tpx-20200930
0001206264December 312020Q3falseus-gaap:AccountingStandardsUpdate201613Memberus-gaap:AccountingStandardsUpdate201613Memberus-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationus-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentus-gaap:DebtCurrentus-gaap:DebtCurrentus-gaap:LongTermDebtAndCapitalLeaseObligationsus-gaap:LongTermDebtAndCapitalLeaseObligations.001.273505000012062642020-01-012020-09-30xbrli:shares00012062642020-11-02iso4217:USD00012062642020-07-012020-09-3000012062642019-07-012019-09-3000012062642019-01-012019-09-30iso4217:USDxbrli:shares00012062642020-09-3000012062642019-12-3100012062642020-06-300001206264us-gaap:CommonStockMember2020-06-300001206264us-gaap:TreasuryStockMember2020-06-300001206264us-gaap:AdditionalPaidInCapitalMember2020-06-300001206264us-gaap:RetainedEarningsMember2020-06-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001206264us-gaap:NoncontrollingInterestMember2020-06-300001206264us-gaap:RetainedEarningsMember2020-07-012020-09-300001206264us-gaap:NoncontrollingInterestMember2020-07-012020-09-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001206264us-gaap:TreasuryStockMember2020-07-012020-09-300001206264us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001206264us-gaap:CommonStockMember2020-09-300001206264us-gaap:TreasuryStockMember2020-09-300001206264us-gaap:AdditionalPaidInCapitalMember2020-09-300001206264us-gaap:RetainedEarningsMember2020-09-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001206264us-gaap:NoncontrollingInterestMember2020-09-300001206264us-gaap:CommonStockMember2019-06-300001206264us-gaap:TreasuryStockMember2019-06-300001206264us-gaap:AdditionalPaidInCapitalMember2019-06-300001206264us-gaap:RetainedEarningsMember2019-06-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001206264us-gaap:NoncontrollingInterestMember2019-06-3000012062642019-06-300001206264us-gaap:RetainedEarningsMember2019-07-012019-09-300001206264us-gaap:NoncontrollingInterestMember2019-07-012019-09-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001206264us-gaap:TreasuryStockMember2019-07-012019-09-300001206264us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001206264us-gaap:CommonStockMember2019-09-300001206264us-gaap:TreasuryStockMember2019-09-300001206264us-gaap:AdditionalPaidInCapitalMember2019-09-300001206264us-gaap:RetainedEarningsMember2019-09-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001206264us-gaap:NoncontrollingInterestMember2019-09-3000012062642019-09-300001206264us-gaap:CommonStockMember2019-12-310001206264us-gaap:TreasuryStockMember2019-12-310001206264us-gaap:AdditionalPaidInCapitalMember2019-12-310001206264us-gaap:RetainedEarningsMember2019-12-310001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001206264us-gaap:NoncontrollingInterestMember2019-12-310001206264us-gaap:RetainedEarningsMember2020-01-012020-09-300001206264us-gaap:NoncontrollingInterestMember2020-01-012020-09-300001206264us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001206264srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001206264us-gaap:TreasuryStockMember2020-01-012020-09-300001206264us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300001206264us-gaap:CommonStockMember2018-12-310001206264us-gaap:TreasuryStockMember2018-12-310001206264us-gaap:AdditionalPaidInCapitalMember2018-12-310001206264us-gaap:RetainedEarningsMember2018-12-310001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001206264us-gaap:NoncontrollingInterestMember2018-12-3100012062642018-12-310001206264us-gaap:RetainedEarningsMember2019-01-012019-09-300001206264us-gaap:NoncontrollingInterestMember2019-01-012019-09-300001206264us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-300001206264us-gaap:TreasuryStockMember2019-01-012019-09-300001206264us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-30tpx:channelxbrli:pure0001206264us-gaap:SubsequentEventMembertpx:SealyAndStemsFosterMember2020-10-310001206264us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-01-010001206264us-gaap:SalesReturnsAndAllowancesMember2019-12-310001206264us-gaap:SalesReturnsAndAllowancesMember2020-01-012020-09-300001206264us-gaap:SalesReturnsAndAllowancesMember2020-09-300001206264tpx:AccruedExpensesAndOtherCurrentLiabilitiesMember2020-09-300001206264tpx:AccruedExpensesAndOtherCurrentLiabilitiesMember2019-12-310001206264us-gaap:OtherNoncurrentLiabilitiesMember2020-09-300001206264us-gaap:OtherNoncurrentLiabilitiesMember2019-12-310001206264srt:MinimumMembertpx:MattressesMembertpx:NorthAmericaSegmentMember2020-01-012020-09-300001206264srt:MaximumMembertpx:MattressesMembertpx:NorthAmericaSegmentMember2020-01-012020-09-300001206264tpx:NonproratedMembersrt:MinimumMembertpx:MattressesMembertpx:NorthAmericaSegmentMember2020-01-012020-09-300001206264srt:MaximumMembertpx:NonproratedMembertpx:MattressesMembertpx:NorthAmericaSegmentMember2020-01-012020-09-300001206264tpx:InternationalMembersrt:MinimumMembertpx:MattressesMember2020-01-012020-09-300001206264srt:MaximumMembertpx:InternationalMembertpx:MattressesMember2020-01-012020-09-300001206264tpx:InternationalMembertpx:NonproratedMembertpx:MattressesMember2020-01-012020-09-300001206264tpx:ProratedMembertpx:InternationalMembertpx:MattressesMember2020-01-012020-09-300001206264tpx:PillowsTwoMembertpx:NorthAmericaSegmentMember2020-01-012020-09-300001206264us-gaap:WarrantyReservesMember2019-12-310001206264us-gaap:WarrantyReservesMember2020-01-012020-09-300001206264us-gaap:WarrantyReservesMember2020-09-3000012062642019-01-012019-12-310001206264srt:NorthAmericaMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:WholesaleMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264srt:NorthAmericaMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:WholesaleMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264srt:NorthAmericaMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264us-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264srt:NorthAmericaMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264us-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264us-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264us-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264srt:NorthAmericaMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264srt:NorthAmericaMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2020-07-012020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2020-07-012020-09-300001206264us-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2020-07-012020-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2020-01-012020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2020-01-012020-09-300001206264us-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2020-01-012020-09-300001206264country:USsrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264country:UStpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264country:USus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264country:USsrