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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 March 31, 2021
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 May 3, 2021 was 196,951,341 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 are based upon our expectations and beliefs and various assumptions. 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; 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, 2020 (the "2020 Annual 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.

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; "2026 Senior Notes" refers to the 5.50% senior notes due 2026 issued in 2016; and "2029 Senior Notes" refers to the 4.00% senior notes due 2029 issued in 2021.
2


TABLE OF CONTENTS
 
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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 Ended
 March 31,
 20212020
Net sales$1,043.8 $822.4 
Cost of sales584.9 465.3 
Gross profit458.9 357.1 
Selling and marketing expenses197.7 171.0 
General, administrative and other expenses79.5 80.6 
Equity (income) loss in earnings of unconsolidated affiliates(6.7)0.2 
Operating income188.4 105.3 
Other expense, net:
Interest expense, net12.3 20.3 
Loss on extinguishment of debt5.0  
Other (income) expense, net(0.3)0.5 
Total other expense, net17.0 20.8 
Income from continuing operations before income taxes 171.4 84.5 
Income tax provision(40.5)(23.5)
Income from continuing operations130.9 61.0 
Loss from discontinued operations, net of tax(0.2)(1.2)
Net income before non-controlling interests130.7 59.8 
Less: Net income attributable to non-controlling interests0.2 0.1 
Net income attributable to Tempur Sealy International, Inc.$130.5 $59.7 
Earnings per common share:
Basic
Earnings per share for continuing operations$0.64 $0.28 
Loss per share for discontinued operations  
Earnings per share$0.64 $0.28 
Diluted
Earnings per share for continuing operations$0.62 $0.28 
Loss per share for discontinued operations  
Earnings per share$0.62 $0.28 
Weighted average common shares outstanding:
Basic203.7 213.6 
Diluted210.1 216.0 

See accompanying Notes to Condensed Consolidated Financial Statements. 
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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in millions)
(unaudited)
Three Months Ended
March 31,
 20212020
Net income before non-controlling interests$130.7 $59.8 
Other comprehensive income, net of tax:
Foreign currency translation adjustments(10.8)(23.0)
Other comprehensive loss, net of tax(10.8)(23.0)
Comprehensive income119.9 36.8 
Less: Comprehensive income attributable to non-controlling interests0.2 0.1 
Comprehensive income attributable to Tempur Sealy International, Inc.$119.7 $36.7 
 
See accompanying Notes to Condensed Consolidated Financial Statements.


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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
 March 31, 2021December 31, 2020
ASSETS(Unaudited)
Current Assets:
Cash and cash equivalents$290.5 $65.0 
Accounts receivable, net397.4 383.7 
Inventories318.8 312.1 
Prepaid expenses and other current assets207.6 207.6 
Total Current Assets1,214.3 968.4 
Property, plant and equipment, net509.0 507.9 
Goodwill765.2 766.3 
Other intangible assets, net626.8 630.1 
Operating lease right-of-use assets294.1 304.3 
Deferred income taxes13.7 13.5 
Other non-current assets119.0 118.1 
Total Assets$3,542.1 $3,308.6 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current Liabilities:  
Accounts payable$278.6 $324.1 
Accrued expenses and other current liabilities546.2 585.1 
Current portion of long-term debt37.7 43.9 
Income taxes payable33.2 21.7 
Total Current Liabilities895.7 974.8 
Long-term debt, net1,822.4 1,323.0 
Long-term operating lease obligations266.2 275.1 
Deferred income taxes98.2 90.4 
Other non-current liabilities132.4 131.8 
Total Liabilities3,214.9 2,795.1 
Redeemable non-controlling interest8.9 8.9 
Total Stockholders' Equity318.3 504.6 
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity$3,542.1 $3,308.6 
 
See accompanying Notes to Condensed Consolidated Financial Statements. 


