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 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 April 16, 2009, Tempur-Pedic
International Inc. (the Company) issued a press release to announce its
financial results for the first quarter, ended March 31, 2009. The Company also
issued revised financial guidance for the fiscal year 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
|
|
99.1
|
Press
Release dated April 16, 2009, entitled “Tempur-Pedic Reports First Quarter
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. | |||
|
Date: April
16, 2009
|
By:
|
/s/ DALE E. WILLIAMS | |
| Name: Dale E. Williams | |||
| Title: Executive Vice President, Chief Financial Officer & Secretary | |||
|
EXHIBIT
INDEX
|
|
Exhibit
|
Description
|
|
99.1
|
Press
Release dated April 16, 2009, entitled “Tempur-Pedic Reports First Quarter
Earnings”
|
TEMPUR-PEDIC
REPORTS FIRST QUARTER EARNINGS
|
|
|
-
Reports EPS of $0.18
|
|
|
|
-
Gross Profit Margin Increases 250 Basis Points to
46.2%
|
|
|
|
-
Maintains EPS Guidance, Reduces Sales
Guidance
|
LEXINGTON, KY, April 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 first quarter ended March 31, 2009. The
Company also updated financial guidance for 2009.
FIRST
QUARTER FINANCIAL SUMMARY
|
·
|
Earnings
per share (EPS) were $0.18 per diluted share in the first quarter of 2009
as compared to $0.18 per diluted share in the first quarter of 2008. The
Company reported net income of $13.3 million for the first quarter of 2009
as compared to net income of $13.5 million in the first quarter of 2008.
Net income results for the first quarter of 2009 include a non-recurring
$1.3 million tax charge resulting from a change to a foreign tax
law.
|
|
·
|
Net
sales declined 28% to $177.1 million in the first quarter of 2009 from
$247.2 million in the first quarter of 2008. On a constant currency basis,
net sales declined 24%. Net sales in the domestic
segment declined 28%, while international segment net sales declined
29%. On a constant currency basis, international segment
net sales declined
18%.
|
|
·
|
Mattress
sales declined 29% globally. Mattress sales declined 29% in the domestic
segment and 29% in the international segment. On a constant currency
basis, international mattress sales declined 17%. Pillow sales declined
27% globally. Pillow sales declined 25% domestically and 29%
internationally. On constant currency basis, international pillow sales
declined 20%.
|
|
·
|
Gross
profit margin was 46.2% as compared to 43.7% in the first quarter of 2008.
The gross profit margin increased as a result of lower commodity and
transportation costs, improved efficiencies in manufacturing, and pricing
actions taken during the quarter, partially offset by fixed cost
de-leverage related to lower production
volumes.
|
|
·
|
Operating
profit margin was 14.6% as compared to 11.9% in the first quarter of 2008.
Operating profit margin improvement resulted from the expansion in
gross profit margin and lower operating expenses. The Company reduced
operating expenses by $22.7 million to $56.0 million in the first quarter
of 2009 from $78.7 million in the first quarter of
2008.
|
|
·
|
Reflecting
the Company’s continued
focus on generating cash, the Company generated $26.0
million of operating cash flow in the first quarter of 2009 as compared to
$24.6 million in the first quarter of
2008.
|
|
·
|
During the quarter,
the Company reduced Total debt by $19.3 million to $400.0 million. As of
March 31, 2009, the Company's ratio of Funded debt to EBITDA was 2.38
times, well within the covenant in its credit facility, which requires
that this ratio not exceed 3.00 times. For additonal 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, “We executed well during the first
quarter. We made solid progress on our long-term initiatives most notably our
initiative to drive gross margins. An easing commodity environment and our
productivity initiatives have generated substantial margin improvement despite
lower volumes. Importantly, we continued to drive balance sheet improvement by
paying down debt.”
Chief
Financial Officer Dale Williams commented, “Sales in the first quarter were
modestly below our expectations. In the domestic segment, while sales were
essentially flat to the fourth quarter run rate, we did not experience the
normal seasonal lift. In the international segment, sales were down from the
fourth quarter reflecting a weakened run rate. As visibility continues to be
low, we have established our revised sales guidance assuming only a modest
seasonal benefit to first quarter unit volumes. Accordingly, we
continue to adjust our production plans and operating expenses. Our drive to
expand margins has generated substantial benefit and we are confirming our prior
EPS guidance. In addition, we continue to project we will remain in compliance
with the covenants in our credit facility.”
2009
Financial Guidance
The
Company maintained its EPS guidance to range from $0.70 to $0.90 per diluted
share, but reduced its net sales guidance 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, April 16, 2009 at 5:00 p.m. Eastern Time. The dial-in number for the
conference call is 888-430-8669. 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 April 16, 2009 at 8:00 p.m. Eastern Time through April 23, 2009.
To listen to the replay, dial 888-203-1112, participant code
9148257.