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264country:UStpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264country:USus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264srt:NorthAmericaMembercountry:CAus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMembercountry:CAus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264country:CAus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264srt:NorthAmericaMembercountry:CAus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMembercountry:CAus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264country:CAus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMembersrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMembertpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001206264tpx:InternationalMembersrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMembertpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001206264srt:NorthAmericaMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:WholesaleMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264srt:NorthAmericaMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMembertpx:WholesaleMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:WholesaleMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264srt:NorthAmericaMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264us-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264srt:NorthAmericaMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMemberus-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264us-gaap:SalesChannelDirectlyToConsumerMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264us-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264us-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264srt:NorthAmericaMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264srt:NorthAmericaMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMembertpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:BeddingProductsMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2019-07-012019-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2019-07-012019-09-300001206264us-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2019-07-012019-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2019-01-012019-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2019-01-012019-09-300001206264us-gaap:OperatingSegmentsMembertpx:ProductsOtherMember2019-01-012019-09-300001206264country:USsrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264country:UStpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264country:USus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264country:USsrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264country:UStpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264country:USus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264srt:NorthAmericaMembercountry:CAus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMembercountry:CAus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264country:CAus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264srt:NorthAmericaMembercountry:CAus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMembercountry:CAus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264country:CAus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMembersrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMembertpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001206264tpx:InternationalMembersrt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMembertpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001206264tpx:SherwoodBeddingMember2020-01-310001206264tpx:SherwoodBeddingMember2020-01-312020-01-310001206264us-gaap:CustomerRelationshipsMembertpx:SherwoodBeddingMember2020-01-310001206264tpx:NorthAmericaSegmentMember2019-12-310001206264tpx:InternationalMember2019-12-310001206264tpx:NorthAmericaSegmentMember2020-01-012020-09-300001206264tpx:InternationalMember2020-01-012020-09-300001206264tpx:NorthAmericaSegmentMember2020-09-300001206264tpx:InternationalMember2020-09-300001206264tpx:A2019CreditAgreementMembertpx:TermFacilityMember2020-09-300001206264tpx:A2019CreditAgreementMembertpx:TermFacilityMember2019-12-310001206264tpx:RevolverMembertpx:A2019CreditAgreementMember2020-09-300001206264tpx:RevolverMembertpx:A2019CreditAgreementMember2019-12-310001206264tpx:SeniorNotesDue2026Member2020-09-300001206264tpx:SeniorNotesDue2026Member2019-12-310001206264tpx:SeniorNotesDue2023Member2020-09-300001206264tpx:SeniorNotesDue2023Member2019-12-310001206264us-gaap:SecuredDebtMember2020-09-300001206264us-gaap:SecuredDebtMember2019-12-310001206264tpx:FinancingandCapitalLeaseObligationsMember2020-09-300001206264tpx:FinancingandCapitalLeaseObligationsMember2019-12-310001206264tpx:A2019CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMembertpx:TermFacilityMember2020-01-012020-09-300001206264tpx:RevolverMembertpx:A2019CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-12-310001206264us-gaap:SecuredDebtMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-12-310001206264us-gaap:SecuredDebtMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-01-012020-09-300001206264us-gaap:RevolvingCreditFacilityMembertpx:A2019CreditAgreementMemberus-gaap:LineOfCreditMember2019-10-160001206264tpx:A2019CreditAgreementMemberus-gaap:LineOfCreditMembertpx:TermLoanFacilityMember2019-10-160001206264tpx:A2019CreditAgreementMemberus-gaap:LineOfCreditMembertpx:IncrementalFacilityMember2019-10-160001206264tpx:A2019CreditAgreementMemberus-gaap:LetterOfCreditMemberus-gaap:LineOfCreditMember2019-10-160001206264tpx:A2019CreditAgreementMemberus-gaap:LineOfCreditMember2020-09-300001206264tpx:A2019CreditAgreementMemberus-gaap:LetterOfCreditMemberus-gaap:LineOfCreditMember2020-01-012020-09-300001206264tpx:A2019CreditAgreementMemberus-gaap:LineOfCreditMembertpx:TermLoanFacilityMember2020-05-130001206264tpx:AccountsReceivableSecuritizationMemberus-gaap:SecuredDebtMember2020-09-300001206264us-gaap:SubsequentEventMembertpx:SeniorNotesDue2023Member2020-10-082020-10-080001206264us-gaap:FairValueInputsLevel2Membertpx:SeniorNotesDue2023Member2020-09-300001206264us-gaap:FairValueInputsLevel2Membertpx:SeniorNotesDue2023Member2019-12-310001206264us-gaap:FairValueInputsLevel2Membertpx:SeniorNotesDue2026Member2020-09-300001206264us-gaap:FairValueInputsLevel2Membertpx:SeniorNotesDue2026Member2019-12-310001206264tpx:February2017ProgramMember2020-09-300001206264us-gaap:SubsequentEventMember2020-10-310001206264tpx:PerformanceBasedRestrictedStockUnitsMember2020-07-012020-09-300001206264tpx:PerformanceBasedRestrictedStockUnitsMember2019-07-012019-09-300001206264tpx:PerformanceBasedRestrictedStockUnitsMember2020-01-012020-09-300001206264tpx:PerformanceBasedRestrictedStockUnitsMember2019-01-012019-09-30tpx:right00012062642020-03-270001206264us-gaap:SubsequentEventMember2020-10-282020-10-280001206264us-gaap:SubsequentEventMember2020-11-102020-11-100001206264us-gaap:AccumulatedTranslationAdjustmentMember2020-06-300001206264us