Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TEMPUR SEALY INTERNATIONAL, INC. | |
Entity Central Index Key | 1,206,264 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 60,921,499 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Income Statement [Abstract] | |||
Net sales | $ 721 | $ 739.5 | |
Cost of sales | 430 | 460.8 | |
Gross profit | 291 | 278.7 | |
Selling and marketing expenses | 150.1 | 153.8 | |
General, administrative and other expenses | 71.7 | 77.7 | |
Equity income in earnings of unconsolidated affiliates | (2.8) | (3) | |
Royalty income, net of royalty expense | (4.7) | (4.2) | |
Operating income | 76.7 | 54.4 | |
Other expense, net: | |||
Interest expense, net | 21.4 | 20.4 | |
Other income, net | (1) | (1.3) | |
Total other expense, net | 20.4 | 19.1 | |
Income before income taxes | 56.3 | 35.3 | |
Income tax provision | (17.3) | (10.3) | |
Net income before non-controlling interest | 39 | 25 | |
Less: Net income (loss) attributable to non-controlling interest | [1] | (0.6) | 1.6 |
Net income attributable to Tempur Sealy International, Inc. | $ 39.6 | $ 23.4 | |
Earnings per common share: | |||
Basic (in dollars per share) | $ 0.64 | $ 0.38 | |
Diluted (in dollars per share) | $ 0.63 | $ 0.38 | |
Weighted average common shares outstanding: | |||
Basic (in shares) | 62 | 60.9 | |
Diluted (in shares) | 62.6 | 62.2 | |
[1] | (Loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the three months ended March 31, 2016 and 2015 represented $(0.6) million and $0.6 million, respectively. As of March 31, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, the Company's net income for the three months ended March 31, 2015 includes a $1.0 million adjustment, net of tax, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of March 31, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary. |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Parenthetical) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Redemption Value Adjustment | $ 1 | |
Comfort Revolution | ||
Income (loss) attributable to Comfort Revolution, LLC | $ (0.6) | $ 0.6 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Statement of Comprehensive Income [Abstract] | |||
Net income before non-controlling interest | $ 39 | $ 25 | |
Other comprehensive income (loss) before tax, net of tax | |||
Foreign currency translation adjustments | 19.1 | (37.6) | |
Net change in unrecognized gain on interest rate swap, net of tax | 0 | 0.1 | |
Unrealized (loss) gain on cash flow hedging derivatives, net of tax | (4.9) | 1.3 | |
Other comprehensive income (loss), net of tax | 14.2 | (36.2) | |
Comprehensive income (loss) | 53.2 | (11.2) | |
Less: Comprehensive income (loss) attributable to non-controlling interest | [1] | (0.6) | 1.6 |
Comprehensive income (loss) attributable to Tempur Sealy International, Inc. | $ 53.8 | $ (12.8) | |
[1] | (Loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the three months ended March 31, 2016 and 2015 represented $(0.6) million and $0.6 million, respectively. As of March 31, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, the Company's net income for the three months ended March 31, 2015 includes a $1.0 million adjustment, net of tax, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of March 31, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary. |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Redemption Value Adjustment | $ 1 | |
Comfort Revolution | ||
Income (loss) attributable to Comfort Revolution, LLC | $ (0.6) | $ 0.6 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 37.1 | $ 153.9 |
Accounts receivable, net | 384.7 | 379.4 |
Inventories, net | 214.4 | 199.2 |
Prepaid expenses and other current assets | 72.7 | 76.6 |
Total Current Assets | 708.9 | 809.1 |
Property, plant and equipment, net | 364.9 | 361.7 |
Goodwill | 717.7 | 709.4 |
Other intangible assets, net | 696.1 | 695.4 |
Deferred income taxes | 13 | 12.2 |
Other non-current assets | 76.2 | 67.7 |
Total Assets | 2,576.8 | 2,655.5 |
Current Liabilities: | ||
Accounts payable | 215.5 | 266.3 |
Accrued expenses and other current liabilities | 246.8 | 254 |
Income taxes payable | 13.9 | 11.2 |
Current portion of long-term debt | 178.9 | 181.5 |
Total Current Liabilities | 655.1 | 713 |
Long-term debt, net | 1,293.7 | 1,273.3 |
Deferred income taxes | 194.1 | 195.4 |
Other non-current liabilities | 169.7 | 171.2 |
Total Liabilities | $ 2,312.6 | $ 2,352.9 |
Commitments and contingencies—see Note 8 | ||
Redeemable non-controlling interest | $ 11.8 | $ 12.4 |
Total Stockholders’ Equity | 252.4 | 290.2 |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | $ 2,576.8 | $ 2,655.5 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income before non-controlling interest | $ 39 | $ 25 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 17.6 | 17.8 |
Amortization of stock-based compensation | 6.1 | 4 |
Amortization of deferred financing costs | 1.8 | 2.2 |
Bad debt expense | 1.5 | 1.1 |
Deferred income taxes | (1.7) | (6.7) |
Dividends received from unconsolidated affiliates | 2.1 | 1.9 |
Equity income in earnings of unconsolidated affiliates | (2.8) | (3) |
Non-cash interest expense on convertible notes | 1.8 | 1.3 |
Loss on sale of assets | 0.2 | 0.1 |
Foreign currency adjustments and other | (1.6) | 0.1 |
Changes in operating assets and liabilities | (82.8) | (50.2) |
Net cash used in operating activities | (18.8) | (6.4) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (12.6) | (15.4) |
Other | (0.2) | 0 |
Net cash used in investing activities | (12.8) | (15.4) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from borrowings under long-term debt obligations | 101.5 | 97.9 |
Repayments of borrowings under long-term debt obligations | (87) | (98.8) |
Proceeds from exercise of stock options | 3 | 1.6 |
Excess tax benefit from stock-based compensation | 1.2 | 0 |
Treasury stock repurchased | (102) | (1.1) |
Other | 0.4 | 0.2 |
Net cash used in financing activities | (82.9) | (0.2) |
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (2.3) | 4.5 |
Decrease in cash and cash equivalents | (116.8) | (17.5) |
CASH AND CASH EQUIVALENTS, beginning of period | 153.9 | 62.5 |
CASH AND CASH EQUIVALENTS, end of period | 37.1 | 45 |
Cash paid during the period for: | ||
Interest | 5.4 | 10.1 |
Income taxes, net of refunds | $ 18.6 | $ 34.4 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Basis of Presentation and Description of Business. Tempur Sealy International, Inc., a Delaware corporation, together with its subsidiaries is a U.S. based, multinational company. The term "Tempur Sealy International" refers to Tempur Sealy International, Inc. only, and the term "Company" refers to Tempur Sealy International, Inc. and its consolidated subsidiaries. The Company develops, manufactures, markets and sells bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories. The Company also derives income from royalties by licensing Sealy® and Stearns & Foster® brands, technology and trademarks to other manufacturers. The Company sells its products through two sales channels: Retail and Other. The Company’s Condensed Consolidated Financial Statements include the results of Comfort Revolution, LLC ("Comfort Revolution"), a 45.0% owned joint venture. Comfort Revolution constitutes a variable interest entity ("VIE") for which the Company is considered to be the primary beneficiary due to the Company's disproportionate share of the economic risk associated with its equity contribution, debt financing and other factors that were considered in the related-party analysis surrounding the identification of the primary beneficiary. The operations of Comfort Revolution are not material to the Company's Condensed Consolidated Financial Statements. The Company also 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 effective control, and consolidation is not otherwise required. The Company's carrying value in its equity method investments of $14.1 million and $13.6 million at March 31, 2016 and December 31, 2015 , respectively, are recorded in other non-current assets within the accompanying Condensed Consolidated Balance Sheets. The Company’s share of earnings is recorded as equity income in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income. 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 ("U.S. GAAP" or "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, 2015 , included in the Company’s Annual Report on Form 10-K filed on February 12, 2016. 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 or market, determined by the first-in, first-out method, and consist of the following: March 31, December 31, (in millions) 2016 2015 Finished goods $ 137.5 $ 126.7 Work-in-process 13.6 14.0 Raw materials and supplies 63.3 58.5 $ 214.4 $ 199.2 (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. 