is Fueling Consumer
is Fueling Consumer
Interest and Involvement in Sleep Related
Interest and Involvement in Sleep Related
Products and Categories
Products and Categories
This is having an impact on all consumers, but
This is having an impact on all consumers, but
especially Baby-Boomers
especially Baby-Boomers
Current Shift to Premium and Specialty Bedding
Current Shift to Premium and Specialty Bedding
Validates the Higher Level of Involvement
Validates the Higher Level of Involvement


13
13
Brand Building


14
14
Overview of the Tempur-Pedic®
Overview of the Tempur-Pedic®
Brand
Brand
An assertively forward-looking image for innovative
technology and products that create customers who are
enthusiastic and passionate about our products
Positioned as a high-tech superior proprietary product with
benefits not provided by conventional bedding
Differentiated from the competition –
our “less is more”
design provides weightless comfort and self-adjustability for
every sleeper on a molecular level –
not a mechanical or
electrical product and no switches, motors, pumps, bladders
or hard steel springs
Supported with a massive advertising and brand-building
program that drives consumer awareness


15
15
> 80 million “impressions”
per month
> 600 million “impressions”
per month
Includes
national
spots
on
such
shows
as:
The
Radio
Factor
with
Bill
O’Reilly, Westwood One, Dr. Laura, Dr. Joy Browne and WOR with
John Gambling
> 900 million “impressions”
per month
> 2.8 billion “impressions”
per month
High profile events:  The Apprentice, Oscar’s, Emmy’s, Grammy’s
Newspapers
Television
Radio
Magazines
Cost Effective Advertising to Build
Cost Effective Advertising to Build
Global Brand
Global Brand
Tempur-Pedic’s national advertising campaign drives over 4.3 billion
consumer “impressions”
per month


16
16
Continue to Build Global Brand
Continue to Build Global Brand
Total Brand Awareness: 78% up from 60% in two years
___________________________
Note:  Total brand awareness for mattresses based on study commissioned by Tempur-Pedic and completed in the first quarter of each year.


17
17
Source: Independent survey commissioned by Tempur-Pedic
Almost all of our customers have recommended Tempur-Pedic®, with about
Almost all of our customers have recommended Tempur-Pedic®, with about
two-thirds reporting that they recommended Tempur-Pedic one to five times. 
two-thirds reporting that they recommended Tempur-Pedic one to five times. 
42% of retail customers report that someone purchased a Tempur-Pedic
42% of retail customers report that someone purchased a Tempur-Pedic
mattress as a result of their recommendation.
mattress as a result of their recommendation.
Customer Passion
Customer Passion
95%
65%
18%
17%
42%
0%
20%
40%
60%
80%
100%
Recommended
Tempur-Pedic
1-5 times
6-10 times
11+ times
Purchase resulted
from
recommendation


$116.8
$156.0
$268.2
$433.3
$566.5
$479.1
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
$600
2004
2004
Mattresses Key Growth Driver
Mattresses Key Growth Driver
Mattress Revenues
2001
2001
2002
2002
2003
2003
Established Accounts + Targeted
Established Accounts + Targeted
New Stores
New Stores
Increasing slots per store
Increasing slots per store
Growing brand awareness
Growing brand awareness
31% Growth in ’05
31% Growth in ’05
($ in millions)
2005
2005
9M06
9M06
Notes:
1. Growth in the first half of 2005 was much higher than growth in the second half of 2005.
2. For a complete discussion of the Company’s financial performance for 2005, please refer to the Management’s Discussion and Analysis section of the
Company’s Form 10K for 2005. For a discussion of the Company’s performance for 9M 2006, please refer to the Company’s press release for the
third quarter of 2006.


Historical Net Sales
Historical Operating Income
(1)
Growing Net Sales and Profitability
Growing Net Sales and Profitability
$221.5
$298.0
$479.1
$684.9
$836.7
$688.5
$0
$100
$200
$300
$400
$500
$600
$700
$800
Net Sales
($ in millions)
$30.4
$39.4
$97.1
$151.0
$190.9
$148.2
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Operating
Income
($ in millions)
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
9M06
9M06
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
9M06
9M06
___________________________
1.
For a complete discussion of the Company’s financial performance for 2005, please refer to the Management’s Discussion and Analysis
section of the Company’s Form 10K for 2005. For a discussion of the Company’s performance for 9M 2006, please refer to the
Company’s press release for the third quarter of 2006.


$19.7
$35.1
$47.0
$77.0
$102.2
$133.1
$0
$20
$40
$60
$80
$100
$120
$140
Cash Flow from Operations
Cash Flow from Operations
Operating Cash Flows
Growth of operating cash
Growth of operating cash
flows
flows
Business model generates
Business model generates
significant operating cash
significant operating cash
flows
flows
Identified key initiatives to
Identified key initiatives to
continue to improve cash flow
continue to improve cash flow
($ in millions)
Note: For a complete discussion of the Company’s financial performance for 2005, please refer to the Management’s Discussion and Analysis section
of the Company’s Form 10K for 2005. For a discussion of the Company’s performance for 9M 2006, please refer to the Company’s press
release for the third quarter of 2006.
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
9M06
9M06


Investment Highlights
Investment Highlights
#1
#1
In
In
The
The
Fast
Fast
Growing
Growing
Viscoelastic
Viscoelastic
Market
#1
In
The
Premium
Mattress
Market
#1
#1
In
In
The
The
Premium
Premium
Pillow
Pillow
Market
#1
#1
In
In
International
International
Operations
Operations
of
of
All
All
U.S.
U.S.
Bedding
Bedding
Manufactur
Manufacturers
#1 In The Industry For
#1 In The Industry For Profitability
#1
#1
In
In
U.S.
U.S.
Consumer
Consumer
Referrals
Referrals
for
for
Mattresses
Mattresses
#1
#1
In
In
Retail
Retail
Sales
Sales
And
And
Profit
Profit
Per
Per
Sq
Sq
Ft
Ft
___________________________
1.
Based on net sales, including management’s estimates of sales by companies that do not publicly report sales of viscoelastic mattresses and pillows,
premium mattress and premium pillows.
2.
Based on total company-owned foreign operations by U.S. based bedding manufacturers, including management’s estimates for companies that do
not publicly report such information.
3.
Based
on
total
net
income
for
all
publicly
reporting
US
mattress
manufacturers.
4.
Based
on
independent
survey(s)
commissioned
by
Tempur-Pedic®
and
management
estimates.
1
1
1
3
4
4
2


Investor Presentation
October 2006