-gaap:AccumulatedTranslationAdjustmentMember2019-06-300001206264us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310001206264us-gaap:AccumulatedTranslationAdjustmentMember2018-12-310001206264us-gaap:AccumulatedTranslationAdjustmentMember2020-09-300001206264us-gaap:AccumulatedTranslationAdjustmentMember2019-09-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-06-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-06-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-310001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-12-310001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-07-012020-09-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-07-012019-09-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-012020-09-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-01-012019-09-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-09-300001206264us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-09-300001206264us-gaap:AccumulatedTranslationAdjustmentMember2019-01-012019-09-300001206264us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-09-300001206264us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001206264us-gaap:EmployeeStockOptionMember2019-07-012019-09-300001206264us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001206264us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001206264tpx:RestrictedStockUnitsAndDeferredStockUnitsMember2020-07-012020-09-300001206264tpx:RestrictedStockUnitsAndDeferredStockUnitsMember2019-07-012019-09-300001206264tpx:RestrictedStockUnitsAndDeferredStockUnitsMember2020-01-012020-09-300001206264tpx:RestrictedStockUnitsAndDeferredStockUnitsMember2019-01-012019-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheTwoMembertpx:VestingScenarioOneMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheOneMembertpx:VestingScenarioOneMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-01-012020-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheTwoMembertpx:VestingScenarioTwoMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheTwoMembertpx:VestingScenarioTwoMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-01-012020-09-300001206264tpx:VestingScenarioThreeMembersrt:MinimumMemberus-gaap:ShareBasedCompensationAwardTrancheOneMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-09-300001206264tpx:VestingScenarioThreeMembersrt:MaximumMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheOneMembertpx:VestingScenarioFourMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-09-300001206264tpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-07-012020-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheThreeMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-09-300001206264us-gaap:ShareBasedCompensationAwardTrancheOneMembertpx:AspirationalPlan2019Membertpx:PerformanceBasedRestrictedStockUnitsMember2020-01-012020-09-30iso4217:DKK0001206264tpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2020-01-012020-09-300001206264tpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2019-01-012019-12-310001206264tpx:TaxYearsAfter2011Membertpx:AccruedExpensesAndOtherCurrentLiabilitiesMembertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2020-01-012020-09-300001206264tpx:TaxYearsAfter2011Membertpx:AccruedExpensesAndOtherCurrentLiabilitiesMembertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2019-01-012019-12-310001206264us-gaap:OtherNoncurrentLiabilitiesMembertpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2020-01-012020-09-300001206264us-gaap:OtherNoncurrentLiabilitiesMembertpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2019-01-012019-12-310001206264tpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMembertpx:TaxYears20122013Member2020-07-012020-09-300001206264tpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMembertpx:TaxYears20122013Member2020-01-012020-03-310001206264tpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2020-09-300001206264tpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2019-12-310001206264tpx:TaxYearsAfter2011Membertpx:AccruedExpensesAndOtherCurrentLiabilitiesMembertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2020-09-300001206264tpx:TaxYearsAfter2011Membertpx:AccruedExpensesAndOtherCurrentLiabilitiesMembertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMember2019-12-310001206264tpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMemberus-gaap:OtherNoncurrentAssetsMember2020-09-300001206264tpx:TaxYearsAfter2011Membertpx:DanishTaxAuthoritySKATMemberus-gaap:ForeignCountryMemberus-gaap:OtherNoncurrentAssetsMember2019-12-31tpx:segment0001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2020-09-300001206264srt:NorthAmericaMemberus-gaap:OperatingSegmentsMember2019-12-310001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2020-09-300001206264tpx:InternationalMemberus-gaap:OperatingSegmentsMember2019-12-310001206264us-gaap:CorporateNonSegmentMember2020-09-300001206264us-gaap:CorporateNonSegmentMember2019-12-310001206264us-gaap:IntersegmentEliminationMember2020-09-300001206264us-gaap:IntersegmentEliminationMember2019-12-310001206264us-gaap:OperatingSegmentsMember2020-09-300001206264us-gaap:OperatingSegmentsMember2019-12-310001206264srt:NorthAmericaMemberus-gaap:IntersegmentEliminationMember2020-07-012020-09-300001206264tpx:InternationalMemberus-gaap:IntersegmentEliminationMember2020-07-012020-09-300001206264us-gaap:IntersegmentEliminationMember2020-07-012020-09-300001206264us-gaap:CorporateNonSegmentMember2020-07-012020-09-300001206264srt:NorthAmericaMemberus-gaap:IntersegmentEliminationMember2019-07-012019-09-300001206264tpx:InternationalMemberus-gaap:IntersegmentEliminationMember2019-07-012019-09-300001206264us-gaap:IntersegmentEliminationMember2019-07-012019-09-300001206264us-gaap:CorporateNonSegmentMember2019-07-012019-09-300001206264srt:NorthAmericaMemberus-gaap:IntersegmentEliminationMember2020-01-012020-09-300001206264tpx:InternationalMemberus-gaap:IntersegmentEliminationMember2020-01-012020-09-300001206264us-gaap:IntersegmentEliminationMember2020-01-012020-09-300001206264us-gaap:CorporateNonSegmentMember2020-01-012020-09-300001206264srt:NorthAmericaMemberus-gaap:IntersegmentEliminationMember2019-01-012019-09-300001206264tpx:InternationalMemberus-gaap:IntersegmentEliminationMember2019-01-012019-09-300001206264us-gaap:IntersegmentEliminationMember2019-01-012019-09-300001206264us-gaap:CorporateNonSegmentMember2019-01-012019-09-300001206264country:US2020-09-300001206264country:US2019-12-310001206264country:CA2020-09-300001206264country:CA2019-12-310001206264tpx:OtherInternationalMember2020-09-300001206264tpx:OtherInternationalMember2019-12-310001206264us-gaap:NonUsMember2020-09-300001206264us-gaap:NonUsMember2019-12-310001206264us-gaap:NonUsMember2020-07-012020-09-300001206264us-gaap:NonUsMember2019-07-012019-09-300001206264us-gaap:NonUsMember2020-01-012020-09-300001206264us-gaap:NonUsMember2019-01-012019-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
  