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, 2015 to March 31, 2016 : (in millions) Balance as of December 31, 2015 $ 28.5 Amounts accrued 34.2 Returns charged to accrual (32.8 ) Balance as of March 31, 2016 $ 29.9 (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. In estimating its warranty obligations, 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 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 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 pillows have a warranty term of 3 years, non-prorated. The Company had the following activity for its accrued warranty expense from December 31, 2015 to March 31, 2016 : (in millions) Balance as of December 31, 2015 $ 29.6 Amounts accrued 7.9 Warranties charged to accrual (8.3 ) Balance as of March 31, 2016 $ 29.2 As of March 31, 2016 and December 31, 2015 , $14.2 million and $14.9 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $15.0 million and $14.7 million of accrued warranty expense is included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively. (e) Revenue Recognition . Sales of products are recognized when persuasive evidence of an arrangement exists, title passes to customers and the risks and rewards of ownership are transferred, the sales price is fixed or determinable and collectability is reasonably assured. The Company extends volume discounts to certain customers, as well as promotional allowances, floor sample discounts, commissions paid to retail associates and slotting fees, and reflects these amounts as a reduction of sales at the time revenue is recognized based on historical experience. The Company also reports sales net of tax assessed by qualifying governmental authorities. The Company extends credit based on the creditworthiness of its customers. No collateral is required on sales made in the normal course of business. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s accounts receivable. The Company regularly reviews the adequacy of its allowance for doubtful accounts. The Company determines the allowance based on historical write-off experience and current economic conditions and also considers factors such as customer credit, past transaction history with the customer and changes in customer payment terms when determining whether the collection of a customer receivable is reasonably assured. Account balances are charged off against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts included in accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets was $24.9 million and $23.3 million as of March 31, 2016 and December 31, 2015 , respectively. (f) Cooperative Advertising, Rebate and Other Promotional Programs . The Company enters into agreements with customers to provide funds for advertising and promotions. The Company also enters into volume and other rebate programs with customers. When sales are made to these customers, the Company records liabilities pursuant to these agreements. The Company periodically assesses these liabilities based on actual sales and claims to determine whether all of the cooperative advertising earned will be used by the customer or whether the customer will meet the requirements to receive rebate funds. The Company generally negotiates these agreements on a customer-by-customer basis. Some of these agreements extend over several years. Significant estimates are required at any point in time with regard to the ultimate reimbursement to be claimed by the customers. Subsequent revisions to these estimates are recorded and charged to earnings in the period in which they are identified. Rebates and cooperative advertising are classified as a reduction of revenue and presented within net sales on the accompanying Condensed Consolidated Statements of Income. Certain cooperative advertising expenses are reported as components of selling and marketing expenses in the accompanying Condensed Consolidated Statements of Income because the Company receives an identifiable benefit and the fair value of the advertising benefit can be reasonably estimated. (g) Derivative Financial Instruments . Derivative financial instruments are used in the normal course of business to manage interest rate and foreign currency exchange risks. The financial instruments used by the Company are straight-forward, non-leveraged instruments. The counterparties to these financial instruments are financial institutions with strong credit ratings. The Company maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit ratings of these institutions. For all transactions designated as hedges, the hedging relationships are formally documented at the inception and on an ongoing basis in offsetting changes in cash flows of the hedged transaction. The Company records derivative financial instruments on the Condensed Consolidated Balance Sheets as either an asset or liability measured at its fair value. Changes in a derivative's fair value (i.e. unrealized gains or losses) are recorded each period in earnings or other comprehensive loss ("OCL"), depending on whether the derivative is designated and is effective as a hedged transaction, and on the type of hedging relationship. For derivative financial instruments that are designated as a hedge, unrealized gains and losses related to the effective portion are either recognized in income immediately to offset the realized gain or loss on the hedged item, or are deferred and reported as a component of accumulated OCL (“AOCL”) in stockholders' equity and subsequently recognized in net income when the hedged item affects net income. The change in fair value of the ineffective portion of a derivative financial instrument is recognized in net income immediately. For derivative instruments that are not designated as hedges, the gain or loss related to the change in fair value is also recorded to net income immediately. The Company manages a portion of the risk associated with fluctuations in foreign currencies related to intercompany and third party inventory purchases denominated in foreign currencies through foreign exchange forward contracts designated as cash flow hedges. As of March 31, 2016, the Company had foreign exchange forward contracts designated as cash flow hedges to buy U.S. dollars and to sell Canadian dollars with a notional amount outstanding of $81.0 million . These foreign exchange forward contracts have maturities ranging from April 2016 to September 2017 . The effectiveness of the cash flow hedge contracts, including time value, is assessed prospectively and retrospectively on a monthly basis using regression analysis, as well as using other timing and probability criteria. The effective portion of the cash flow hedge contracts' gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of accumulated OCL until the underlying hedged item is reflected in the Company's accompanying Condensed Consolidated Statements of Income, at which time the effective amount in AOCL is reclassified to cost of sales in the accompanying Condensed Consolidated Statements of Income. The Company expects to reclassify a gain of approximately $1.7 million , net of tax over the next 12 months based on March 31, 2016 exchange rates. The Company is also exposed to foreign currency risk related to intercompany debt and associated interest payments and certain intercompany accounts receivable and accounts payable. To manage the risk associated with fluctuations in foreign currencies related to these assets and liabilities, the Company enters into foreign exchange forward contracts. The Company considers these contracts to be economic hedges. Accordingly, changes in the fair value of these instruments affect earnings during the current period. These foreign exchange forward contracts protect against the reduction in value of forecasted foreign currency cash flows resulting from payments in foreign currencies. (h) Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are also recognized for the estimated future effects of tax loss carry forwards. The effect of changes in tax rates on deferred taxes is recognized in the period in which any such change is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertain foreign and domestic tax positions utilizing a proscribed recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. (i) Subsequent Events. On April 6, 2016, the Company entered into a senior secured credit agreement ("2016 Credit Agreement") with a syndicate of banks. The 2016 Credit Agreement replaced the prior credit agreement, entered into on December 12, 2012 ("2012 Credit Agreement"). For more information please refer to Note 4, "Debt" in our Condensed Consolidated Financial Statements. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers , that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This ASU is based on the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating this ASU to determine the Company's adoption method and the impact it will have on the Company's Condensed Consolidated Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , that requires lessees to recognize most leases on the balance sheet and provides for expanded disclosures on key information about leasing arrangements. This ASU is effective for interim and annual periods beginning after December 15, 2018, however early adoption is permitted. In transition, entities are required to use a modified retrospective approach for the adoption of the new standard. The Company is currently evaluating this ASU to determine the impact it will have on the Company's Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. When adopting this ASU, entities should use a modified retrospective approach when adopting amendments related to the timing of excess tax benefit recognition, minimum statutory withholding requirements and forfeitures, and a retrospective approach when adopting amendments related to recognition of excess tax benefits and tax deficiencies in the income statement; and entities have the option of using a prospective or a retrospective transition approach when adopting amendments related to the presentation of excess tax benefits on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating this ASU to determine the Company's adoption method and the impact it will have on the Company's Condensed Consolidated Financial Statements. