UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 21, 2005
TEMPUR-PEDIC INTERNATIONAL INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 001-31922 33-1022198
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
1713 Jaggie Fox Way
Lexington, Kentucky 40511
(Address of principal executive offices) (Zip Code)
(800) 878-8889
(Registrant's telephone number, including area code)
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N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 21, 2005, Tempur-Pedic International Inc. issued a press release to announce its financial results for the second quarter ended June 30, 2005, including certain non-GAAP financial results. This press release includes reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures and is furnished herewith as Exhibit 99.1 and incorporated by reference herein.
The information in this report (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
ITEM 7.01. REGULATION FD DISCLOSURE.
The information furnished under Item 2.02 of this Form 8-K, including Exhibit 99.1 furnished herewith, is hereby incorporated by reference under this Item 7.01 as if fully set forth herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
99.1. Press release dated July 21, 2005 titled "Tempur-Pedic International Achieves 47% Earnings Increase on 27% Net Sales Increase in Second Quarter of 2005."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 21, 2005
Tempur-Pedic International Inc.
By: /s/ Robert B. Trussell, Jr
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Name: Robert B. Trussell, Jr.
Title: Chief Executive Officer
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EXHIBIT INDEX
Exhibit Description
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99.1 Press release dated July 21, 2005, titled "Tempur-Pedic
International Achieves 47% Earnings Increase on 27% Net Sales
Increase in Second Quarter of 2005."
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Exhibit 99.1
TEMPUR-PEDIC INTERNATIONAL ACHIEVES 47% EARNINGS INCREASE ON 27%
NET SALES INCREASE IN SECOND QUARTER OF 2005
PRO FORMA NET INCOME INCREASES 38% TO $0.25 PER DILUTED SHARE, GAAP NET INCOME
INCREASES 47% TO $0.24 PER DILUTED SHARE
LEXINGTON, Ky., July 21 /PRNewswire-FirstCall/ -- Tempur-Pedic International Inc. (NYSE: TPX), the market-leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced net sales and earnings for the second quarter ended June 30, 2005.
Second Quarter 2005 Highlights
-- Pro forma net income rose 38% to $25.5 million, or $0.25 per diluted
share, from $18.4 million, or $0.18 per diluted share, in the second
quarter of 2004. The Company reported net income under GAAP of $24.8
million, or $0.24 per diluted share, compared to $16.9 million, or $0.16
per diluted share, in the second quarter of 2004, an increase in net
income of 47%.
-- Net sales rose 27% to $192.6 million from $151.6 million in the second quarter of 2004.
-- Operating margin increased to 23.2% from 21.8% in the second quarter of 2004.
-- The Company's retail channel continued its strong growth, with net sales rising 35% worldwide. Sales in the U.S. retail channel were especially strong, increasing 42%.
-- Worldwide, mattress net sales increased 40% on unit growth of 27%.
Chief Executive Officer Robert B. Trussell, Jr. commented, "Tempur-Pedic International delivered excellent second quarter results and strong growth in what is seasonally a slower period for the retail furniture industry. Our results were fueled by the ongoing expansion of our retail channel and sales of our premium mattresses, reflecting consumers' growing awareness of the comfort and sleep benefits our products offer. We continue to see the key elements of Tempur-Pedic's strategy - our superior products, unique marketing model and growing distribution - play a decisive role in the Company's impressive performance. By executing on our strategy, we believe Tempur-Pedic can deliver sustained growth and capitalize on the extraordinary market opportunity we have identified in the premium bedding category."
President H. Thomas Bryant continued, "During the second quarter, we added approximately 400 net furniture retail stores in the U.S. and approximately another 180 net internationally to our retail distribution channel, substantially exceeding our targets for the period. Equally important, we generated solid growth in our established accounts and are well on track to meet our goal of increasing sales from these accounts by 30-35% this year. The visco-elastic category we created is continuing to expand as more and more people become interested in our innovative and proprietary technology and growing array of products.
"Over the past three months, we made excellent progress with our new product introductions and other initiatives. 'The CelebrityBed by Tempur-Pedic(TM)' represented 20% of our mattress sales in the U.S. in the second quarter. Retailer interest in 'The EuroBed by Tempur-Pedic(TM)', which began shipping in July, has been outstanding. Our futon product is being well received by Japanese consumers and we began the second phase of the roll-out on schedule, shipping to bedding and futon stores throughout Japan.