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

Commission file number 001-31922

TEMPUR SEALY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-1022198
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
 1000 Tempur Way
Lexington, Kentucky 40511
(Address, including zip code, of principal executive offices)
Registrant’s telephone number, including area code: (800) 878-8889
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, $0.01 par valueTPXNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý  Yes  o No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ý Yes    o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging Growth Company
x
 o
 o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes  No ý

The number of shares outstanding of the registrant’s common stock as of November 2, 2020 was 51,588,496 shares.


Table of Contents
Special Note Regarding Forward-Looking Statements

    This Quarterly Report on Form 10-Q, (this "Report"), including the information incorporated by reference herein, contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which includes information concerning one or more of our plans; objectives; goals; strategies and other information that is not historical information. Many of these statements appear, in particular, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, ITEM 2 of this Report. When used in this Report, the words "assumes," "estimates," "expects," “guidance,” “anticipates,” "might," “projects,” "predicts," “plans,” “proposed,” “targets,” “intends,” “believes,” “will,” "may," "could," "is likely to" 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 intent and expectations regarding the conditional partial redemption of the 2023 Senior Notes, the Company's quarterly cash dividend, the Company's share repurchase targets, expected timing of the stock split, the Company's beliefs regarding the impact of its capital allocation strategy and ESG initiatives, and the Company's expectations regarding supply chain constraints, commodities, net sales and adjusted EBITDA per credit facility in the fourth quarter, performance generally for 2020 and subsequent periods, the probable vesting of the Company’s long-term aspirational plan and performance-based stock compensation plan and, the impacts of COVID-19. There can be no assurance that we will realize our expectations or that our beliefs will prove correct.

    Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from any that may be expressed as forward-looking statements in this Report. These risk factors include the impact of the macroeconomic environment in both the U.S. and internationally on our business segments and expectations regarding growth of the mattress industry; uncertainties arising from global events, natural disasters or pandemics; risks associated with the duration, scope and severity of COVID-19 and its effects on our business and operations, including the disruption or delay of production and delivery of materials and products in our supply chain; the impact of travel bans, work-from-home policies, or shelter-in-place orders; a temporary or prolonged shutdown of manufacturing facilities or retail stores and decreased retail traffic; the effects of strategic investments on our operations, including our efforts to expand our global market share; the ability to develop and successfully launch new products; the efficiency and effectiveness of our advertising campaigns and other marketing programs; the ability to increase sales productivity within existing retail accounts and to further penetrate the retail channel, including the timing of opening or expanding within large retail accounts and the timing and success of product launches, and the related expenses and life cycles of such products; the ability to continuously improve and expand our product line; the effects of consolidation of retailers on revenues and costs; competition in our industry; consumer acceptance of our products; general economic, financial and industry conditions, particularly conditions relating to liquidity, financial performance and related credit issues present in the retail sector; financial distress among our business partners, customers and competitors, and financial solvency and related problems experienced by other market participants, any of which may be amplified by the effects of COVID-19; risks associated with our acquisition of 80% ownership of Sherwood Acquisition Holdings, LLC, including the possibility that the expected benefits of the acquisition are not realized when expected or at all; our reliance on information technology and the associated risks involving potential security lapses and/or cyber-based attacks; the outcome of pending tax audits or other tax, regulatory or investigation proceedings and pending litigation; changes in foreign tax rates and changes in tax laws generally, including the ability to utilize tax loss carryforwards; market disruptions related to COVID-19 which may frustrate our ability to access financing on acceptable terms or at all; our capital structure and debt level, including our ability to meet financial obligations and continue to comply with the terms and financial ratio covenants of our credit facilities; changes in interest rates; effects of changes in foreign exchange rates on our reported earnings; changing commodity costs; expectations regarding our target leverage and our share repurchase program; sales fluctuations due to seasonality; the effect of future legislative or regulatory changes, including changes in international trade duties, tariffs and other aspects of international trade policy; our ability to protect our intellectual property; and disruptions to the implementation of our strategic priorities and business plan caused by changes in our executive management team.