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following summarizes changes to the Company’s goodwill, by segment: (in millions) North America International Consolidated Balance as of December 31, 2015 $ 562.8 $ 146.6 $ 709.4 Foreign currency translation adjustments 4.0 4.3 8.3 Balance as of March 31, 2016 $ 566.8 $ 150.9 $ 717.7 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt for the Company consists of the following: (in millions, except percentages) March 31, 2016 December 31, 2015 Debt: Amount Rate Amount Rate Maturity Date Revolver $ 33.7 (1) $ — N/A March 18, 2018 Term A Facility 396.6 (2) 409.4 (2) March 18, 2018 Term B Facility 99.0 (3) 100.1 (3) March 18, 2020 2020 Senior Notes 375.0 6.875% 375.0 6.875% December 15, 2020 2023 Senior Notes 450.0 5.625% 450.0 5.625% October 15, 2023 8.0% Sealy Notes 112.8 8.0% 111.1 8.0% July 15, 2016 Capital lease obligations and other 29.1 34.0 Various Total debt 1,496.2 1,479.6 Less: deferred financing costs (23.6 ) (24.8 ) Total debt, net 1,472.6 1,454.8 Less: current portion (178.9 ) (181.5 ) Total long-term debt, net $ 1,293.7 $ 1,273.3 (1) Interest at Base Rate plus applicable margin of 1.50% or LIBOR plus applicable margin of 2.50% as of March 31, 2016. (2) Interest at LIBOR plus applicable margin of 1.75% as of March 31, 2016 and 2.00% as of December 31, 2015. (3) Interest at LIBOR, subject to a 0.75% floor plus applicable margin of 2.75% as of March 31, 2016 and December 31, 2015. The Company is in compliance with all applicable covenants as of March 31, 2016 . 2016 Credit Agreement On April 6, 2016, the Company entered into a senior secured credit agreement ("2016 Credit Agreement") with a syndicate of banks. The 2016 Credit Agreement replaced the Company’s 2012 Credit Agreement. The 2016 Credit Agreement provides for a $500.0 million revolving credit facility, a $500.0 million initial term loan facility and a $100.0 million delayed draw term loan facility. At any time, the Company may also elect to request the establishment of one or more incremental term loan facilities and/or increase commitments under the revolving credit facility in an aggregate amount of up to $500.0 million . A portion of the revolving credit facility of up to $250.0 million is available in Canadian Dollars, Pounds Sterling, the Euro and any additional currencies determined by mutual agreement of the Company, the Agent and the lenders under the revolving credit facility. A portion of the revolving credit facility of up to $100.0 million is available for the issuance of letters of credit for the account of the Company and a portion of the revolving credit facility of up to $50.0 million is available for swing line loans to the Company. Borrowings under the 2016 Credit Agreement will generally bear interest, at the election of Tempur Sealy International and the other subsidiary borrowers, at either (i) LIBOR plus the applicable margin or (ii) Base Rate plus the applicable margin. For the revolving credit facility and the initial term loan facility (a) the initial applicable margin for LIBOR advances was 1.75% per annum and the initial applicable margin for Base Rate advances was 0.75% per annum, and (b) thereafter following the delivery of financial statements for the fiscal quarter ending March 31, 2016, such applicable margins are determined by a pricing grid based on the consolidated total net leverage ratio of the Company. Once drawn, the delayed draw term loan facility will have identical pricing to the revolving credit facility and initial term loan facility. Obligations under the 2016 Credit Agreement are guaranteed by the Company’s existing and future direct and indirect wholly-owned domestic subsidiaries, subject to certain exceptions. The 2016 Credit Agreement is secured by a security interest in substantially all of Tempur Sealy International’s and the other subsidiary borrowers’ domestic assets and the domestic assets of each subsidiary guarantor, whether owned as of the closing or thereafter acquired, including a pledge of 100.0% of the equity interests of each subsidiary guarantor that is a domestic entity (subject to certain limited exceptions) and 65.0% of the voting equity interests of any direct first tier foreign entity owned by a subsidiary guarantor. The 2016 Credit Agreement requires compliance with certain financial covenants providing for maintenance of a minimum consolidated interest coverage ratio, maintenance of a maximum consolidated total net leverage ratio, and maintenance of a maximum consolidated secured net leverage ratio. The consolidated total net leverage ratio is calculated using consolidated funded debt less qualified cash. Consolidated funded debt includes debt recorded on the Condensed Consolidated Balance Sheets as of the reporting date, plus letters of credit outstanding and short-term other debt. The Company is allowed to subtract from consolidated funded debt an amount equal to 100.0% of the domestic qualified cash and 60.0% of foreign qualified cash, the aggregate of which cannot exceed $150.0 million at the end of the reporting period. As of March 31, 2016 , domestic qualified cash was $6.3 million and foreign qualified cash was $18.5 million . The 2016 Credit Agreement contains certain customary negative covenants, which include limitations on liens, investments, indebtedness, dispositions, mergers and acquisitions, the making of restricted payments, changes in the nature of business, changes in fiscal year, transactions with affiliates, use of proceeds, prepayments of certain indebtedness, entry into burdensome agreements and changes to governing documents and other junior financing documents. The 2016 Credit Agreement also contains certain customary affirmative covenants and events of default, including upon a change of control. The Company is required to pay a commitment fee on the unused portion of the revolving credit facility, which initially will be 0.30% per annum and thereafter following the delivery of financial statements for the fiscal quarter ending March 31, 2016, such fees are determined by a pricing grid based on the consolidated total net leverage ratio of the Company. This unused commitment fee is payable quarterly in arrears and on the date of termination or expiration of the commitments under the revolving credit facility. The Company and the other borrowers also pay customary letter of credit issuance and other fees under the 2016 Credit Agreement. 2012 Credit Agreement The Company used the proceeds from the 2016 Credit Agreement to repay in full and terminate the 2012 Credit Agreement. The 2012 Credit Agreement initially provided for (i) a revolving credit facility of $350.0 million (the "Revolver"), (ii) a term A facility of $550.0 million (the "Term A Facility") and (iii) a term B facility of $870.0 million (the "Term B Facility"). In conjunction with the repayment of all outstanding borrowings on the 2012 Credit Agreement, the Company will write off approximately $11.0 million of deferred financing costs in the second quarter of 2016. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value of the foreign exchange forward contracts is calculated using standard industry models based on observable forward points and discount curves. The fair values of all derivative instruments are adjusted for credit risk and restrictions and other terms specific to the contracts. The classification of fair value measurements within the established three-level hierarchy is based upon the lowest level of input that is significant to the measurements. There were no transfers between levels for the three months ended March 31, 2016 or year ended December 31, 2015. The fair value of our financial instruments which are recorded on a recurring basis at fair value are not material. 