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 improve its balance
sheet and margins and further improve financial flexibility and its business;
its ability to maintain compliance with its credit facility covenants; the
Company’s initiatives to align costs with anticipated sales levels; 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 US 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
|
||||||||||
|
March
31,
|
||||||||||
|
2009
|
2008
|
Chg%
|
||||||||
|
Net
sales
|
$ | 177,104 | $ | 247,222 |
(28%)
|
|||||
|
Cost
of sales
|
95,243 | 139,141 | ||||||||
|
Gross
profit
|
81,861 | 108,081 |
(24%)
|
|||||||
|
Selling
and marketing expenses
|
33,872 | 53,163 | ||||||||
|
General,
administrative and other expenses
|
22,108 | 25,585 | ||||||||
|
Operating
income
|
25,881 | 29,333 |
(12%)
|
|||||||
|
Other
income (expense), net:
|
||||||||||
|
Interest
expense, net
|
(4,571 | ) | (7,691 | ) | ||||||
|
Other
income (expense), net
|
348 | (1,019 | ) | |||||||
|
Total
other expense
|
(4,223 | ) | (8,710 | ) | ||||||
|
Income
before income taxes
|
21,658 | 20,623 |
5%
|
|||||||
|
Income
tax provision
|
8,320 | 7,109 | ||||||||
|
Net
income
|
$ | 13,338 | $ | 13,514 |
(1%)
|
|||||
|
Earnings
per common share:
|
||||||||||
|
Basic
|
$ | 0.18 | $ | 0.18 | ||||||
|
Diluted
|
$ | 0.18 | $ | 0.18 | ||||||
|
Weighted
average common shares outstanding:
|
||||||||||
|
Basic
|
74,874 | 74,591 | ||||||||
|
Diluted
|
74,959 | 75,188 | ||||||||
TEMPUR-PEDIC INTERNATIONAL
INC. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(In
thousands)
|
March
31,
|
December
31,
|
||||||
|
2009
|
2008
|
Chg
%
|
|||||
|
ASSETS
|
|||||||
|
Current
Assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
21,127
|
$
|
15,385
|
|||
|
Accounts
receivable, net
|
90,500
|
99,811
|
|||||
|
Inventories
|
60,791
|
60,497
|
|||||
|
Prepaid
expenses and other current assets
|
12,284
|
9,233
|
|||||
|
Deferred
income taxes
|
16,475
|
11,888
|
|||||
|
Total
Current Assets
|
201,177
|
196,814
|
2%
|
||||
|
Property,
plant and equipment, net
|
178,016
|
185,843
|
|||||
|
Goodwill
|
192,339
|
192,569
|
|||||
|
Other
intangible assets, net
|
66,328
|
66,823
|
|||||
|
Other
non-current assets
|
4,058
|
4,482
|
|||||
|
Total
Assets
|
$
|
641,918
|
$
|
646,531
|
(1%)
|
||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
Liabilities:
|
|||||||
|
Accounts
payable
|
$
|
40,140
|
$
|
41,355
|
|||
|
Accrued
expenses and other current liabilities
|
68,312
|
65,316
|
|||||
|
Income
taxes payable
|
7,934
|
7,783
|
|||||
|
Total
Current Liabilities
|
116,386
|
114,454
|
2%
|
||||
|
Long-term
debt
|
400,000
|
419,341
|
|||||
|
Deferred
income taxes
|
28,667
|
28,371
|
|||||
|
Other
non-current liabilities
|
12,550
|
11,922
|
|||||
|
Total
Liabilities
|
557,603
|
574,088
|
(3%)
|
||||
|
Total
Stockholders’ Equity
|
84,315
|
72,443
|
16%
|
||||
|
Total
Liabilities and Stockholders’ Equity
|
$
|
641,918
|
$
|
646,531
|
(1%)
|
||
TEMPUR-PEDIC
INTERNATIONAL INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
|
Three
Months Ended
|
|||||||
|
March
31,
|
|||||||
|
2009
|
2008
|
||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
|
Net
income
|
$
|
13,338
|
$
|
13,514
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
7,727
|
8,334
|
|||||
|
Amortization
of stock-based compensation
|
1,903
|
1,979
|
|||||
|
Amortization
of deferred financing costs
|
172
|
185
|
|||||
|
Bad
debt expense
|
2,233
|
985
|
|||||
|
Deferred
income taxes
|
(4,742
|
)
|
(1,158
|
) | |||
|
Foreign
currency adjustments
|
(311
|
)
|
1,156
|
||||
|
Loss
on sale of equipment and other
|
—
|
41
|
|||||
|
Changes
in operating assets and liabilities
|
5,679
|
(451
|
) | ||||
|
Net
cash provided by operating activities
|
25,999
|
24,585
|
|||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
|
Purchases
of property, plant and equipment
|
(1,423
|
)
|
(2,793
|
) | |||
|
Acquisition