    Other potential risk factors include the risk factors discussed under the heading "Risk Factors" in Part I, ITEM 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Annual Report"), and in Part II, ITEM 1A, Risk Factors, of this Report. In addition, there may be other factors that may cause our actual results to differ materially from the forward-looking statements.

    All forward-looking statements attributable to us apply only as of the date of this Report and are expressly qualified in their entirety by the cautionary statements included in this Report. Except as may be required by law, we undertake no obligation to publicly update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise.

    
2

Table of Contents

When used in this Report, except as specifically noted otherwise, the term "Tempur Sealy International" refers to Tempur Sealy International, Inc. only, and the terms "Company," "we," "our," "ours" and "us" refer to Tempur Sealy International, Inc. and its consolidated subsidiaries. When used in this Report, the term "Tempur" may refer to Tempur-branded products and the term "Sealy" may refer to Sealy-branded products or to Sealy Corporation and its historical subsidiaries, in all cases as the context requires. In addition, when used in this Report, "2019 Credit Agreement" refers to the Company's senior credit facility entered into in 2019; "2023 Senior Notes" refers to the 5.625% senior notes due 2023 issued in 2015; and "2026 Senior Notes" refers to the 5.50% senior notes due 2026 issued in 2016.
3


TABLE OF CONTENTS
 
  Page
  
 
   
 
 
 
 
 
 
   
   
   
  
 
   
   
   
   
   
   
  



Table of Contents
PART I.     FINANCIAL INFORMATION
ITEM 1.     FINANCIAL STATEMENTS

TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($ in millions, except per common share amounts)
(unaudited)
 Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
Net sales$1,132.3 $821.0 $2,619.9 $2,234.7 
Cost of sales602.1 460.4 1,466.7 1,278.9 
Gross profit530.2 360.6 1,153.2 955.8 
Selling and marketing expenses229.7 168.6 535.8 485.4 
General, administrative and other expenses125.1 75.3 288.1 218.7 
Equity income in earnings of unconsolidated affiliates(4.8)(3.9)(9.6)(10.4)
Operating income180.2 120.6 338.9 262.1 
Other expense, net:
Interest expense, net20.1 20.8 61.0 65.7 
Loss on extinguishment of debt0.9  0.9  
Other (income) expense, net(0.5)1.3 0.3 (6.5)
Total other expense, net20.5 22.1 62.2 59.2 
Income from continuing operations before income taxes 159.7 98.5 276.7 202.9 
Income tax provision(40.3)(26.1)(73.2)(58.8)
Income from continuing operations119.4 72.4 203.5 144.1 
Income (loss) from discontinued operations, net of tax2.4 0.8 1.3 (0.8)
Net income before non-controlling interests121.8 73.2 204.8 143.3 
Less: Net income (loss) attributable to non-controlling interests0.4 (0.1)0.7  
Net income attributable to Tempur Sealy International, Inc.$121.4 $73.3 $204.1 $143.3 
Earnings per common share:
Basic
Earnings per share for continuing operations$2.31 $1.33 $3.89 $2.63 
Earnings (loss) per share for discontinued operations0.04 0.01 0.02 (0.01)
Earnings per share$2.35 $1.34 $3.91 $2.62 
Diluted
Earnings per share for continuing operations$2.25 $1.30 $3.83 $2.57 
Earnings (loss) per share for discontinued operations0.04 0.01 0.03 (0.01)
Earnings per share$2.29 $1.31 $3.86 $2.56 
Weighted average common shares outstanding:
Basic51.6 54.6 52.2 54.7 
Diluted52.9 55.8 52.9 56.0 

See accompanying Notes to Condensed Consolidated Financial Statements. 
5

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in millions)
(unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
Net income before non-controlling interests$121.8 $73.2 $204.8 $143.3 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments12.1 (6.7)(0.2)0.3 
Other comprehensive income (loss), net of tax12.1 (6.7)(0.2)0.3 
Comprehensive income133.9 66.5 204.6 143.6 
Less: Comprehensive income (loss) attributable to non-controlling interests0.4 (0.1)0.7  
Comprehensive income attributable to Tempur Sealy International, Inc.$133.5 $66.6 $203.9 $143.6 
 
See accompanying Notes to Condensed Consolidated Financial Statements.