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 2012 Credit Agreement are at variable interest rates and accordingly their carrying amounts approximate fair value. The fair values of the following material financial instruments were based on Level 2 inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk, and the contractual terms of the debt instruments. The fair values of material financial instruments are as follows: Fair Value (in millions) March 31, 2016 December 31, 2015 2020 Senior Notes $ 395.2 $ 393.8 2023 Senior Notes 462.9 453.4 8.0% Sealy Notes 113.8 112.7 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholder's Equity (a) Common Stock. Tempur Sealy International has 300.0 million authorized shares of common stock with $0.01 per share par value and 0.01 million shares of preferred stock. Subject to preferences that may be applicable to any outstanding preferred stock, holders of the common stock are entitled to receive ratably such dividends as may be declared from time to time by the Board of Directors out of funds legally available for that purpose. In the event of liquidation, dissolution or winding up, the holders of the common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. (b) Treasury Stock. On February 1, 2016, Tempur Sealy International's Board of Directors authorized a new share repurchase authorization of up to $200.0 million of Tempur Sealy International's common stock. During the first quarter of 2016, the Company repurchased 1.7 million shares for approximately $100.0 million under the share repurchase authorization. In addition, the Company acquired 0.1 million and 0.0 million shares upon the vesting of certain performance restricted stock units ("PRSUs"), which were withheld to satisfy tax withholding obligations in the first quarter of 2016 and 2015, respectively. The shares withheld were valued at the closing price of the common stock on the New York Stock Exchange on the vesting date or first business day thereafter, resulting in approximately $2.0 million and $1.1 million in treasury stock acquired during the three months ended March 31, 2016 and 2015, respectively. (c) Accumulated Other Comprehensive Loss ("AOCL"). AOCL consisted of the following: Three Months Ended March 31, (in millions) 2016 2015 Foreign Currency Translation Balance at beginning of period $ (115.4 ) $ (54.0 ) Other comprehensive income (loss): Foreign currency translation adjustments (1) 19.1 (37.6 ) Balance at end of period $ (96.3 ) $ (91.6 ) Interest Rate Swap Agreement Balance at beginning of period $ — $ (0.7 ) Other comprehensive income (loss): Net change from period revaluations: — 0.7 Tax expense (2) — (0.3 ) Total other comprehensive income before reclassifications, net of tax $ — $ 0.4 Net amount reclassified to earnings (3) — (0.5 ) Tax benefit (2) — 0.2 Total amount reclassified from accumulated other comprehensive loss, net of tax $ — $ (0.3 ) Total other comprehensive income — 0.1 Balance at end of period $ — $ (0.6 ) Pensions Balance at beginning of period $ (1.4 ) $ (2.4 ) Other comprehensive income (loss): Net change from period revaluations: — — Balance at end of period $ (1.4 ) $ (2.4 ) Foreign Exchange Forward Contracts Balance at beginning of period $ 6.6 $ 1.3 Other comprehensive (loss) income: Net change from period revaluations: (5.0 ) 3.7 Tax benefit (expense) (2) 1.3 (1.0 ) Total other comprehensive (loss) income before reclassifications, net of tax $ (3.7 ) $ 2.7 Net amount reclassified to earnings (4) (1.6 ) (1.9 ) Tax benefit (2) 0.4 0.5 Total amount reclassified from accumulated other comprehensive loss, net of tax $ (1.2 ) $ (1.4 ) Total other comprehensive (loss) income (4.9 ) 1.3 Balance at end of period $ 1.7 $ 2.6 (1) In 2016 and 2015, no amounts were reclassified to earnings. (2) These amounts were included in the income tax provision on the accompanying Condensed Consolidated Statements of Income. (3) This amount was included in interest expense, net on the accompanying Condensed Consolidated Statements of Income. (4) This amount was included in cost of sales, net on the accompanying Condensed Consolidated Statements of Income. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company’s stock-based compensation expense for the three months ended March 31, 2016 and 2015 included performance-based restricted stock units ("PRSUs"), non-qualified stock options, restricted stock units ("RSUs") and deferred stock units ("DSUs"). A summary of the Company’s stock-based compensation expense is presented in the following table. Three Months Ended (in millions) 2016 2015 PRSU expense $ 2.5 $ 2.0 Option expense 1.7 1.5 RSU/DSU expense 1.9 0.5 Total stock-based compensation expense $ 6.1 $ 4.0 In the three months ended March 31, 2016, the Company recorded $2.0 million of accelerated amortization associated with executive management transition. In 2015, the Company granted 1.4 million PRSUs that will vest if the Company achieves more than $650 million of Adjusted EBITDA for 2017 (the "2017 Aspirational Plan PRSUs"). All of the 2017 Aspirational Plan PRSUs will vest in full if the Company achieves Adjusted EBITDA in 2017 greater than $650 million . In addition, if this target is not met in 2017 but the Company achieves more than $650 million in Adjusted EBITDA for 2018, then one-third of the total 2017 Aspirational Plan PRSUs will vest, and the remaining 2017 Aspirational Plan PRSUs will be forfeited. If the Company does not achieve more than $650 million of Adjusted EBITDA in either 2017 or 2018, then all of the 2017 Aspirational Plan PRSUs will be forfeited. Adjusted EBITDA is defined as the Company’s “Consolidated EBITDA” as such term is defined in the Company’s 2012 Credit Agreement. The Company did not record any stock-based compensation expense related to the 2017 Aspirational Plan PRSUs during the the three months ended March 31, 2016, as it is not considered probable that the Company will achieve the specified performance target as of December 31, 2017 or December 31, 2018. The Company will continue to evaluate the probability of achieving the performance condition going forward and record the appropriate expense if necessary. Based on the price of the Company’s common stock on the grant date, the total unrecognized compensation expense related to this award if the performance target is met for 2017 is $101.1 million , which would be expensed over the service period if it becomes probable of achieving the performance condition. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Alvin Todd, and Henry and Mary Thompson, individually and on behalf of all others similarly situated, Plaintiffs v. Tempur Sealy International, Inc., formerly known as Tempur-Pedic International, Inc. and Tempur-Pedic North America, LLC, Defendants; filed October 25, 2013 On October 25, 2013, a suit was filed against Tempur Sealy International and one of its domestic subsidiaries in the United States District Court for the Northern District of California, purportedly on behalf of a proposed class of “consumers” as defined by Cal. Civ. Code § 1761(d) who purchased, not for resale, a Tempur-Pedic mattress or pillow in the State of California. On November 19, 2013, the Company was served for the first time in the case but with an amended petition adding additional class representatives for additional states. The purported classes seek certification of claims under applicable state laws. The complaint alleges that the Company engaged in unfair business practices, false advertising, and misrepresentations or omissions related to the sale of certain products. The plaintiffs seek restitution, injunctive relief and all other relief allowed under applicable state laws, interest, attorneys’ fees and costs. The purported classes do not seek damages for physical injuries. The Company believes the case lacks merit and intends to defend against the claims vigorously. The Court was scheduled to consider class certification motions in the fourth quarter of 2015; however, the plaintiffs filed a Motion to Amend the Complaint, at which time the Company filed a Motion to Dismiss the Amended Complaint. A hearing on the Motion to Dismiss was held January 28, 2016 and the Court denied in part and granted in part the Company’s Motion to Dismiss, allowing certain claims to proceed. The outcome of this case remains uncertain. As a result, the Company is unable to reasonably estimate the possible loss or range of losses, if any, arising from this litigation, or whether the Company’s applicable insurance policies will provide sufficient coverage for these claims. Accordingly, the Company can give no assurance that this matter will not have a material adverse effect on the Company’s financial position or results of operations. (b) Environmental. The Company is currently conducting an environmental cleanup at a formerly owned facility in South Brunswick, New Jersey pursuant to the New Jersey Industrial Site Recovery Act. Sealy and one of its subsidiaries are parties to an Administrative Consent Order issued by the New Jersey Department of Environmental Protection. Pursuant to that order, Sealy and its subsidiary agreed to conduct soil and groundwater remediation at the property. The Company does not believe that its manufacturing processes were the source of contamination. The Company sold the property in 1997. The Company retained primary responsibility for the required remediation. Previously, the Company removed and disposed of contaminated soil from the site with New Jersey Department of Environmental Protection approval, and the Company has installed a groundwater remediation system on the site. During 2005, with the approval of the New Jersey Department of Environmental Protection, the Company removed and disposed of sediment in Oakeys Brook adjoining the site. The Company continues to monitor ground water at the site. During 2012, with the approval of the New Jersey Department of Environmental Protection, the Company commenced the removal and disposal of additional contaminated soil from the site. The Company does not believe this matter is material to the Company's financial statements. The Company has also undertaken a remediation of soil and groundwater contamination at an inactive facility located in Oakville, Connecticut. Although the Company is conducting the remediation voluntarily, it obtained Connecticut Department of Energy and Environmental Protection (“DEEP”) approval of the remediation plan. In 2012, the Company submitted separate closure reports to the Connecticut DEEP for the lower portion of the site and the upper portion of the site. The Connecticut DEEP approved the Company’s closure report for the upper portion of the site and also gave conditional approval to the Company’s closure report for the lower portion of the site. The Company is continuing