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

Three Months Ended March 31, 2021
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, 2020
$8.9 283.8 $2.8 78.9 $(2,096.8)$617.5 $2,045.6 $(65.5)$1.0 $504.6 
Net income130.5 130.5 
Net income attributable to non-controlling interests— 0.2 0.2 
Foreign currency adjustments, net of tax(10.8)(10.8)
Exercise of stock options(0.4)10.9 (4.3)6.6 
Dividends on common stock ($0.07 per share)
(14.8)(14.8)
Issuances of PRSUs, RSUs, and DSUs
(1.5)38.3 (38.3) 
Treasury stock repurchased
8.4 (299.8)(299.8)
Treasury stock repurchased - PRSU/RSU releases0.5 (13.3)(13.3)
Amortization of unearned stock-based compensation
15.1 15.1 
Balance, March 31, 2021
$8.9 283.8 $2.8 85.9 $(2,360.7)$590.0 $2,161.3 $(76.3)$1.2 $318.3 

Three Months Ended March 31, 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
$ 283.8 $2.8 75.1 $(1,832.8)$573.9 $1,703.3 $(87.7)$0.9 $360.4 
Adoption of accounting standard effective January 1, 2020, net of tax(6.5)(6.5)
Net income59.7 59.7 
Net income attributable to non-controlling interests0.1 0.1 
Acquisition of non-controlling interest in subsidiary8.4— 
Foreign currency adjustments, net of tax(23.0)(23.0)
Exercise of stock options0.3 1.0 1.3 
Issuances of PRSUs, RSUs, and DSUs
(0.4)5.3 (5.3) 
Treasury stock repurchased
2.6 (187.5)(187.5)
Treasury stock repurchased - PRSU/RSU releases0.1 (11.8)(11.8)
Amortization of unearned stock-based compensation
7.3 7.3 
Balance, March 31, 2020
$8.4 283.8 $2.8 77.4 $(2,026.5)$576.9 $1,756.5 $(110.7)$1.0 $200.0 

See accompanying Notes to Condensed Consolidated Financial Statements.
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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions) (unaudited)
 Three Months Ended
 March 31,
 20212020
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:
Net income before non-controlling interests$130.7 $59.8 
Loss from discontinued operations, net of tax0.2 1.2 
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Depreciation and amortization26.5 23.2 
Amortization of stock-based compensation15.1 7.3 
Amortization of deferred financing costs0.6 0.7 
Bad debt expense2.5 15.7 
Deferred income taxes7.1 3.0 
Dividends received from unconsolidated affiliates2.5  
Equity (income) loss in earnings of unconsolidated affiliates(6.7)0.2 
Loss on extinguishment of debt1.5  
Foreign currency adjustments and other0.1 0.6 
Changes in operating assets and liabilities, net of effect of business acquisitions(93.8)(96.7)
Net cash provided by operating activities from continuing operations86.3 15.0 
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS:  
Purchases of property, plant and equipment(23.5)(26.2)
Acquisitions, net of cash acquired(1.0)(37.9)
Other0.1 0.1 
Net cash used in investing activities from continuing operations(24.4)(64.0)
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:  
Proceeds from borrowings under long-term debt obligations1,653.4 611.1 
Repayments of borrowings under long-term debt obligations(1,148.6)(231.0)
Proceeds from exercise of stock options6.6 1.3 
Treasury stock repurchased(313.1)(199.3)
Dividends paid(14.3) 
Payments of deferred financing costs(12.7) 
Repayments of finance lease obligations and other(2.4)6.0 
Net cash provided by financing activities from continuing operations168.9 188.1 
Net cash provided by continuing operations230.8 139.1 
Net operating cash flows used in discontinued operations(0.4)(1.1)
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(4.9)(5.9)
Increase in cash and cash equivalents225.5 132.1 
CASH AND CASH EQUIVALENTS, beginning of period65.0 64.9 
CASH AND CASH EQUIVALENTS, end of period$290.5 $197.0 
Supplemental cash flow information:  
Cash paid during the period for:  
Interest$8.3 $6.4 
Income taxes, net of refunds$20.2 $6.3 
See accompanying Notes to Condensed Consolidated Financial Statements.
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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 designs, manufactures and distributes 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 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, 2020, included in the 2020 Annual Report filed with the Securities and Exchange Commission on February 19, 2021.
 