6

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
 September 30, 2020December 31, 2019
ASSETS(Unaudited)
Current Assets:
Cash and cash equivalents$229.2 $64.9 
Accounts receivable, net440.8 372.0 
Inventories275.6 260.5 
Prepaid expenses and other current assets202.5 202.8 
Total Current Assets1,148.1 900.2 
Property, plant and equipment, net485.8 435.8 
Goodwill761.1 732.3 
Other intangible assets, net630.9 641.4 
Operating lease right-of-use assets305.6 245.4 
Deferred income taxes15.6 14.1 
Other non-current assets108.3 92.6 
Total Assets$3,455.4 $3,061.8 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current Liabilities:  
Accounts payable$330.9 $251.7 
Accrued expenses and other current liabilities601.4 473.2 
Current portion of long-term debt35.4 37.4 
Income taxes payable59.0 11.0 
Total Current Liabilities1,026.7 773.3 
Long-term debt, net1,494.6 1,502.6 
Long-term operating lease obligations275.3 205.4 
Deferred income taxes78.2 102.1 
Other non-current liabilities124.4 118.0 
Total Liabilities2,999.2 2,701.4 
Redeemable non-controlling interest8.9  
Total Stockholders' Equity447.3 360.4 
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity$3,455.4 $3,061.8 
 
See accompanying Notes to Condensed Consolidated Financial Statements. 


7

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
($ in millions)
(unaudited)

Three Months Ended September 30, 2020
Tempur Sealy International, Inc. Stockholders' Equity
Redeemable
Non-controlling Interest
Common StockTreasury StockAccumulated Other Comprehensive LossNon-controlling Interest in SubsidiariesTotal Stockholders' Equity
Shares IssuedAt ParShares IssuedAt CostAdditional Paid in CapitalRetained Earnings
Balance as of June 30, 2020
$8.7 99.2 $1.0 47.7 $(2,026.3)$586.0 $1,779.5 $(100.0)$0.8 $241.0 
Net income121.4 121.4 
Net income attributable to non-controlling interests0.20.2 0.2 
Foreign currency adjustments, net of tax12.1 12.1 
Exercise of stock options— 0.2 0.7 0.9 
Issuances of PRSUs, RSUs, and DSUs
— 0.1 (0.1) 
Treasury stock repurchased - PRSU/RSU/DSU releases— (0.1)(0.1)
Amortization of unearned stock-based compensation
71.8 71.8 
Balance, September 30, 2020
$8.9 99.2 $1.0 47.7 $(2,026.1)$658.4 $1,900.9 $(87.9)$1.0 $447.3 

Three Months Ended September 30, 2019
Tempur Sealy International, Inc. Stockholders' Equity
Redeemable
Non-controlling Interest
Common StockTreasury StockAccumulated Other Comprehensive LossNon-controlling Interest in SubsidiariesTotal Stockholders' Equity
Shares IssuedAt ParShares IssuedAt CostAdditional Paid in CapitalRetained Earnings
Balance as of June 30, 2019
$— 99.2 $1.0 44.4 $(1,737.3)$545.6 $1,583.8 $(88.3)$1.1 $305.9 
Net income73.3 73.3 
Net loss attributable to non-controlling interest(0.1)(0.1)
Foreign currency adjustments, net of tax(6.7)(6.7)
Exercise of stock options(0.1)1.9 5.4 7.3 
Issuances of PRSUs, RSUs, and DSUs
— 0.1 (0.1) 
Treasury stock repurchased
0.7 (50.0)(50.0)
Treasury stock repurchased - PRSU/RSU/DSU releases— —  
Amortization of unearned stock-based compensation
6.8 6.8 
Balance, September 30, 2019
$— 99.2 $1.0 45.0 $(1,785.3)$557.7 $1,657.1 $(95.0)$1.0 $336.5 

See accompanying Notes to Condensed Consolidated Financial Statements.
8

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(in millions) (unaudited)

Nine Months Ended September 30, 2020
Tempur Sealy International, Inc. Stockholders' Equity
Redeemable
Non-controlling Interest
Common StockTreasury StockAccumulated Other Comprehensive LossNon-controlling Interest in SubsidiariesTotal Stockholders' Equity
Shares IssuedAt ParShares IssuedAt CostAdditional Paid in CapitalRetained Earnings
Balance as of December 31, 2019
$ 99.2 $1.0 45.4 $(1,832.8)$575.7 $1,703.3 $(87.7)$0.9 $360.4 
Net income204.1 204.1 
Net income attributable to non-controlling interests0.60.1 0.1 
Adoption of accounting standard effective January 1, 2020, net of tax(6.5)(6.5)
Acquisition of non-controlling interest in subsidiary8.4 
Dividend paid to non-controlling interest in subsidiary(0.1) 
Foreign currency adjustments, net of tax(0.2)(0.2)
Exercise of stock options— 0.5 1.9 2.4 
Issuances of PRSUs, RSUs, and DSUs
(0.4)5.8 (5.8) 
Treasury stock repurchased
2.6 (187.5)(187.5)
Treasury stock repurchased - PRSU/RSU/DSU releases0.1(12.1)(12.1)
Amortization of unearned stock-based compensation
86.6 86.6 
Balance, September 30, 2020
$8.9 99.2 $1.0 47.7 $(2,026.1)$658.4 $1,900.9 $(87.9)$1.0 $447.3 