"Our marketing campaign, which has been so successful in establishing the Tempur-Pedic brand, continued to serve as an engine for growth, improving our brand recognition worldwide. In fact, our most recent independent study shows that aided brand awareness in the U.S. increased to 71% at the end of 2004 from 60% the previous year. Construction of our new manufacturing facility in Albuquerque, New Mexico proceeds on schedule and on budget. We look forward to beginning operations in the second quarter of 2006. The new factory will help us satisfy demand in North America, our largest single market, quickly and cost-effectively.
"Finally, during the quarter we were pleased to receive the prestigious Ease-of-Use Commendation from the Arthritis Foundation for our adjustable base and three mattresses - the Tempur-Pedic Classic Swedish Mattress, the Tempur-Pedic Deluxe Swedish Mattress and 'The CelebrityBed by Tempur- Pedic(TM)'. We are very gratified that our mattresses are the first to be recognized by the Arthritis Foundation, whose Ease-of-Use program identifies products that improve the quality of life for the many people suffering from arthritis. The commendation is additional evidence of the comfort and support our proprietary TEMPUR(R) material provides."
For a complete discussion of pro forma adjustments, see the Supplemental Information included later in this press release.
2005 Guidance
The Company is confirming the full-year guidance it previously provided for
2005. The Company currently expects net sales for 2005 to range from $880
million -- $890 million and pro forma diluted net income to range from $1.10 -
$1.13. It expects GAAP diluted earnings per share to range from $1.08 - $1.11.
The Company notes that its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company's control.
Conference Call Information
As previously announced, Tempur-Pedic International will host a live
conference call featuring Chief Executive Officer Robert Trussell, Jr.,
President H. Thomas Bryant, and Chief Financial Officer Dale Williams to discuss
second quarter financial results today, July 21, 2005 at 5:00 p.m. Eastern Time
(2 p.m. Pacific Time). The dial-in number for the conference call is
706-634-0167. The call is also being webcast, and can be accessed at
http://www.tempurpedic.com/ir.
For those who cannot listen to the live broadcast, a replay of the call will be available from July 21, 2005 at 8:00 p.m. Eastern Time through July 28, 2005. To listen to the telephone replay, dial 706-645-9291, conference ID #6926996.
An archived webcast will also be available on the Tempur-Pedic International investor relations website at http://www.tempurpedic.com/ir.
Forward-Looking Statements
This release contains "forward-looking statements," which include
information concerning one or more of the Company's plans, objectives, goals,
strategies, future revenues and performance, capital expenditures, financing
needs and other information that is not historical information. When used in
this release, the words "estimates," "expects," "anticipates," "projects,"
"plans," "intends," "believes," and variations of such words or similar
expressions are intended to identify forward-looking statements. All
forward-looking statements, including without limitation, management's
expectations regarding continued growth and its net sales and pro forma and GAAP
net income for 2005, the construction of its Albuquerque facility and the timing
of new products, are based upon current expectations and beliefs and various
assumptions. There can be no assurance that the Company will realize these
expectations or that these beliefs will prove correct.
There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from those expressed as forward-looking statements. Certain of these risk factors are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's annual report on Form 10-K under the headings "Special Note Regarding Forward-Looking Statements" and "Business-Risk Factors". Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward- looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
About the Company
Tempur-Pedic International Inc. (NYSE: TPX) manufactures and distributes
Swedish Mattresses and Neck Pillows(TM) made from its proprietary TEMPUR(R)
pressure-relieving material: a visco-elastic material that conforms to the
body to provide support and help alleviate pressure points. Products are
currently sold in 60 countries under the TEMPUR(R) and Tempur-Pedic(R) brand
names. World headquarters for Tempur-Pedic International are in Lexington, KY.
For more information, visit http://www.tempurpedic.com or call 800-805-3635.