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) 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:
March 31,December 31,
(in millions)20212020
Finished goods$171.3 $170.2 
Work-in-process10.6 12.6 
Raw materials and supplies136.9 129.3 
 $318.8 $312.1 

(c) 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, 2020 to March 31, 2021:
(in millions)
Balance as of December 31, 2020$44.9 
Amounts accrued36.7 
Returns charged to accrual(33.4)
Balance as of March 31, 2021$48.2 
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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

As of March 31, 2021 and December 31, 2020, $33.8 million and $31.6 million of accrued sales returns are included as a component of accrued expenses and other current liabilities and $14.4 million and $13.3 million of accrued sales returns are included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

(d) 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, 2020 to March 31, 2021:
(in millions)
Balance as of December 31, 2020$44.2 
Amounts accrued5.8 
Warranties charged to accrual(5.7)
Balance as of March 31, 2021$44.3 

As of March 31, 2021 and December 31, 2020, $20.8 million and $20.3 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $23.5 million and $23.9 million of accrued warranty expense is included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

(e) 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 regularly reviews the adequacy of its allowance for credit losses. 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. Account balances are charged off against the allowance for credit losses after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. As of March 31, 2021, the Company's accounts receivable were substantially current. 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, 2020 to March 31, 2021:

(in millions)
Balance as of December 31, 2020
$71.6 
Amounts accrued2.5 
Write-offs charged against the allowance(1.6)
Balance as of March 31, 2021
$72.5 






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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
(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 months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021Three Months Ended March 31, 2020
(in millions)North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Channel
Wholesale$765.5 $115.9 $881.4 $624.7 $97.7 $722.4 
Direct117.8 44.6 162.4 67.6 32.4 100.0 
Net sales$883.3 $160.5 $1,043.8 $692.3 $130.1 $822.4 
North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Product
Bedding$830.3 $121.7 $952.0 $654.9 $101.5 $756.4 
Other53.0 38.8 91.8 37.4 28.6 66.0 
Net sales$883.3 $160.5 $1,043.8 $692.3 $130.1 $822.4 
North AmericaInternationalConsolidatedNorth AmericaInternationalConsolidated
Geographical region
United States$818.5 $ $818.5 $632.5 $ $632.5 
All Other64.8 160.5 225.3 59.8 130.1 189.9 
Net sales$883.3 $160.5 $1,043.8 $692.3 $130.1 $822.4 

(3) Acquisitions
Acquisition of Sherwood Bedding
On January 31, 2020, the Company acquired an 80% ownership interest in a newly formed limited liability company containing substantially all of the assets of the Sherwood Bedding business for a cash purchase price of approximately $39.1 million, which included $1.2 million of cash acquired.
The Company accounted for this transaction as a business combination. The final allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of January 31, 2020, which included the following:
(in millions)
Working capital (accounts receivable and inventory, net of accounts payable and accrued liabilities)$5.8 
Property and equipment10.1 
Goodwill26.7 
Customer relationships intangible assets3.7 
Operating lease right-of-use assets19.9 
Operating lease liabilities(19.9)
Redeemable non-controlling interest(8.4)
Purchase price, net of cash acquired$37.9 

Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the private label product growth opportunities and expected synergistic manufacturing benefits to be realized from the acquisition. The goodwill is deductible for income tax purposes and is included within the North American reporting unit for goodwill impairment assessments.
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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
(4) Goodwill
The following summarizes changes to the Company’s goodwill, by segment:
(in millions) North AmericaInternationalConsolidated
Balance as of December 31, 2020$610.3 $156.0 $766.3 
Foreign currency translation and other1.6 (2.7)(1.1)
Balance as of March 31, 2021$611.9 $153.3 $765.2 