Nine Months Ended September 30, 2019
Tempur Sealy International, Inc. Stockholders' Equity
Redeemable
Non-controlling Interest
Common StockTreasury StockAccumulated Other Comprehensive LossNon-controlling Interest in SubsidiariesTotal Stockholders' Equity
Shares IssuedAt ParShares IssuedAt CostAdditional Paid in CapitalRetained Earnings
Balance as of December 31, 2018
$— 99.2 $1.0 44.7 $(1,737.0)$532.1 $1,513.8 $(95.3)$2.9 $217.5 
Net income143.3 143.3 
Net income attributable to non-controlling interest—  
Repurchase of interest in subsidiary(1.9)(1.9)
Foreign currency adjustments, net of tax0.3 0.3 
Exercise of stock options(0.3)3.6 9.2 12.8 
Issuances of PRSUs, RSUs, and DSUs
(0.2)3.6 (3.6) 
Treasury stock repurchased
0.7 (52.3)(52.3)
Treasury stock repurchased - PRSU/RSU/DSU releases0.1(3.2)(3.2)
Amortization of unearned stock-based compensation
20.0 20.0 
Balance, September 30, 2019
$— 99.2 $1.0 45.0 $(1,785.3)$557.7 $1,657.1 $(95.0)$1.0 $336.5 


See accompanying Notes to Condensed Consolidated Financial Statements.

9

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions) (unaudited)
 Nine Months Ended
 September 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:
Net income before non-controlling interests$204.8 $143.3 
(Income) loss from discontinued operations, net of tax(1.3)0.8 
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Depreciation and amortization72.5 66.7 
Amortization of stock-based compensation86.6 20.0 
Amortization of deferred financing costs2.6 1.7 
Bad debt expense32.8 7.3 
Deferred income taxes(23.4)0.5 
Dividends received from unconsolidated affiliates15.8 12.8 
Equity income in earnings of unconsolidated affiliates(9.6)(10.4)
Loss on extinguishment of debt0.9  
Foreign currency adjustments and other0.4 (5.5)
Changes in operating assets and liabilities, net of effect of business acquisitions115.8 (35.5)
Net cash provided by operating activities from continuing operations497.9 201.7 
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS:  
Purchases of property, plant and equipment(73.6)(61.9)
Acquisitions, net of cash acquired(37.9)(17.1)
Other0.1 15.0 
Net cash used in investing activities from continuing operations(111.4)(64.0)
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:  
Proceeds from borrowings under long-term debt obligations1,073.9 602.5 
Repayments of borrowings under long-term debt obligations(1,094.9)(678.5)
Proceeds from exercise of stock options2.4 12.8 
Treasury stock repurchased(199.6)(55.5)
Payments of deferred financing costs(1.4)(0.1)
Repayments of finance lease obligations and other(8.9)(6.0)
Net cash used in financing activities from continuing operations(228.5)(124.8)
Net cash provided by continuing operations158.0 12.9 
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS
Operating cash flows1.5 (1.7)
Investing cash flows  
Financing cash flows  
Net cash provided by (used in) discontinued operations1.5 (1.7)
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS4.8 (4.1)
Increase in cash and cash equivalents164.3 7.1 
CASH AND CASH EQUIVALENTS, beginning of period64.9 45.8 
CASH AND CASH EQUIVALENTS, end of period$229.2 $52.9 
Supplemental cash flow information:  
Cash paid during the period for:  
Interest$46.1 $53.5 
Income taxes, net of refunds$47.0 $40.0 
            See accompanying Notes to Condensed Consolidated Financial Statements.
10

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited)

(1) Summary of Significant Accounting Policies
 
(a) Basis of Presentation and Description of Business. Tempur Sealy International, Inc., a Delaware corporation, together with its subsidiaries, is a U.S. based, multinational company. The term "Tempur Sealy International" refers to Tempur Sealy International, Inc. only, and the term "Company" refers to Tempur Sealy International, Inc. and its consolidated subsidiaries.

The Company develops, manufactures, markets and sells bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories. The Company also derives income from royalties by licensing Sealy® and Stearns & Foster® brands, technology and trademarks to other manufacturers. The Company sells its products through two sales channels: Wholesale and Direct.

The Company has ownership interests in a group of Asia-Pacific joint ventures to develop markets for Sealy® branded products in those regions. The Company’s ownership interest in these joint ventures is 50.0%. The equity method of accounting is used for these joint ventures, over which the Company has significant influence but does not have control, and consolidation is not otherwise required. The Company's carrying value in its equity method investments of $16.0 million and $22.5 million at September 30, 2020 and December 31, 2019, respectively, is recorded in other non-current assets within the accompanying Condensed Consolidated Balance Sheets. The Company’s equity in the net income and losses of these investments is reported in equity income in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income. Additionally, in October 2020, the Company entered into a 50.0% ownership joint venture to reacquire the rights and acquire the assets to manufacture, market and distribute Sealy® and Stearns & Foster® branded products in the United Kingdom.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and include all of the information and disclosures required by generally accepted accounting principles in the United States ("GAAP") for interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2019, included in the 2019 Annual Report filed with the Securities and Exchange Commission on February 21, 2020.
 
The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. It is the opinion of management that all necessary adjustments for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

(b) Adoption of New Accounting Standards.

Goodwill. Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") No. 2017-04, "Intangibles - Goodwill and Other (Topic 350)." The ASU simplifies the test for goodwill impairment, by eliminating Step 2 of the impairment test. Under ASU 2017-04, the goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill for the reporting unit. Adoption of this guidance did not have an impact on the Company's financial statements.

