![]() Investor Presentation 2Q 2008 Exhibit 99.1 |
![]() 2 Forward-Looking Statements This presentation may contain “forward-looking statements” which include information concerning the Company’s plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this presentation, 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, the Company’s expectations regarding improving manufacturing output capacity, increasing brand awareness, growth opportunities, new products, unit share opportunities, increasing slots per store, new consumer segments, consumer preferences and behavior, opportunities for SG&A leverage and cash flow generation, 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 presentation. 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, particularly in the retail sector, and consumer confidence; the Company’s ability to reduce expenses to align with reduced sales levels; uncertainties arising from global events; the effects of changes in foreign exchange rates on the Company’s reported earnings; consumer acceptance of the Company’s products; industry competition; the efficiency and effectiveness of the Company’s advertising campaigns and other marketing programs; the Company’s ability to increase sales productivity within existing retail accounts and to further penetrate the U.S. retail furniture channel, including the timing of opening or expanding within large retail accounts; the Company’s dependence on its significant customers; the Company’s ability to address issues in certain underperforming international markets; the Company’s ability to continuously improve its product line, maintain efficient, timely and cost-effective production and delivery of its products, and manage its growth; changes in foreign tax rates, including the ability to utilize tax loss carry forwards; rising commodity costs; the Company’s ability to protect and maintain its intellectual property; the Company’s ability to respond to regulatory requirements; the Company’s ability to retain members of its senior management team; the effects of increased interest rates; the effects of labor relations on business operations and costs; the effects of increased product return rates or a reduction in warranty reserves; the market price for the Company’s common stock prevailing from time to time; and the nature of other investment opportunities presented to the Company from time to time. Additional information concerning these and other risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's annual report on Form 10-K under the headings "Special Note Regarding Forward-Looking Statements" and "Risk Factors". Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances. |
![]() 3 Overview Worldwide leader in Premium Sleep, estimated to be 50% of the ~$13 billion wholesale mattress market Global sales under the “Tempur-Pedic®” and “TEMPUR®” trademarks in >70 countries Products provide greater overall comfort and better quality sleep Most profitable company in the industry Highest customer satisfaction rates in the industry Over 25,000 health care professionals recommend the brand |
![]() 4 Tempur-Pedic Swedish Sleep System Pressure & Pain Management – 94% of owners experience a reduction in painful pressure points Open Cell Technology Body Conforming & Support – 92% of owners sleep better and wake more refreshed Safe and Healthy Maintenance Free Source: Independent survey commissioned by Tempur-Pedic |
![]() 5 Seasoned Management Team Executive team has ~130 years managing large international businesses Name Position Prior Experience Consumer Products Inter'l Tom Bryant President & CEO CEO, Stairmaster Sports & Medical Products President, Dunlop Maxfli Johnson & Johnson Rick Anderson EVP and President, VP, Gillette North America Gillette/P&G David Montgomery EVP and President, President, Rubbermaid Europe International VP, Black & Decker Europe, Middle East, Africa Matt Clift EVP, Global Operations VP/GM Lexmark International Lexmark/IBM Dale Williams EVP & CFO CFO, Honeywell Control Products CFO, Saga Systems CFO, GE Information Services Prior Experience (1) (1) In February 2008, Mr. Bryant announced his plan to retire effective mid-year 2008. |
![]() 6 Global Presence International Subsidiary International Third Party Domestic Subsidiary Domestic Third Party |
![]() 7 Global Sales Healthcare 2% Direct 10% Retail 86% Third Party 2% Mattress 74% Pillow 9% Other 17% 1. Data represents results of full year 2007. Domestic represents ~66% of total sales while International represents ~34% Products sold through four distinct channels in three product categories US & European-based R&D centers focused on unique, regional preferences Brand building via advertising campaign to drive market share gains Domestic Sales International Sales Direct 3% Healthcare 9% Third Party 11% Retail 77% Mattress 61% Pillow 19% Other 20% |
![]() 8 Vertically Integrated |
![]() 9 Denmark (500K sq ft) Duffield, VA (500K sq ft) Albuquerque, NM (800K sq ft) Manufacturing Facilities Global, vertically integrated manufacturer State of the art, highly automated, ISO- certified plants > $200 million invested Goal: Improve output capacity every year without significant new capital investment 1. Albuquerque facility is in the process of ISO certification. |