(5) Debt

Debt for the Company consists of the following:
March 31, 2021December 31, 2020
(in millions, except percentages)AmountRateAmountRateMaturity Date
2019 Credit Agreement:
Term A Facility$398.4 (1)$409.1 (2)October 16, 2024
Revolver (1) (2)October 16, 2024
2029 Senior Notes800.0 4.00% N/AApril 15, 2029
2026 Senior Notes600.0 5.500%600.0 5.500%June 15, 2026
2023 Senior Notes N/A250.0 5.625%October 15, 2023
Securitized debt (3)33.9 (4)April 6, 2023
Finance lease obligations (5)
69.7 71.4 Various
Other5.0 5.9 Various
Total debt1,873.1 1,370.3 
Less: Deferred financing costs13.0 3.4 
Total debt, net1,860.1 1,366.9 
Less: Current portion37.7 43.9 
Total long-term debt, net$1,822.4 $1,323.0 

(1)
Interest at LIBOR plus applicable margin of 1.250% as of March 31, 2021.
(2)
Interest at LIBOR plus applicable margin of 1.250% as of December 31, 2020.
(3)
Interest at one month LIBOR index plus 70 basis points.
(4)
Interest at one month LIBOR index plus 80 basis points.
(5)
New finance lease obligations are a non-cash financing activity. Refer to Note 6, "Leases".

As of March 31, 2021, the Company was in compliance with all applicable debt covenants.

2019 Credit Agreement

On October 16, 2019, the Company entered into the 2019 Credit Agreement with a syndicate of banks. The 2019 Credit Agreement provides for a $425.0 million revolving credit facility, a $425.0 million term loan facility, and an incremental facility in an aggregate amount of up to $550.0 million plus the amount of certain prepayments plus an additional unlimited amount subject to compliance with a maximum consolidated secured leverage ratio test. The 2019 Credit Agreement has a $60.0 million sub-facility for the issuance of letters of credit.

On February 2, 2021, the Company entered into an amendment to the 2019 Credit Agreement. The amendment increased the revolving credit facility from $425.0 million to $725.0 million. As of March 31, 2021, total availability under the revolving credit facility was $724.9 million after a $0.1 million reduction for outstanding letters of credit.

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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
Securitized Debt

The Company and certain of its subsidiaries are party to a securitization transaction with respect to certain accounts receivable due to the Company and certain of its subsidiaries (as amended, the "Accounts Receivable Securitization"). As of March 31, 2021, the Company had availability of $87.2 million under the Accounts Receivable Securitization. On April 6, 2021, the Company and certain of its subsidiaries entered into a new amendment to the Accounts Receivable Securitization. The amendment, among other things, extended the maturity date of the Accounts Receivable Securitization to April 6, 2023 and increased the overall limit from $120.0 million to $200.0 million.

2029 Senior Notes

On March 25, 2021, Tempur Sealy International issued $800.0 million in aggregate principal amount of 4.00% senior notes due 2029 (the "2029 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The 2029 Senior Notes were issued pursuant to an indenture, dated as of March 25, 2021 (the "2029 Indenture"), among Tempur Sealy International, certain subsidiaries of Tempur Sealy International as guarantors (the "Guarantors"), and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2029 Senior Notes are general unsecured senior obligations of Tempur Sealy International and are guaranteed on a senior unsecured basis by the Guarantors. The 2029 Senior Notes mature on April 15, 2029, and interest is payable semi-annually in arrears on each April 15 and October 15, beginning on October 15, 2021.

Tempur Sealy International has the option to redeem all or a portion of the 2029 Senior Notes at any time on or after April 15, 2024. The initial redemption price is 102.000% of the principal amount, plus accrued and unpaid interest, if any. The redemption price will decline each year after 2024 until it becomes 100.0% of the principal amount beginning on April 15, 2026. In addition, Tempur Sealy International has the option at any time prior to April 15, 2024 to redeem some or all of the 2029 Senior Notes at 100.0% of the original principal amount plus a “make-whole” premium and accrued and unpaid interest, if any. Tempur Sealy International may also redeem up to 40.0% of the 2029 Senior Notes prior to April 15, 2024, under certain circumstances with the net cash proceeds from certain equity offerings, at 104.000% of the principal amount plus accrued and unpaid interest, if any. Tempur Sealy International may make such redemptions as described in the preceding sentence only if, after any such redemption, at least 60.0% of the original aggregate principal amount of the 2029 Senior Notes issued remains outstanding.

