Tempur-Pedic International Third Quarter 2005 Net Sales Rise 13% to $206.1 Million; Company Announces Share Repurchase Program.LEXINGTON Lexington. 1 City (1990 pop. 225,366), seat of Fayette co., N central Ky., in the heart of the bluegrass region; inc. 1832, made coextensive with Fayette co. 1974. , Ky. -- Tempur-Pedic This article contains links, text or other information that has been inserted due to a business arrangement by the Wikimedia Foundation rather than the usual Wikipedia editing process. It may or may not comply with all of Wikipedia's normal editorial standards. International Inc. (NYSE NYSE See: New York Stock Exchange : TPX TPX - Terminal Productivity eXecutive ), the market-leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight and earnings for the third quarter ended September September: see month. 30, 2005, the adoption of a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, a refinancing Refinancing An extension and/or increase in amount of existing debt. of the Company's senior credit facility on improved terms and a plan to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. foreign earnings. Highlights --Net sales rose 13% to $206.1 million from $181.7 million in the third quarter of 2004. Retail channel sales worldwide increased 19%. Sales in the international retail channel were especially strong, increasing 31%. --The Company's Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an $80 million share repurchase program. --The Company closed on a new $340 million global senior credit facility with improved terms. --The Company is in process of completing the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of $115.0 million of foreign earnings related to the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act of 2004 and expects this to be completed by the end of October October: see month. 2005. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income rose 3% to $24.4 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $23.7 million, or $0.23 per diluted share, in the third quarter of 2004. The Company reported net income under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) of $17.4 million, or $0.17 per diluted share, compared to $22.4 million, or $0.22 per diluted share, in the third quarter of 2004, a decrease of 22%. GAAP results include a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. tax charge of $0.06 per fully diluted share for the repatriation of foreign earnings related to the American Jobs Creation Act of 2004. Chief Executive Officer Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. B. Trussell, Jr. commented, "Our financial results for the third quarter are in line with the top end of the range we provided in September 2005 and represent strong continued growth in our net sales compared to 2004. As we discussed last month, the retail environment softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. during the third quarter related to macro-economic factors that adversely affected net sales growth in our U.S. business. However, our international business showed considerable strength as a result of our new marketing initiatives and product launches." President H. Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Bryant Bry·ant , William Cullen 1794-1878. American poet, critic, and editor known especially for his early nature poems, such as "Thanatopsis" (1817) and "To a Waterfowl" (1821). added, "We continued expanding our furniture retail channel, adding approximately 270 net furniture stores in the U.S. and 190 net stores internationally. Our international results reflect continued strong demand for our premium products across our international markets. Sales growth in our U.S. retail established accounts slowed significantly in the third quarter. As we announced in September, based on our lowered growth expectations for the second half we expect annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. established account growth of 20 - 25% for 2005. Moreover, like many other companies in the furniture industry, during the third quarter we began experiencing impact on our net income from the rising costs of certain raw materials and fuel surcharges on transportation costs. "We have been accelerating the rollout of our newest mattress models in the U.S. 'The EuroBed by Tempur-Pedic(TM),' which we began shipping in July July: see month. , is already in approximately 24% of our retail accounts. 'The OriginalBed by Tempur-Pedic(TM),' which began shipping in late August, is in approximately 28% of our retail accounts. To date, retailer and consumer reaction to our new products has been excellent, and we continue to expect 'The OriginalBed by Tempur-Pedic(TM)' to considerably broaden our universe of consumers and expand our market share. "The Company's other new product initiatives are also proceeding well. We launched our Scandinavian Bed Collection, which was previously available only in the Nordic region, throughout Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and
the reception has been excellent. In September, we also launched a new