![]() 10 Building Brand Equity |
![]() 11 “Welcome To Bed” Marketing Campaign |
![]() 12 Increasing Brand Awareness 86% 89% 78% 73% 60% 44% 26% 20% 30% 40% 50% 60% 70% 80% 90% 2002 2003 2004 2005 2006 2007 2008 Awareness % 1. Total Brand Awareness for mattresses based on study commissioned by Tempur-Pedic and completed in the first quarter of each year. 2. Advertising and trade expenses FY 2002 through 1Q08. For a discussion of the Company’s performance, please refer to the Company’s press release for 1Q08 results and the Company’s prior 10K and 10Q filings. Global Marketing Investment >$575 million (since 2002) |
![]() 13 Source: Independent survey commissioned by Tempur-Pedic. ~95% Tempur-Pedic® consumers recommend the product ~65% of consumers recommended Tempur-Pedic up to 5 times 42% of consumers report someone purchased a Tempur-Pedic mattress as a result of their recommendation Consumer Passion 95% 65% 18% 17% 42% 0% 20% 40% 60% 80% 100% Recommend Tempur-Pedic 1-5 times 6-10 times 11+ times Purchase resulted from recommendation |
![]() 14 Significant Unit Share Opportunity – Only represent ~2.3% of U.S. mattress units (‘07 est.) Slots Very Low Versus % of Retail Sales – Gaining “slots” with new models, key price points Investing in Marketing and Expanding Brand Awareness Targeting Key New Consumer Segments – BellaSonna “Traditionalist” consumers Targeting 77 Million Baby-Boomers Selectively Adding New Retail Accounts Growth Opportunities |
![]() 15 Premium consumers are comparatively more likely to defer mattress purchases during an economic downturn Premium has reached >25% household penetration Among consumers who expect to buy a mattress in the next five years, ~46% plan to purchase premium Premium Mattress Consumer Research Source: Based on recent independent third party research of over 1,200 US consumers. Based on third party research, we believe the following market factors will create favorable market conditions for the premium segment: |
![]() 16 Among consumers who are likely to buy a premium mattress in the next five years: – ~80% say they are most likely to purchase specialty Specialty has reached >7% household penetration Specialty currently represents 40% of premium installed base – Innerspring currently represents 60% of premium installed base ~60% of consumers who are likely to buy a premium mattress in the next 5 years report they are most likely to buy visco Specialty Mattress Consumer Research Source: Based on recent independent third party research of over 1,200 US consumers. |
![]() 17 $222 $298 $479 $685 $837 $945 $1,107 $247 $0 $200 $400 $600 $800 $1,000 $1,200 2001 2002 2003 2004 2005 2006 2007 1Q '08 Worldwide Net Sales Revenue growth led by mattresses 1Q’08 sales down 7% as U.S. macroeconomic environment deteriorates ($ in millions) 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 1Q08 results and the Company’s prior 10K and 10Q filings. |
![]() 18 Operating Income Historically, operating leverage offset most of the prior Gross Margin erosion Opportunities for SG&A leverage over the long term 1Q’08 Operating margin declined primarily related to: – Gross margin decline driven by channel shift, raw material inflation, fixed cost de-leverage – Operating expenses planned and incurred assuming much higher sales level (e.g. advertising de-leveraged > 200 bps) Have completed restructuring ($ in millions) 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 1Q08 results and the Company’s prior 10K and 10Q filings. $30 $41 $97 $244 $29 $151 $191 $209 $0 $50 $100 $150 $200 $250 2001 2002 2003 2004 2005 2006 2007 1Q '08 |
![]() 19 Capital Expenditures & Cash Flow Completed major capital investments Free cash flow opportunities Cash cycle opportunities Revised production plans to align with sales expectations Anticipate inventory will be source of cash in 2008 ($ in millions) Capital Expenditures 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 1Q08 results and the Company’s prior 10K and 10Q filings. $35 $11 $33 $38 $85 $16 $3 $37 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 2001 2002 2003 2004 2005 2006 2007 1Q '08 |
![]() 20 Investment Highlights #1 In The Fast Growing Viscoelastic Market 1 #1 In The Fast Growing Premium Mattress Market 1 #1 In The Premium Pillow Market #1 In International Operations of U.S. Bedding Manufacturers #1 In The Industry For Profitability #1 In U.S. Consumer Referrals for Mattresses #1 In Retail Sales And Profit Per Sq Ft 1. Based on net sales, including management’s estimates of sales by companies that do not publicly report sales of viscoelastic mattresses and pillows, premium mattress and premium pillows. 2. Based on total company-owned foreign operations by U.S. based bedding manufacturers, including management’s estimates for companies that do not publicly report such information. 3. Based on total net income for all publicly reporting US mattress manufacturers. 4. Based on independent survey(s) commissioned by Tempur-Pedic® and management estimates. 4 4 2 3 2 |
![]() Investor Presentation 2Q 2008 |