The 2029 Indenture restricts the ability of Tempur Sealy International and the ability of certain of its subsidiaries to, among other things: (i) incur, directly or indirectly, debt; (ii) make, directly or indirectly, certain investments and restricted payments; (iii) incur or suffer to exist, directly or indirectly, liens on its properties or assets; (iv) sell or otherwise dispose of, directly or indirectly, assets; (v) create or otherwise cause or suffer to exist any consensual restriction on the right of certain of the subsidiaries of Tempur Sealy International to pay dividends or make any other distributions on or in respect of their capital stock; and (vi) enter into transactions with affiliates. These covenants are subject to a number of exceptions and qualifications.

As a result of the issuance of the 2029 Senior Notes, $11.4 million of deferred financing costs were capitalized in the first quarter of 2021 and will be amortized as interest expense over the respective debt instrument period, 8 years, using the effective interest method.

2026 Senior Notes

On April 28, 2021, the Company announced its election to conditionally redeem the $600.0 million issued and outstanding 2026 Senior Notes, in full, on June 15, 2021 (the "Redemption Date"). The 2026 Senior Notes will be redeemed at 102.750% of their principal amount, plus the accrued and unpaid interest. The redemption is conditional on the determination by the Company's Chief Financial Officer, in his sole discretion, as of the second business day before the Redemption Date, that the redemption continues to be reasonably prudent and consistent with the Company's objectives concerning liquidity, financing needs and funding costs. The Company intends to use net proceeds from the 2029 Senior Notes primarily to fund the redemption.

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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
2023 Senior Notes

On November 9, 2020, the Company redeemed the first $200.0 million of the issued and outstanding 2023 Senior Notes at 101.406% of the principal amount, plus the accrued and unpaid interest. During the first quarter of 2021, the Company redeemed the remaining $250.0 million of the issued and outstanding 2023 Senior Notes at 101.406% of the principal amount, plus the accrued and unpaid interest. In the first quarter of 2021, the Company recognized $5.0 million of loss on extinguishment of debt, which includes a prepayment premium of $3.5 million and the write-off of $1.5 million of deferred financing costs, associated with the redemption of the remaining amount outstanding of the 2023 Senior Notes.

Fair Value of Financial Instruments

Financial instruments, although not recorded at fair value on a recurring basis, include cash and cash equivalents, accounts receivable, accounts payable and the Company's debt obligations. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of those instruments. Borrowings under the 2019 Credit Agreement and the securitized debt are at variable interest rates and accordingly their carrying amounts approximate fair value. The fair value of the following material financial instruments were based on observable inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of debt instruments. The fair values of these material financial instruments are as follows:
Fair Value
(in millions)March 31, 2021December 31, 2020
2023 Senior Notes$ $255.1 
2026 Senior Notes625.2 625.4 
2029 Senior Notes798.2  

(6) Leases

The following table summarizes the classification of operating and finance lease assets and obligations in the Company's Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020:

(in millions)March 31, 2021December 31, 2020
Assets
Operating lease assetsOperating lease right-of-use assets$294.1 $304.3 
Finance lease assetsProperty, plant and equipment, net59.4 61.2 
Total leased assets$353.5 $365.5 
Liabilities
Short-term:
Operating lease obligationsAccrued expenses and other current liabilities$61.2 $61.0 
Finance lease obligationsCurrent portion of long-term debt11.4 11.4 
Long-term:
Operating lease obligationsLong-term operating lease obligations266.2 275.1 
Finance lease obligationsLong-term debt, net58.3 60.0 
Total lease obligations$397.1 $407.5 

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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
The following table summarizes the classification of lease expense in the Company's Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and 2020:

Three Months Ended
March 31,
(in millions)20212020
Operating lease expense:
Operating lease expense$19.4 $18.0 
Short-term lease expense3.9 3.2 
Variable lease expense6.4 5.3 
Finance lease expense:
Amortization of right-of-use assets2.8 2.2 
Interest on lease obligations1.1 1.2 
Total lease expense$33.6 $29.9 