to work with the Connecticut DEEP and is performing additional testing to obtain closure for the lower portion of the site. The Company does not believe the contamination on this site is attributable to the Company’s operations, nor that it will have a material effect on the Company's financial statements. In 1998, the Company sold an inactive facility located in Putnam, Connecticut. In 2012, the Company received a letter from the attorney for the current owner of that property claiming that the Company may have some responsibility for an environmental condition on the property. The Company continues to investigate this matter, but intends to vigorously defend the claim of the current owner against the Company. The Company cannot predict the ultimate timing or costs of the South Brunswick, Oakville and Putnam environmental matters. Based on facts currently known, the Company believes that the accruals recorded are adequate and does not believe the resolution of these matters will have a material effect on the financial position or future operations of the Company. However, in the event of an adverse decision by the agencies involved, or an unfavorable result in the New Jersey natural resources damages matter, these matters could have a material effect on the Company’s financial position or results of operations. (c) Income Tax Assessments. We have received income tax assessments from the Danish Tax Authority ("SKAT") with respect to the tax years 2001 through 2008 relating to the royalty paid by certain of Tempur Sealy International’s U.S. subsidiaries to a Danish subsidiary. For more information please refer to Note 9, “Income Taxes” in our Condensed Consolidated Financial Statements. (d) Other. The Company is involved in various other legal proceedings incidental to the operations of its business. The Company believes that the outcome of all such pending legal proceedings in the aggregate will not have a material adverse effect on its business, financial condition, liquidity, or operating results. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended March 31, 2016 and 2015 was 30.7% and 29.2% , respectively. The Company’s income tax rate for the three months ended March 31, 2016 and 2015 differed from the U.S. federal statutory rate of 35.0% principally due to certain foreign income tax rate differentials, state and local income taxes, the production activities deduction, certain other permanent differences and changes in the Company’s uncertain tax positions. The Company has received income tax assessments from SKAT with respect to the tax years 2001 through 2008 relating to the royalty paid by a U.S. subsidiary of Tempur Sealy International to a Danish subsidiary. The royalty is paid by the U.S. subsidiary for the right to utilize certain intangible assets owned by the Danish subsidiary in the U.S. production processes. In its assessment, SKAT asserts that the amount of royalty rate paid by the U.S. subsidiary to the Danish subsidiary is not reflective of an arms-length transaction. Accordingly, the tax assessment received from SKAT is based, in part, on a 20% royalty rate, which is substantially higher than that historically used or deemed appropriate by the Company. The cumulative total tax assessment at March 31, 2016 for all years for which an assessment has been received (2001 - 2008) is approximately Danish Krone ("DKK") 1,479.0 million , including interest and penalties ( $224.4 million , based on the DKK to USD exchange rate on March 31, 2016). The cumulative total tax assessment at December 31, 2015 for all years for which an assessment had been received up through that date (2001 - 2008) including interest and penalties was approximately DKK 1,363.1 million ( $199.6 million , based on the DKK to USD exchange rate on December 31, 2015). If SKAT continues to issue assessments for each year not currently assessed, the Company expects the aggregate assessments for such years (2009 - 2015) to be in excess of the amounts described above as assessed for the years 2001 - 2008. From June 2012 through March 31, 2016, SKAT withheld Value Added Tax refunds otherwise owed to the Company, pending resolution of this matter. Total withheld refunds at March 31, 2016 and December 31, 2015 are approximately $30.0 million and $26.0 million , respectively. These amounts are included as a receivable within other non-current assets in the accompanying Condensed Consolidated Balance Sheets. In April 2016, the Company and its advisors met with SKAT to continue the discussion initiated during a meeting with SKAT in November 2015. The purpose of the April 2016 meeting was to continue to develop a framework to resolve this matter through a negotiated settlement. The Company and SKAT have agreed to continue negotiations to resolve the matter. The Company's case is pending before the Danish National Tax Tribunal (the "Tribunal"), the appellate division of SKAT. During the fourth quarter of 2015 the Company and its third-party advisors prepared an additional analysis of the Company’s positions related to this matter. Further, the Company also evaluated the increased risk of tax litigation in Denmark. The Company had updated its analysis of this uncertain tax position at December 31, 2015 and recorded a change in estimate to increase the uncertain tax liability for this item by approximately $59.7 million , from $18.9 million recorded at December 31, 2014 to $78.6 million recorded at December 31, 2015. The amount of the uncertain tax liability for this matter remains at $78.6 million at March 31, 2016. The uncertain tax liability reflects the Company’s best judgment of the facts, circumstances and information available through March 31, 2016. If the Company is not successful in defending its position before the Tribunal or in the Danish courts or in negotiating a mutually acceptable settlement, there is significant risk that the Company could be required to pay significant amounts to SKAT in excess of any related reserve. Such an outcome could have a material adverse impact on the Company’s profitability and liquidity. In addition, prior to any ultimate resolution of this issue before the Tribunal or the Danish courts, based on a change in facts and circumstances, the Company may be required to further increase its uncertain tax liability associated with this matter, which could have a material impact on the Company's reported earnings. The amount of unrecognized tax benefits that would impact the effective tax rate if recognized at March 31, 2016 and December 31, 2015 would be $67.9 and $67.7 million (exclusive of interest and penalties), respectively. Interest and penalties related to unrecognized tax benefits are recorded in income tax expense. It is reasonably possible that there could be material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues, reassessment of existing uncertain tax positions, including the Danish tax matter, or the expiration of applicable statute of limitations; however, the Company is not able to estimate the impact of these items at this time. There were no significant changes to the liability for unrecognized tax benefits during the three months ended March 31, 2016. |
Major Customers
Major Customers | 3 Months Ended |
Mar. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Major Customers | Major Customers On February 5, 2016, Mattress Firm Holding Corp. ("Mattress Firm") acquired all of the outstanding equity interests in HMK Mattress Holdings, LLC ("Sleepy’s"). Sleepy’s has historically been one of the Company's top five customers and, as a result of this acquisition, the combined companies represented 20.8% and 22.2% of the Company's sales for the three months ended March 31, 2016 and 2015, respectively. Net sales from this customer are included in the North America segment. The top five customers, including the impact of the Mattress Firm acquisitions, accounted for approximately 40.6% , and 41.2% of the Company’s sales for the three months ended March 31, 2016 and 2015, respectively. The top five customers, including the impact of the Mattress Firm acquisitions, accounted for approximately 37.8% and 37.7% of accounts receivable as of March 31, 2016 and December 31, 2015, respectively. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share The following table sets forth the components of the numerator and denominator for the computation of basic and diluted earnings per share for net income attributable to Tempur Sealy International. As presented on the Company's Condensed Consolidated Statement of Income, the Company has included the effect of the $1.0 million Comfort Revolution redemption value adjustment, net of tax, for the three months ended March 31, 2015 in net income attributable to Tempur Sealy International, Inc. below. As of March 31, 2016 , the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary. Three Months Ended March 31, (in millions, except per common share amounts) 2016 2015 Numerator: Net income attributable to Tempur Sealy International, Inc. $ 39.6 $ 23.4 Denominator: Denominator for basic earnings per common share-weighted average shares 62.0 60.9 Effect of dilutive securities: Employee stock-based compensation 0.6 1.3 Denominator for diluted earnings per common share-adjusted weighted average shares 62.6 62.2 Basic earnings per common share $ 0.64 $ 0.38 Diluted earnings per common share $ 0.63 $ 0.38 The Company excluded 0.5 million and 0.3 million shares issuable upon exercise of outstanding stock options for the three months ended March 31, 2016 and 2015 , respectively, from the diluted earnings per common share computation because their exercise price was greater than the average market price of Tempur Sealy International’s common stock or they were otherwise anti-dilutive. Holders of non-vested stock-based compensation awards do not maintain voting rights or maintain rights to receive any dividends thereon. |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information The Company operates in two segments: North America and International. Corporate operating expenses are not included in either of the segments and are presented separately as a reconciling item to consolidated results. These segments are strategic business units that are managed separately based on geography. The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S. and Canada. The International segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America. The Company evaluates segment performance based on net sales, gross profit and operating income. The Company’s North America and International segment assets include investments in subsidiaries that are appropriately eliminated in the Company’s accompanying Condensed Consolidated Financial Statements. The remaining inter-segment eliminations are comprised of intercompany accounts receivable and payables. The following table summarizes total assets by segment: March 31, December 31, (in millions) 2016 2015 North America $ 2,498.0 $ 2,533.1 International 488.0 477.1 Corporate 657.3 775.0 Inter-segment eliminations (1,066.5 ) (1,129.7 ) Total assets $ 2,576.8 $ 2,655.5 The following table summarizes property, plant and equipment, net by segment: March 31, December 31, (in millions) 2016 2015 North America $ 238.7 $ 239.2 International 56.2 54.8 Corporate 70.0 67.7 Total property, plant and equipment, net $ 364.9 $ 361.7 The following table summarizes segment information for the three months ended March 31, 2016 : (in millions) North America International Corporate Eliminations Consolidated Bedding sales $ 554.4 $ 113.1 $ — $ — $ 667.5 Other sales 25.6 27.9 — — 53.5 Net sales 580.0 141.0 — — 721.0 Inter-segment sales $ 1.2 $ 0.1 $ — $ (1.3 ) $ — Inter-segment royalty expense (income) 1.7 (1.7 ) — — — Gross profit 214.5 76.5 — — 291.0 Operating income (loss) 77.3 27.3 (27.9 ) — 76.7 Income (loss) before income taxes 77.0 24.4 (45.1 ) — 56.3 Depreciation and amortization (1) $ 10.4 $ 3.8 $ 9.5 $ — $ 23.7 Capital expenditures 5.6 2.3 4.7 — 12.6 (1) Depreciation and amortization includes stock-based compensation amortization expense. The following table summarizes segment information for the three months ended March 31, 2015 : (in millions) North America International Corporate Eliminations Consolidated Bedding sales $ 558.6 $ 117.1 $ — $ — $ 675.7 Other sales 35.5 28.3 — — 63.8 Net sales 594.1 145.4 — — 739.5 Inter-segment sales $ 1.7 $ 0.1 $ — $ (1.8 ) $ — Inter-segment royalty expense (income) 1.5 (1.5 ) — — — Gross profit 203.1 75.6 — — 278.7 Operating income (loss) 57.9 25.3 (28.8 ) — 54.4 Income (loss) before income taxes 56.5 25.3 (46.5 ) — 35.3 Depreciation and amortization (1) $ 10.6 $ 4.0 $ 7.2 $ — $ 21.8 Capital expenditures 8.2 2.1 5.1 — 15.4 (1) Depreciation and amortization includes stock-based compensation amortization expense. The following table summarizes property, plant and equipment, net by geographic region: March 31, December 31, (in millions) 2016 2015 United States $ 301.6 $ 300.1 Canada 7.2 6.8 Other International 56.1 54.8 Total property, plant and equipment, net $ 364.9 $ 361.7 Total International $ 63.3 $ 61.6 The following table summarizes net sales by geographic region: Three Months Ended March 31, (in millions) 2016 2015 United States $ 537.1 $ 547.7 Canada 42.9 46.4 Other International 141.0 145.4 Total net sales $ 721.0 $ 739.5 Total International $ 183.9 $ 191.8 |
Guarantor_Non-Guarantor Financi
Guarantor/Non-Guarantor Financial Information | 3 Months Ended |
Mar. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Guarantor/Non-Guarantor Financial Information | Guarantor/Non-Guarantor Financial Information The $375.0 million and $450.0 million aggregate principal amount of 2020 Senior Notes and 2023 Senior Notes (collectively the "Senior Notes"), respectively, are general unsecured senior obligations of Tempur Sealy International and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by all of Tempur Sealy International’s 100% directly or indirectly owned current and future domestic subsidiaries (the "Combined Guarantor Subsidiaries"). The foreign subsidiaries (the "Combined Non-Guarantor Subsidiaries") represent the foreign operations of the Company and do not guarantee the Senior Notes. A subsidiary guarantor will be released from its obligations under the applicable indenture governing the Senior Notes when: (a) the subsidiary guarantor is sold or sells all or substantially all of its assets; (b) the subsidiary is declared "unrestricted" under the applicable indenture governing the Senior Notes; (c) the subsidiary’s guarantee of indebtedness under the 2012 Credit Agreement (as it may be amended, refinanced or replaced) is released (other than a discharge through repayment); or (d) the requirements for legal or covenant defeasance or discharge of the applicable indenture have been satisfied. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, including transactions with the Company’s wholly-owned subsidiary guarantors and non-guarantor subsidiaries. The Company has accounted for its investments in its subsidiaries under the equity method. The following financial information presents the Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015, the Supplemental Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 , and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 for Tempur Sealy International, Combined Guarantor Subsidiaries and Combined Non-Guarantor Subsidiaries. Supplemental Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended March 31, 2016 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 550.7 $ 184.1 $ (13.8 ) $ 721.0 Cost of sales — 348.4 95.4 (13.8 ) 430.0 Gross profit — 202.3 88.7 — 291.0 Selling and marketing expenses 1.8 102.1 46.2 — 150.1 General, administrative and other expenses 4.8 50.9 16.0 — 71.7 Equity income in earnings of unconsolidated affiliates — — (2.8 ) — (2.8 ) Royalty income, net of royalty expense — (4.7 ) — — (4.7 ) Operating (loss) income (6.6 ) 54.0 29.3 — 76.7 Other expense, net: Third party interest expense, net 20.0 0.8 0.6 — 21.4 Intercompany interest (income) expense, net (1.1 ) — 1.1 — — Interest expense, net 18.9 0.8 1.7 — 21.4 Other (income) expense, net — (1.7 ) 0.7 — (1.0 ) Total other expense (income), net 18.9 (0.9 ) 2.4 — 20.4 Income from equity investees 56.5 22.0 — (78.5 ) — Income before income taxes 31.0 76.9 26.9 (78.5 ) 56.3 Income tax benefit (provision) 8.0 (20.4 ) (4.9 ) — (17.3 ) Net income before non-controlling interest 39.0 56.5 22.0 (78.5 ) 39.0 Less: Net loss attributable to non-controlling interest (0.6 ) (0.6 ) — 0.6 (0.6 ) Net income attributable to Tempur Sealy International, Inc. $ 39.6 $ 57.1 $ 22.0 $ (79.1 ) $ 39.6 Comprehensive income attributable to Tempur Sealy International, Inc. $ 53.8 $ 57.3 $ 45.2 $ (102.5 ) $ 53.8 Supplemental Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended March 31, 2015 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 558.9 $ 192.9 $ (12.3 ) $ 739.5 Cost of sales — 367.6 105.5 (12.3 ) 460.8 Gross profit — 191.3 87.4 — 278.7 Selling and marketing expenses 0.8 105.5 47.5 — 153.8 General, administrative and other expenses 3.6 57.6 16.5 — 77.7 Equity income in earnings of unconsolidated affiliates — — (3.0 ) — (3.0 ) Royalty income, net of royalty expense — (4.2 ) — — (4.2 ) Operating (loss) income (4.4 ) 32.4 26.4 — 54.4 Other expense, net: Third party interest expense, net 6.7 13.1 0.6 — 20.4 Intercompany interest expense (income), net 8.2 (8.9 ) 0.7 — — Interest expense, net 14.9 4.2 1.3 — 20.4 Other income, net — (0.1 ) (1.2 ) — (1.3 ) Total other expense, net 14.9 4.1 0.1 — 19.1 Income from equity investees 37.5 20.9 — (58.4 ) — Income before income taxes 18.2 49.2 26.3 (58.4 ) 35.3 Income tax benefit (provision) 6.8 (11.7 ) (5.4 ) — (10.3 ) Net income before non-controlling interest 25.0 37.5 20.9 (58.4 ) 25.0 Less: Net income attributable to non-controlling interest 1.6 1.6 — (1.6 ) 1.6 Net income attributable to Tempur Sealy International, Inc. $ 23.4 $ 35.9 $ 20.9 $ (56.8 ) $ 23.4 Comprehensive (loss) income attributable to Tempur Sealy International, Inc. $ (12.8 ) $ 36.1 $ (18.3 ) $ (17.8 ) $ (12.8 ) Supplemental Condensed Consolidated Balance Sheets March 31, 2016 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 6.3 $ 30.8 $ — $ 37.1 Accounts receivable, net — 239.0 145.7 — 384.7 Inventories, net — 154.6 59.8 — 214.4 Income taxes receivable 202.5 — — (202.5 ) — Prepaid expenses and other current assets 0.8 47.9 24.0 — 72.7 Total Current Assets 203.3 447.8 260.3 (202.5 ) 708.9 Property, plant and equipment, net — 301.6 63.3 — 364.9 Goodwill — 501.3 216.4 — 717.7 Other intangible assets, net — 609.7 86.4 — 696.1 Deferred income taxes 15.7 — 13.0 (15.7 ) 13.0 Other non-current assets — 27.0 49.2 — 76.2 Net investment in subsidiaries 2,059.8 — — (2,059.8 ) — Due from affiliates 451.3 1,772.6 2.7 (2,226.6 ) — Total Assets $ 