Credit Losses. Effective January 1, 2020, the Company adopted ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326)," which requires entities to estimate expected lifetime credit losses on financial assets and provide expanded disclosures. The ASU replaces the incurred loss impairment methodology with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the new credit losses standard using the modified retrospective approach. The cumulative effect of adoption at January 1, 2020 was $6.5 million, net of tax. The Company's primary financial assets are its trade accounts receivable, which are short-term financings with industry standard credit and trade terms.

11

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
(c) Inventories. Inventories are stated at the lower of cost and net realizable value, determined by the first-in, first-out method, and consist of the following:
September 30,December 31,
(in millions)20202019
Finished goods$139.4 $157.4 
Work-in-process12.1 10.8 
Raw materials and supplies124.1 92.3 
 $275.6 $260.5 

(d) Accrued Sales Returns. The Company allows product returns through certain sales channels and on certain products. Estimated sales returns are provided at the time of sale based on historical sales channel return rates. Estimated future obligations related to these products are provided by a reduction of sales in the period in which the revenue is recognized. The Company considers the impact of recoverable salvage value on sales returns by segment in determining its estimate of future sales returns. Accrued sales returns are included in accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

The Company had the following activity for sales returns from December 31, 2019 to September 30, 2020:
(in millions)
Balance as of December 31, 2019$39.3 
Amounts accrued81.6 
Returns charged to accrual(78.8)
Balance as of September 30, 2020$42.1 

As of September 30, 2020 and December 31, 2019, $29.0 million and $26.2 million of accrued sales returns are included as a component of accrued expenses and other current liabilities and $13.1 million and $13.1 million of accrued sales returns are included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

(e) Warranties. The Company provides warranties on certain products, which vary by segment, product and brand. Estimates of warranty expenses are based primarily on historical claims experience and product testing. Estimated future obligations related to these products are charged to cost of sales in the period in which the related revenue is recognized. The Company considers the impact of recoverable salvage value on warranty costs in determining its estimate of future warranty obligations.

The Company provides warranties on mattresses with varying warranty terms. Tempur-Pedic mattresses sold in the North America segment and all Sealy mattresses have warranty terms ranging from 10 to 25 years, generally non-prorated for the first 10 to 15 years and then prorated for the balance of the warranty term. Tempur-Pedic mattresses sold in the International segment have warranty terms ranging from 5 to 15 years, non-prorated for the first 5 years and then prorated on a straight-line basis for the last 10 years of the warranty term. Tempur-Pedic pillows have a warranty term of 3 years, non-prorated.

The Company had the following activity for its accrued warranty expense from December 31, 2019 to September 30, 2020:
(in millions)
Balance as of December 31, 2019$41.6 
Amounts accrued15.9 
Warranties charged to accrual(15.7)
Balance as of September 30, 2020$41.8 

As of September 30, 2020 and December 31, 2019, $18.8 million and $19.4 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $23.0 million and $22.2 million of accrued warranty expense is included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.
12

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

(f) Allowance for Credit Losses. The allowance for credit losses is the Company’s best estimate of the amount of expected lifetime credit losses in the Company’s accounts receivable. The Company estimates losses over the contractual life using assumptions to capture the risk of loss, even if remote, based principally on how long a receivable has been outstanding. Other factors considered include historical write-off experience, current economic conditions and also factors such as customer credit, past transaction history with the customer and changes in customer payment terms. The allowance for credit losses is included in accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets.

The Company had the following activity for its allowance for credit losses from December 31, 2019 to September 30, 2020:

(in millions)
Balance as of December 31, 2019
$71.9 
ASU 2016-13 adoption impact8.9 
Amounts accrued32.8 
Write-offs charged against the allowance(17.0)
Balance as of September 30, 2020
$96.6 

(2) Net Sales     

    The following table presents the Company's disaggregated revenue by channel, product and geographical region, including a reconciliation of disaggregated revenue by segment, for the three and nine months ended September 30, 2020:

Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
(in millions)North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Channel
Wholesale$869.1 $118.1 $987.2 $1,973.3 $300.0 $2,273.3 
Direct107.4 37.7 145.1 250.9 95.7 346.6 
Net sales$976.5 $155.8 $1,132.3 $2,224.2 $395.7 $2,619.9 
North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Product
Bedding$913.0 $123.6 $1,036.6 $2,086.3 $313.4 $2,399.7 
Other63.5 32.2 95.7 137.9 82.3 220.2 
Net sales$976.5 $155.8 $1,132.3 $2,224.2 $395.7 $2,619.9 
North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Geographical region
United States$904.3 $ $904.3 $2,078.8 $ $2,078.8 
Canada72.2  72.2 145.4  145.4 
International 155.8 155.8  395.7 395.7 
Net sales$976.5 $155.8 $1,132.3 $2,224.2 $395.7 $2,619.9 




13

Table of Contents
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
The following table presents the Company's disaggregated revenue by channel, product and geographical region, including a reconciliation of disaggregated revenue by segment, for the three and nine months ended September 30, 2019:

Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
(in millions)North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Channel
Wholesale$602.2 $107.9 $710.1 $1,632.5 $325.7 $1,958.2 
Direct79.8 31.1 110.9 181.6 94.9 276.5 
Net sales$682.0 $139.0 $821.0 $1,814.1 $