The following table sets forth the scheduled maturities of lease obligations as of March 31, 2021:

(in millions)Operating LeasesFinance LeasesTotal
Year Ended December 31,
2021 (excluding the three months ended March 31, 2021)
$55.5 $11.6 $67.1 
202268.3 13.7 82.0 
202356.3 11.0 67.3 
202446.7 8.8 55.5 
202540.0 7.8 47.8 
Thereafter117.1 34.3 151.4 
Total lease payments383.9 87.2 471.1 
Less: Interest56.5 17.5 74.0 
Present value of lease obligations$327.4 $69.7 $397.1 

The following table provides lease term and discount rate information related to operating and finance leases as of March 31, 2021:
March 31, 2021
Weighted average remaining lease term (years):
Operating leases6.61
Finance leases7.75
Weighted average discount rate:
Operating leases4.92 %
Finance leases5.75 %

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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
The following table provides supplemental information related to the Company's Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020:
Three Months Ended
(in millions)March 31, 2021March 31, 2020
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows paid for operating leases (a)
$18.2 $17.3 
Operating cash flows paid for finance leases$1.1 $1.2 
Financing cash flows paid for finance leases$2.4 $2.3 
Right-of-use assets obtained in exchange for new operating lease obligations$9.2 $35.6 
Right-of-use assets obtained in exchange for new finance lease obligations$1.2 $8.2 

(a) Operating cash flows paid for operating leases are included within the change in other assets and liabilities within the Condensed Consolidated Statement of Cash Flows offset by non-cash right-of-use asset amortization and lease liability accretion.
(7) Stockholders' Equity
 
(a) Treasury Stock. On February 11, 2021, the Board of Directors authorized an increase, of $211.4 million, to the existing share repurchase authorization of Tempur Sealy International's common stock. The Company repurchased 8.4 million and 2.6 million shares, under the program, for approximately $299.8 million and $187.5 million during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the Company had approximately $113.2 million remaining under its share repurchase authorization. On April 29, 2021, the Company announced that its Board of Directors authorized an increase to the share repurchase authorization bringing the total authorization to $400.0 million.

In addition, the Company acquired shares upon the vesting of certain restricted stock units ("RSUs") and performance restricted stock units ("PRSUs"), which were withheld to satisfy tax withholding obligations during each of the three months ended March 31, 2021 and 2020. The shares withheld were valued at the closing price of the stock on the New York Stock Exchange on the vesting date or first business day prior to vesting, resulting in approximately $13.3 million and $11.8 million in treasury stock acquired during the three months ended March 31, 2021 and 2020, respectively.


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TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)
(b) AOCL. AOCL consisted of the following:
Three Months Ended
 March 31,
(in millions)20212020
Foreign Currency Translation
Balance at beginning of period$(58.6)$(82.2)
Other comprehensive loss:
Foreign currency translation adjustments (1)
(10.8)(23.0)
Balance at end of period$(69.4)$(105.2)
Pensions
Balance at beginning of period$(6.9)$(5.5)
Other comprehensive loss:
Net change from period revaluations 0.1 
Tax expense (2)
 (0.1)
Total other comprehensive income before reclassifications, net of tax$ $ 
Net amount reclassified to earnings (1)
  
Tax benefit (2)
  
Total amount reclassified from accumulated other comprehensive loss, net of tax$ $ 
Total other comprehensive loss  
Balance at end of period$(6.9)$(5.5)

(1)
In 2021 and 2020, there were no tax impacts related to foreign currency translation adjustments and no amounts were reclassified to earnings.
(2)These amounts were included in the income tax provision in the accompanying Condensed Consolidated Statements of Income.

(8) Other Items

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:

(in millions)March 31, 2021December 31, 2020
Taxes$145.0 $150.4 
Wages and benefits68.1 102.5 
Advertising61.3 74.4 
Operating lease obligations61.2 61.0 
Other210.6 196.8 
$