2,730.1 $ 3,660.0 $ 691.3 $ (4,504.6 ) $ 2,576.8 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ 165.2 $ 50.3 $ — $ 215.5 Accrued expenses and other current liabilities 20.9 157.8 68.1 — 246.8 Income taxes payable — 212.9 3.5 (202.5 ) 13.9 Current portion of long-term debt — 170.5 8.4 — 178.9 Total Current Liabilities 20.9 706.4 130.3 (202.5 ) 655.1 Long-term debt, net 812.5 481.2 — — 1,293.7 Deferred income taxes — 187.1 22.7 (15.7 ) 194.1 Other non-current liabilities — 164.8 4.9 — 169.7 Due to affiliates 1,632.5 60.7 592.4 (2,285.6 ) — Total Liabilities 2,465.9 1,600.2 750.3 (2,503.8 ) 2,312.6 Redeemable non-controlling interest 11.8 11.8 — (11.8 ) 11.8 Total Stockholders’ Equity 252.4 2,048.0 (59.0 ) (1,989.0 ) 252.4 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity $ 2,730.1 $ 3,660.0 $ 691.3 $ (4,504.6 ) $ 2,576.8 Supplemental Condensed Consolidated Balance Sheets December 31, 2015 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 121.8 $ 32.1 $ — $ 153.9 Accounts receivable, net — 231.9 147.5 — 379.4 Inventories, net — 145.3 53.9 — 199.2 Income taxes receivable 193.1 — — (193.1 ) — Prepaid expenses and other current assets — 43.5 33.1 — 76.6 Total Current Assets 193.1 542.5 266.6 (193.1 ) 809.1 Property, plant and equipment, net — 300.1 61.6 — 361.7 Goodwill — 501.4 208.0 — 709.4 Other intangible assets, net — 612.9 82.5 — 695.4 Deferred income taxes 16.0 — 12.2 (16.0 ) 12.2 Other non-current assets — 23.3 44.4 — 67.7 Net investment in subsidiaries 1,960.5 — — (1,960.5 ) — Due from affiliates 548.1 1,655.3 4.8 (2,208.2 ) — Total Assets $ 2,717.7 $ 3,635.5 $ 680.1 $ (4,377.8 ) $ 2,655.5 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ 212.2 $ 54.1 $ — $ 266.3 Accrued expenses and other current liabilities 1.4 183.8 68.8 — 254.0 Deferred income taxes — — — — — Income taxes payable — 196.0 8.3 (193.1 ) 11.2 Current portion of long-term debt — 168.7 12.8 — 181.5 Total Current Liabilities 1.4 760.7 144.0 (193.1 ) 713.0 Long-term debt, net 811.9 461.4 — — 1,273.3 Deferred income taxes — 189.8 21.6 (16.0 ) 195.4 Other non-current liabilities — 166.6 4.6 — 171.2 Due to affiliates 1,601.8 96.5 604.9 (2,303.2 ) — Total Liabilities 2,415.1 1,675.0 775.1 (2,512.3 ) 2,352.9 Redeemable non-controlling interest 12.4 12.4 — (12.4 ) 12.4 Total Stockholders’ Equity 290.2 1,948.1 (95.0 ) (1,853.1 ) 290.2 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity $ 2,717.7 $ 3,635.5 $ 680.1 $ (4,377.8 ) $ 2,655.5 Supplemental Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2016 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash (used in) provided by operating activities $ (1.3 ) $ (37.4 ) $ 19.9 $ — $ (18.8 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment — (10.2 ) (2.4 ) — (12.6 ) Other — (0.2 ) — — (0.2 ) Net cash used in investing activities — (10.4 ) (2.4 ) — (12.8 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations — 96.3 5.2 — 101.5 Repayments of borrowings under long-term debt obligations — (76.5 ) (10.5 ) — (87.0 ) Net activity in investment in and advances from (to) subsidiaries and affiliates 99.1 (86.9 ) (12.2 ) — Proceeds from exercise of stock options 3.0 — — — 3.0 Excess tax benefit from stock-based compensation 1.2 — — — 1.2 Treasury stock repurchased (102.0 ) — — — (102.0 ) Other — (0.6 ) 1.0 — 0.4 Net cash provided by (used in) financing activities 1.3 (67.7 ) (16.5 ) — (82.9 ) NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — (2.3 ) — (2.3 ) Decrease in cash and cash equivalents — (115.5 ) (1.3 ) — (116.8 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD — 121.8 32.1 — 153.9 CASH AND CASH EQUIVALENTS, END OF PERIOD $ — $ 6.3 $ 30.8 $ — $ 37.1 Supplemental Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2015 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash (used in) provided by operating activities $ (13.5 ) $ 10.4 $ (3.3 ) $ — $ (6.4 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment — (13.1 ) (2.3 ) — (15.4 ) Net cash used in investing activities — (13.1 ) (2.3 ) — (15.4 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations — 93.5 4.4 — 97.9 Repayments of borrowings under long-term debt obligations — (98.8 ) — — (98.8 ) Net activity in investment in and advances from (to) subsidiaries and affiliates 12.6 (1.4 ) (11.2 ) — — Proceeds from exercise of stock options 1.6 — — — 1.6 Treasury stock repurchased (1.1 ) — — — (1.1 ) Other — (0.4 ) 0.6 — 0.2 Net cash provided by (used in) financing activities 13.1 (7.1 ) (6.2 ) — (0.2 ) NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — 4.5 — 4.5 Decrease in cash and cash equivalents (0.4 ) (9.8 ) (7.3 ) — (17.5 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0.4 25.5 36.6 — 62.5 CASH AND CASH EQUIVALENTS, END OF PERIOD $ — $ 15.7 $ 29.3 $ — $ 45.0 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Description of Business | Basis of Presentation and Description of Business. Tempur Sealy International, Inc., a Delaware corporation, together with its subsidiaries is a U.S. based, multinational company. The term "Tempur Sealy International" refers to Tempur Sealy International, Inc. only, and the term "Company" refers to Tempur Sealy International, Inc. and its consolidated subsidiaries. The Company develops, manufactures, markets and sells bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories. The Company also derives income from royalties by licensing Sealy® and Stearns & Foster® brands, technology and trademarks to other manufacturers. The Company sells its products through two sales channels: Retail and Other. The Company’s Condensed Consolidated Financial Statements include the results of Comfort Revolution, LLC ("Comfort Revolution"), a 45.0% owned joint venture. Comfort Revolution constitutes a variable interest entity ("VIE") for which the Company is considered to be the primary beneficiary due to the Company's disproportionate share of the economic risk associated with its equity contribution, debt financing and other factors that were considered in the related-party analysis surrounding the identification of the primary beneficiary. The operations of Comfort Revolution are not material to the Company's Condensed Consolidated Financial Statements. The Company also 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 effective control, and consolidation is not otherwise required. The Company's carrying value in its equity method investments of $14.1 million and $13.6 million at March 31, 2016 and December 31, 2015 , respectively, are recorded in other non-current assets within the accompanying Condensed Consolidated Balance Sheets. The Company’s share of earnings is recorded as equity income in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income. 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 ("U.S. GAAP" or "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, 2015 , included in the Company’s Annual Report on Form 10-K filed on February 12, 2016. 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. |
Inventories | Inventories . Inventories are stated at the lower of cost or market, determined by the first-in, first-out method |
Accrued Sales Returns | 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. Accrued sales returns are included in accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets. |
Warranties | 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. In estimating its warranty obligations, 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 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 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 pillows have a warranty term of 3 years, non-prorated. |
Revenue Recognition | Revenue Recognition . Sales of products are recognized when persuasive evidence of an arrangement exists, title passes to customers and the risks and rewards of ownership are transferred, the sales price is fixed or determinable and collectability is reasonably assured. The Company extends volume discounts to certain customers, as well as promotional allowances, floor sample discounts, commissions paid to retail associates and slotting fees, and reflects these amounts as a reduction of sales at the time revenue is recognized based on historical experience. The Company also reports sales net of tax assessed by qualifying governmental authorities. The Company extends credit based on the creditworthiness of its customers. No collateral is required on sales made in the normal course of business. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s accounts receivable. The Company regularly reviews the adequacy of its allowance for doubtful accounts. The Company determines the allowance based on historical write-off experience and current economic conditions and also considers factors such as customer credit, past transaction history with the customer and changes in customer payment terms when determining whether the collection of a customer receivable is reasonably assured. Account balances are charged off against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. |