of business, net of cash acquired
|
—
|
(1,498
|
) | ||||
|
Payments
for other
|
(218
|
)
|
(145
|
) | |||
|
Net
cash used by investing activities
|
(1,641
|
)
|
(4,436
|
) | |||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
|
Proceeds
from long-term revolving credit facility
|
61,500
|
7,221
|
|||||
|
Repayments
of long-term revolving credit facility
|
(79,721
|
)
|
(12,233
|
) | |||
|
Repayments
of long-term debt
|
—
|
(77
|
) | ||||
|
Proceeds
from issuance of Common stock
|
—
|
498
|
|||||
|
Excess
tax benefit from stock based compensation
|
—
|
323
|
|||||
|
Dividend
paid to stockholders
|
—
|
(5,965
|
) | ||||
|
Payments
for other
|
—
|
(14
|
) | ||||
|
Net
cash used by financing activities
|
(18,221
|
)
|
(10,247
|
) | |||
|
NET
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(395
|
)
|
3,350
|
||||
|
Increase
in cash and cash equivalents
|
5,742
|
13,252
|
|||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
15,385
|
33,315
|
|||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
21,127
|
$
|
46,567
|
|||
Summary
of Channel Sales
The
Company generates sales through four distribution channels: retail, direct,
healthcare and third party. The retail channel sells to furniture and
bedding retailers, specialty stores, and department stores, among
others. 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 first quarter of 2009 compared to 2008:
|
(In
thousands)
|
||||||||||||||||||||||||
|
CONSOLIDATED
|
DOMESTIC
|
INTERNATIONAL
|
||||||||||||||||||||||
|
Three
Months Ended
|
Three
Months Ended
|
Three
Months Ended
|
||||||||||||||||||||||
|
March
31,
|
March
31,
|
March
31,
|
||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||
|
Retail
|
$ | 150,522 | $ | 207,903 | $ | 93,411 | $ | 129,120 | $ | 57,111 | $ | 78,783 | ||||||||||||
|
Direct
|
9,729 | 12,744 | 8,478 | 10,675 | 1,251 | 2,069 | ||||||||||||||||||
|
Healthcare
|
8,902 | 12,257 | 2,694 | 3,822 | 6,208 | 8,435 | ||||||||||||||||||
|
Third
Party
|
7,951 | 14,318 | 1,851 | 4,301 | 6,100 | 10,017 | ||||||||||||||||||
| $ | 177,104 | $ | 247,222 | $ | 106,434 | $ | 147,918 | $ | 70,670 | $ | 99,304 | |||||||||||||
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
|
||||||||||||||||||||||
|
March
31,
|
March
31,
|
March
31,
|
||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||
|
Mattresses
|
$ | 119,128 | $ | 168,050 | $ | 75,711 | $ | 106,872 | $ | 43,417 | $ | 61,178 | ||||||||||||
|
Pillows
|
23,061 | 31,616 | 9,845 | 13,121 | 13,216 | 18,495 | ||||||||||||||||||
|
Other
|
34,915 | 47,556 | 20,878 | 27,925 | 14,037 | 19,631 | ||||||||||||||||||
| $ | 177,104 | $ | 247,222 | $ | 106,434 | $ | 147,918 | $ | 70,670 | $ | 99,304 | |||||||||||||
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 June 30,
2008, September 30, 2008 , December 31, 2008 and March 31, 2009, as well as the
twelve months ended March 31, 2009:
|
Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||||||
|
June
30, 2008
|
September
30, 2008
|
December
31, 2008
|
March
31, 2009
|
March
31, 2009
|
||||||||||||||||
|
GAAP
Net income
|
$ | 20,228 | $ | 24,071 | $ | 1,055 | $ | 13,338 | $ | 58,692 | ||||||||||
|
Plus:
|
||||||||||||||||||||
|
Interest
expense
|
5,645 | 6,294 | 5,493 | 4,571 | 22,003 | |||||||||||||||
|
Income
taxes
|
10,374 | 12,622 | 18,449 | 8,320 | 49,765 | |||||||||||||||
|
Depreciation &
Amortization
|
10,413 | 10,222 | 9,849 | 9,630 | 40,114 | |||||||||||||||
|
EBITDA
|
$ | 46,660 | $ | 53,209 | $ | 34,846 | $ | 35,859 | $ | 170,574 | ||||||||||
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 March 31, 2009:
|
As
of
|
||||
|
March
31, 2009
|
||||
|
GAAP
basis Total debt
|
$ | 400,000 | ||
|
Plus:
|
||||
|
Letters
of credit outstanding
|
5,573 | |||
|
Funded
debt
|
$ | 405,573 | ||
Calculation
of Funded debt to EBITDA
|
As
of
|
||||
|
March
31, 2009
|
||||
|
Funded
debt
|
$ | 405,573 | ||
|
EBITDA
|
170,574 | |||
|
2.38
times
|
||||