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
2005 2004 Chg % 2005 2004 Chg %
---------- ---------- ---------- ---------- ---------- ----------
Net sales $ 192,615 $ 151,600 27% $ 414,994 $ 304,723 36%
Cost of sales 94,080 70,787 202,216 142,571
Gross profit 98,535 80,813 22% 212,778 162,152 31%
Selling expenses 38,149 31,653 83,118 66,608
General and
administrative
expenses 15,276 15,929 34,366 31,291
Research and
development
expenses 513 242 1,317 730
Operating Income 44,597 32,989 35% 93,977 63,523 48%
Other income
(expense), net:
Interest expense,
net (4,864) (5,551) (10,227) (11,645)
Loss on debt
extinguishment - - (717) (5,381)
Other income
(expense), net 412 116 327 196
Total other
expense, net (4,452) (5,435) (10,617) (16,830)
Income before
income taxes 40,145 27,554 83,360 46,693
Income tax
provision 15,295 10,608 31,760 17,977
Net income $ 24,850 $ 16,946 47% $ 51,600 $ 28,716 80%
Basic earnings
per share $ 0.25 $ 0.17 $ 0.52 $ 0.29
Diluted earnings
per share $ 0.24 $ 0.16 $ 0.50 $ 0.28
Dilutive weighted
average shares
outstanding
(in thousands) 103,431 103,119 103,315 103,010
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Supplemental Information
Pro Forma Net Income and Other Financial Data
To further provide investors useful information, pro forma net income is
presented and represents the Company's GAAP net income before non-cash
stock-based compensation expense of $0.7 million and $1.5 million for the three
months ended June 30, 2005 and 2004, respectively, and $1.4 million and $3.0
million for the six months ended June 30, 2005 and 2004 respectively. In
addition, for the six months ended June 30, 2004, GAAP net income includes, and
pro forma net income excludes, a loss on debt extinguishment totaling $3.3
million, net of tax, relating to the Company's redemption in January 2004 of
$52.5 million aggregate principal amount of the outstanding 10-1/4% Senior
Subordinated Notes due 2010, issued by its subsidiaries Tempur-Pedic, Inc. and
Tempur Production USA, Inc.
The Company believes that excluding non-cash stock-based compensation expense and loss on debt extinguishment provides a measure that is more representative of ongoing costs and therefore more comparable to the Company's historical operations. The following is a reconciliation of GAAP net income to pro forma net income and per share amounts:
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Pro Forma Net Income, and Other Financial Data
($ in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
GAAP net income $ 24,850 $ 16,946 $ 51,600 $ 28,716
Non-cash stock-based
compensation expense 655 1,490 1,430 2,990
Loss on debt
extinguishment, net of tax - - - 3,309
Pro forma net income $ 25,505 $ 18,436 $ 53,030 $ 35,015
GAAP net income per
share, diluted $ 0.24 $ 0.16 $ 0.50 $ 0.28
Pro forma net income per
share, diluted $ 0.25 $ 0.18 $ 0.51 $ 0.34
Other financial data
Depreciation and
amortization $ 6,825 $ 7,065 $ 14,239 $ 13,965
Net debt $ 264,441 $ 286,435 $ 264,441 $ 286,435
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Summary of Channel Sales
The Company generates sales through four distribution channels: retail,
direct, healthcare and third party. The retail channel sells to furniture,
specialty and department stores globally. The direct channel sells directly to
consumers. The healthcare channel sells to hospitals, nursing homes, healthcare
professionals and medical retailers. The third party channel sells to
distributors in countries where Tempur-Pedic International does not operate its
own distribution company.
The following table highlights net sales information, by channel and by segment, for the second quarter of 2005 compared to 2004:
($ in thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30
----------------------- ----------------------- -----------------------
2005 2004 2005 2004 2005 2004
---------- ---------- ---------- ---------- ---------- ----------
By Sales Channel
Retail $ 143,642 $ 106,073 $ 97,109 $ 68,515 $ 46,533 $ 37,558
Direct 26,166 22,821 22,222 18,932 3,944 3,889
Healthcare 10,605 10,403 2,594 2,587 8,011 7,816
Third Party 12,202 12,303 2,129 1,705 10,073 10,598
Total $ 192,615 $ 151,600 $ 124,054 $ 91,739 $ 68,561 $ 59,861
By Segment
Domestic $ 124,054 $ 91,739
International 68,561 59,861
Total $ 192,615 $ 151,600
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Summary of Product Sales
A summary of net sales by product is reported below:
($ in thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30
----------------------- ----------------------- -----------------------
2005 2004 2005 2004 2005 2004
---------- ---------- ---------- ---------- ---------- ----------
Net Sales
Mattresses $ 130,788 $ 93,176 $ 91,022 $ 64,951 $ 39,766 $ 28,225
Pillows 28,579 32,393 12,010 10,496 16,569 21,897
Other 33,248 26,031 21,022 16,292 12,226 9,739
Total $ 192,615 $ 151,600 $ 124,054 $ 91,739 $ 68,561 $ 59,861
Units Sold(1)
Mattresses 152,837 120,773 86,436 70,572 66,401 50,201
Pillows 585,257 695,606 252,327 210,036 332,930 485,570
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(1) Units sold represent net sales after consideration of returned mattresses and pillows and excludes units shipped to fulfill warranty claims and promotional activities.
SOURCE Tempur-Pedic International Inc.
-0- 07/21/2005
/CONTACT: Tempur-Pedic International, 1-800-805-3635 /
/Web site: http://www.tempurpedic.com /