pillow pillow Medtalk A functional 'unit' used to assess the severity of orthopnea in Pts with CHF, which refers to the number of pillows a Pt needs to sleep comfortably. See Congestive heart failure. collection exclusively for Japan."Within our manufacturing and supply chain operations, we are focusing our efforts on generating productivity improvements and cost reductions. For example, we have made use of several new sourcing and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. initiatives, which we believe will result in additional cost savings and help us manage raw materials costs in the coming quarters. Regarding raw materials, we have not experienced a supply interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. to date in part because we source raw materials from multiple suppliers on a global basis and manufacture our own TEMPUR(R) material." For a complete discussion of pro forma adjustments, see the Supplemental Information included later in this press release. Share Repurchase Program The Board of Directors authorized the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to $80 million of shares of the Company's common stock. Stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. under this program may be made through open market transactions, negotiated purchases or otherwise, at times and in such amounts as management and a committee of the Board deem appropriate. The Company noted it will not purchase shares from insiders Insiders These are directors and senior officers of a corporation-in effect, those who have access to inside information about a company. An insider also is someone who owns more than 10% of the voting shares of a company. . The timing and actual number of shares repurchased will depend on a variety of factors including price, financing and regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and other market conditions. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. This share repurchase program may be limited, suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. or terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: at any time without prior notice. Financings The Company closed on a new global senior credit facility with Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. , N.A. as lead agent. The total facility is $340 million, comprised of a U.S. revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to of $200 million, a European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. revolver of $30 million and a European five-year term loan of $110 million. The terms of the new agreement include an approximately 100-basis point reduction in the interest margin charged on outstanding borrowings compared to the prior credit facility as well as favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. changes to the financial and non-financial covenants. The Company anticipates taking a one-time, non-cash write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of approximately $3.5 million in the fourth quarter related to deferred financing charges from its prior credit facility. In addition to the refinancing of its senior credit facility on more favorable terms, the Company expects to complete an industrial revenue bond financing for its New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). facility under construction. Under the terms of the proposed financing, Bernalillo County, New Mexico Bernalillo County is a county located in the U.S. state of New Mexico. As of 2000, the population was 556,678. The county seat is Albuquerque6. It is part of the Albuquerque, New Mexico Metropolitan Statistical Area. will issue $75 million of Taxable Variable Rate Industrial Revenue Bonds, supported by a letter of credit issued under the Company's new U.S. revolver. The closing of this financing is subject to completion of documentation and satisfaction of closing conditions and is expected to occur by the end of October 2005. Repatriation of Earnings The Company is in the process of repatriating approximately $115 million in foreign earnings related to the American Jobs Creation Act of 2004 (the Act). The Company expects this will be completed by the end of October 2005. Subject to obtaining certain foreign tax rulings, the Company expects to repatriate up to an additional $55 million in the fourth quarter of 2005, for a total $170 million repatriation plan. In the third quarter, the Company recorded a one-time charge related to the tax expense of approximately $6.5 million, or $0.06 per fully diluted share, for the repatriation plan which was finalized See finalization. in the third quarter. Proceeds from the repatriation will be reinvested in its U.S. operations consistent with the objectives of the Act. Planned uses include, among others, investment in its new Albuquerque Albuquerque (ăl`bəkûr'kē), city (1990 pop. 384,736), seat of Bernalillo co., W central N.Mex., on the upper Rio Grande; inc. 1890. production facility, U.S.-based advertising, hiring and training, and capital investment. 2005 Guidance The Company is confirming the full-year 2005 guidance it provided on September 19, 2005 for net sales and pro forma diluted net income per share. It currently expects net sales for 2005 to range between $845 million - $855 million and pro forma diluted net income per share to range from $1.05 - $1.07. It currently expects GAAP diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to range from $0.94 - 0.96 versus its previous guidance of $1.04 - 1.06. The change in guidance for GAAP diluted earnings per share takes into account a total charge of approximately $0.10 per share for the effects of the tax provision for the repatriation and the write-off of deferred financing costs related to the Company's prior credit facility. The Company notes that its guidance for pro forma and GAAP diluted earnings per share do not assume any benefit from a potential reduction in shares outstanding related to its share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and . 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 Tempur-Pedic International will host a live conference call with Chief Executive Officer Robert Trussell, Jr., President H. Thomas Bryant, and Chief Financial Officer Dale Williams Dale Williams is a Welsh professional football (soccer) player, currently unattached, but most recently with Shrewsbury Town F.C. Beginning his career as a trainee with Yeovil Town, Williams played just four minutes for the Somerset club, after coming on for Arron Davies in to discuss third quarter financial results today, October 20, 2005 at 5:00 p.m. Eastern Time (2:00 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 October 20, 2005 at 8:00 p.m. Eastern Time through October 27, 2005. To listen to the telephone replay, dial 706-645-9291, conference ID #1229662. An archived webcast will also be available on the Tempur-Pedic International investor relations Investor relations The process by which the corporation communicates with its investors. website at http://www.tempurpedic.com/ir. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains "forward-looking statements," within the meaning of federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including without limitation, management's expectations regarding its net sales and pro forma and GAAP net income for the full year 2005, anticipated sales growth in established accounts, the rollout and market acceptance of new products, plans to increase sales and reduce costs, the Company's intention to repurchase shares of its common stock from time to time under its share repurchase program, the planned industrial revenue bond financing and expectations regarding earnings repatriations, are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from those expressed as forward-looking statements. These risk factors include general economic and industry conditions and consumer confidence; uncertainties arising from global events; consumer acceptance of the Company's products; industry competition; the efficiency and effectiveness of the Company's advertising campaign and other marketing programs; the Company's ability to further penetrate the US retail furniture channel, continuously improve its product line, maintain efficient, timely and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. production and delivery of its products, and manage its growth; rising commodity costs; the market price for the Company's common stock prevailing from time to time; the nature of other investment opportunities presented to the Company from time to time; and the inability to obtain foreign tax rulings required to complete an additional repatriation of foreign earnings. Additional information concerning these and other risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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 for any reason, including to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances. About the Company Tempur-Pedic International Inc. (NYSE: TPX) manufactures and distributes 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 Alleviate To make something easier to be endured. Mentioned in: Kinesiology, Applied 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 earnings per share)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 Chg % 2005 2004 Chg %
-----------------------------------------------
Net sales $206,095 $181,737 13% $621,089 $486,460 28%
Cost of sales 103,577 85,657 305,793 228,228
-------- -------- -------- --------
Gross profit 102,518 96,080 7% 315,296 258,232 22%
Selling and marketing
expenses 41,590 34,911 124,708 101,519
General and
administrative
expenses 17,483 17,683 51,849 48,974
Research and
development
expenses 627 651 1,944 1,381
-------- -------- -------- --------
Operating income 42,818 42,835 0% 136,795 106,358 29%
Other income (expense),
net:
Interest expense, net (5,079) (6,220) (15,306) (17,865)
Loss on extinguishment
of debt - - (717) (5,381)
Other income (expense),
net (160) (175) 167 21
-------- -------- -------- --------
Total other expense (5,239) (6,395) (15,856) (23,225)
Income before income
taxes 37,579 36,440 120,939 83,133
Income tax provision 20,211 14,029 51,971 32,006
-------- -------- -------- --------
Net income $ 17,368 $ 22,411 -23% $ 68,968 $ 51,127 35%
======== ======== ======== ========
Earnings per share:
Basic $0.18 $0.23 $0.70 $0.52
Diluted $0.17 $0.22 $0.67 $0.50
Weighted average shares
outstanding:
Basic 99,090 97,763 98,770 97,601
Diluted 103,346 103,036 103,171 102,933
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES Consolidated Balance Sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (In thousands)
September 30, December 31,
2005 2004 Chg %
-------------------------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 52,401 $ 28,368
Accounts receivable, net 116,408 93,804
Inventories 87,159 66,162
Prepaid expenses and other current
assets 9,982 12,523
Income taxes receivable - 4,136
Deferred income taxes 9,140 8,853
-------- --------
Total current assets 275,090 213,846 29%
Property, plant and equipment, net 182,851 138,457
Goodwill 201,234 200,810
Other intangible assets, net 74,418 76,122
Deferred financing and other
non-current assets, net 8,960 10,388
-------- --------
Total assets $742,553 $639,623 16%
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 38,193 $ 34,771
Accrued expenses and other 56,694 55,600
Income taxes payable 23,540 -
Current portion of long-term debt 3,178 8,758
-------- --------
Total current liabilities 121,605 99,129 23%
Long-term debt 304,136 280,913
Deferred income taxes 43,149 43,771
Other non-current liabilities 1,823 2,189
-------- --------
Total liabilities 470,713 426,002 11%
Stockholders' Equity:
Common stock - $.01 par value,
300,000 shares authorized, 99,204
and 98,194 shares issued and
outstanding, respectively 992 982
Additional paid in capital 255,328 253,134
Deferred stock compensation -
net of amortization of $11,741 and
$9,429, respectively (2,767) (5,079)
Retained earnings (deficit) 16,345 (52,623)
Accumulated other comprehensive
income 1,942 17,207
-------- --------
Total stockholders' equity 271,840 213,621 27%
-------- --------
Total liabilities and stockholders'
equity $742,553 $639,623 16%
======== ========
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statement of Cash Flows (In thousands) (Unaudited)
Nine Months Ended
September 30,
2005 2004 Chg %
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 68,968 $ 51,127
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 18,815 16,938
Amortization of deferred financing costs 1,804 2,432
Loss on extinguishment of debt 717 -
Stock-based compensation amortization 2,312 4,256
Allowance for doubtful accounts 2,286 2,992
Deferred income taxes (909) 2,202
Foreign currency adjustments 606 53
Loss on sale of equipment and other 574 367
Changes in operating assets and liabilities
Accounts receivable (30,477) (35,709)
Inventories (23,917) 4,232
Prepaid expenses and other current
assets 1,569 (1,267)
Accounts payable 6,275 3,842
Accrued expenses and other 2,078 3,146
Income taxes 28,375 1,118
-------- --------
Net cash provided by operating activities 79,076 55,729 42%
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for trademarks and other intellectual
property (1,520) -
Purchases of property, plant and equipment (68,139) (23,014)
Proceeds from sale of equipment 327 77
-------- --------
Net cash used by investing activities (69,332) (22,937)-203%
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term Revolving Credit
Facility 73,500 33,511
Repayments of long-term Revolving Credit
Facility (22,000) (35,670)
Repayments of term loans (33,492) (78,006)
Cash held in trust for repayment of Senior
Subordinated Notes - 60,243
Payments of deferred financing costs (250) (2,361)
Proceeds from issuance of common stock 2,204 797
-------- --------
Net cash provided (used) by financing
activities 19,962 (21,486) 192%
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH (5,673) (362)
-------- --------
Increase in cash and cash equivalents 24,033 10,944
CASH AND CASH EQUIVALENTS, beginning of period 28,368 14,230
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 52,401 $ 25,174 108%
======== ========
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 income tax expense on repatriation of foreign dividend of $6.5 million for the three and nine months ended September 30, 2005. In addition, non-cash stock-based compensation expense of $0.5 million and $1.3 million for the three months ended September 30, 2005 and 2004, respectively, and $1.9 million and $4.3 million for the nine months ended September 30, 2005 and 2004 respectively, are excluded from GAAP net income and included in pro forma net income. In addition, for the nine months ended September 30, 2004, GAAP net income includes, and pro forma net income excludes, a loss on debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. totaling $3.3 million, net of tax, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's redemption in January January: see month. 2004 of $52.5 million aggregate principal amount of the outstanding 10-1/4% Senior Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Notes due 2010, issued by its subsidiaries Tempur-Pedic, Inc. and Tempur Production USA, Inc. The Company believes that excluding the repatriation income tax provision, 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)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-------------------------------------------
GAAP net income $ 17,368 $ 22,411 $ 68,968 $ 51,127
Income tax provision on
repatriation dividend 6,491 - 6,491 -
Non-cash stock-based
compensation expense 553 1,266 1,983 4,256
Loss on extinguishment
of debt, net of tax - - - 3,309
-------- -------- -------- --------
Pro forma net income $ 24,412 $ 23,677 $ 77,442 $ 58,692
======== ======== ======== ========
GAAP net income per
share, diluted $ 0.17 0.22 0.67 0.50
Income tax provision on
repatriation dividend 0.06 - 0.06 -
Non-cash stock-based
compensation expense 0.01 0.01 0.02 0.04
Loss on extinguishment
of debt, net of tax - - - 0.03
Pro forma net income per
share, diluted $ 0.24 0.23 0.75 0.57
Other financial data
Depreciation and
amortization $ 6,888 $ 7,229 $ 21,127 $ 21,194
Net debt $254,913 $270,722 $254,913 $270,722
Summary of Channel Sales The Company generates sales through four distribution channels: retail, direct, healthcare and third party. The retail channel sells to furniture, specialty and department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. globally. The direct channel sells directly to consumers. The healthcare channel sells to hospitals, nursing homes, healthcare professionals and medical retailers. The third party channel sells to distributors in countries where Tempur-Pedic International does not operate its own distribution company. The following table highlights net sales information, by channel and by segment, for the third quarter of 2005 compared to 2004:
($ in thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
---------------------------------------------------------
By Sales
Channel
Retail $159,446 $133,429 $106,937 $ 93,260 $52,509 $40,169
Direct 23,694 24,767 20,085 21,300 3,609 3,467
Healthcare 10,748 11,442 2,725 2,793 8,023 8,649
Third Party 12,207 12,099 2,576 2,206 9,631 9,893
-------- -------- -------- -------- ------- -------
Total $206,095 $181,737 $132,323 $119,559 $73,772 $62,178
======== ======== ======== ======== ======= =======
Summary of Product Sales A summary of net sales by product is reported below:
($ in thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
---------------------------------------------------------
Net Sales
Mattresses $139,162 $119,754 $ 96,398 $ 85,406 $ 42,764 $34,348
Pillows 30,950 33,036 12,985 14,076 17,965 18,960
Other 35,983 28,947 22,940 20,077 13,043 8,870
-------- -------- -------- -------- -------- --------
Total $206,095 $181,737 $132,323 $119,559 $ 73,772 $62,178
======== ======== ======== ======== ======== ========
Units Sold(1)
Mattresses 171,939 150,029 95,725 91,860 76,214 58,169
Pillows 650,934 712,603 277,262 288,316 373,672 424,287
(1) Units sold represent net sales after consideration of returned mattresses and pillows and excludes units shipped to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. warranty claims and promotional activities. |
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