Cooperative Advertising, Rebate and Other Promotional Programs | Cooperative Advertising, Rebate and Other Promotional Programs . The Company enters into agreements with customers to provide funds for advertising and promotions. The Company also enters into volume and other rebate programs with customers. When sales are made to these customers, the Company records liabilities pursuant to these agreements. The Company periodically assesses these liabilities based on actual sales and claims to determine whether all of the cooperative advertising earned will be used by the customer or whether the customer will meet the requirements to receive rebate funds. The Company generally negotiates these agreements on a customer-by-customer basis. Some of these agreements extend over several years. Significant estimates are required at any point in time with regard to the ultimate reimbursement to be claimed by the customers. Subsequent revisions to these estimates are recorded and charged to earnings in the period in which they are identified. Rebates and cooperative advertising are classified as a reduction of revenue and presented within net sales on the accompanying Condensed Consolidated Statements of Income. Certain cooperative advertising expenses are reported as components of selling and marketing expenses in the accompanying Condensed Consolidated Statements of Income because the Company receives an identifiable benefit and the fair value of the advertising benefit can be reasonably estimated. |
Derivative Financial Instruments | Derivative Financial Instruments . Derivative financial instruments are used in the normal course of business to manage interest rate and foreign currency exchange risks. The financial instruments used by the Company are straight-forward, non-leveraged instruments. The counterparties to these financial instruments are financial institutions with strong credit ratings. The Company maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit ratings of these institutions. For all transactions designated as hedges, the hedging relationships are formally documented at the inception and on an ongoing basis in offsetting changes in cash flows of the hedged transaction. The Company records derivative financial instruments on the Condensed Consolidated Balance Sheets as either an asset or liability measured at its fair value. Changes in a derivative's fair value (i.e. unrealized gains or losses) are recorded each period in earnings or other comprehensive loss ("OCL"), depending on whether the derivative is designated and is effective as a hedged transaction, and on the type of hedging relationship. For derivative financial instruments that are designated as a hedge, unrealized gains and losses related to the effective portion are either recognized in income immediately to offset the realized gain or loss on the hedged item, or are deferred and reported as a component of accumulated OCL (“AOCL”) in stockholders' equity and subsequently recognized in net income when the hedged item affects net income. The change in fair value of the ineffective portion of a derivative financial instrument is recognized in net income immediately. For derivative instruments that are not designated as hedges, the gain or loss related to the change in fair value is also recorded to net income immediately. The Company manages a portion of the risk associated with fluctuations in foreign currencies related to intercompany and third party inventory purchases denominated in foreign currencies through foreign exchange forward contracts designated as cash flow hedges. |
Income Taxes | Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are also recognized for the estimated future effects of tax loss carry forwards. The effect of changes in tax rates on deferred taxes is recognized in the period in which any such change is enacted. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertain foreign and domestic tax positions utilizing a proscribed recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers , that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This ASU is based on the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating this ASU to determine the Company's adoption method and the impact it will have on the Company's Condensed Consolidated Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , that requires lessees to recognize most leases on the balance sheet and provides for expanded disclosures on key information about leasing arrangements. This ASU is effective for interim and annual periods beginning after December 15, 2018, however early adoption is permitted. In transition, entities are required to use a modified retrospective approach for the adoption of the new standard. The Company is currently evaluating this ASU to determine the impact it will have on the Company's Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. When adopting this ASU, entities should use a modified retrospective approach when adopting amendments related to the timing of excess tax benefit recognition, minimum statutory withholding requirements and forfeitures, and a retrospective approach when adopting amendments related to recognition of excess tax benefits and tax deficiencies in the income statement; and entities have the option of using a prospective or a retrospective transition approach when adopting amendments related to the presentation of excess tax benefits on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating this ASU to determine the Company's adoption method and the impact it will have on the Company's Condensed Consolidated Financial Statements. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Inventory, Current | Inventories are stated at the lower of cost or market, determined by the first-in, first-out method, and consist of the following: March 31, December 31, (in millions) 2016 2015 Finished goods $ 137.5 $ 126.7 Work-in-process 13.6 14.0 Raw materials and supplies 63.3 58.5 $ 214.4 $ 199.2 |
Changes in accrued sales returns | The Company had the following activity for sales returns from December 31, 2015 to March 31, 2016 : (in millions) Balance as of December 31, 2015 $ 28.5 Amounts accrued 34.2 Returns charged to accrual (32.8 ) Balance as of March 31, 2016 $ 29.9 |
Warranty activity | The Company had the following activity for its accrued warranty expense from December 31, 2015 to March 31, 2016 : (in millions) Balance as of December 31, 2015 $ 29.6 Amounts accrued 7.9 Warranties charged to accrual (8.3 ) Balance as of March 31, 2016 $ 29.2 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill by business segment | The following summarizes changes to the Company’s goodwill, by segment: (in millions) North America International Consolidated Balance as of December 31, 2015 $ 562.8 $ 146.6 $ 709.4 Foreign currency translation adjustments 4.0 4.3 8.3 Balance as of March 31, 2016 $ 566.8 $ 150.9 $ 717.7 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long term debt | Debt for the Company consists of the following: (in millions, except percentages) March 31, 2016 December 31, 2015 Debt: Amount Rate Amount Rate Maturity Date Revolver $ 33.7 (1) $ — N/A March 18, 2018 Term A Facility 396.6 (2) 409.4 (2) March 18, 2018 Term B Facility 99.0 (3) 100.1 (3) March 18, 2020 2020 Senior Notes 375.0 6.875% 375.0 6.875% December 15, 2020 2023 Senior Notes 450.0 5.625% 450.0 5.625% October 15, 2023 8.0% Sealy Notes 112.8 8.0% 111.1 8.0% July 15, 2016 Capital lease obligations and other 29.1 34.0 Various Total debt 1,496.2 1,479.6 Less: deferred financing costs (23.6 ) (24.8 ) Total debt, net 1,472.6 1,454.8 Less: current portion (178.9 ) (181.5 ) Total long-term debt, net $ 1,293.7 $ 1,273.3 (1) Interest at Base Rate plus applicable margin of 1.50% or LIBOR plus applicable margin of 2.50% as of March 31, 2016. (2) Interest at LIBOR plus applicable margin of 1.75% as of March 31, 2016 and 2.00% as of December 31, 2015. (3) Interest at LIBOR, subject to a 0.75% floor plus applicable margin of 2.75% as of March 31, 2016 and December 31, 2015. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The fair values of material financial instruments are as follows: Fair Value (in millions) March 31, 2016 December 31, 2015 2020 Senior Notes $ 395.2 $ 393.8 2023 Senior Notes 462.9 453.4 8.0% Sealy Notes 113.8 112.7 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Changes in accumulated other comprehensive loss | AOCL consisted of the following: Three Months Ended March 31, (in millions) 2016 2015 Foreign Currency Translation Balance at beginning of period $ (115.4 ) $ (54.0 ) Other comprehensive income (loss): Foreign currency translation adjustments (1) 19.1 (37.6 ) Balance at end of period $ (96.3 ) $ (91.6 ) Interest Rate Swap Agreement Balance at beginning of period $ — $ (0.7 ) Other comprehensive income (loss): Net change from period revaluations: — 0.7 Tax expense (2) — (0.3 ) Total other comprehensive income before reclassifications, net of tax $ — $ 0.4 Net amount reclassified to earnings (3) — (0.5 ) Tax benefit (2) — 0.2 Total amount reclassified from accumulated other comprehensive loss, net of tax $ — $ (0.3 ) Total other comprehensive income — 0.1 Balance at end of period $ — $ (0.6 ) Pensions Balance at beginning of period $ (1.4 ) $ (2.4 ) Other comprehensive income (loss): Net change from period revaluations: — — Balance at end of period $ (1.4 ) $ (2.4 ) Foreign Exchange Forward Contracts Balance at beginning of period $ 6.6 $ 1.3 Other comprehensive (loss) income: Net change from period revaluations: (5.0 ) 3.7 Tax benefit (expense) (2) 1.3 (1.0 ) Total other comprehensive (loss) income before reclassifications, net of tax $ (3.7 ) $ 2.7 Net amount reclassified to earnings (4) (1.6 ) (1.9 ) Tax benefit (2) 0.4 0.5 Total amount reclassified from accumulated other comprehensive loss, net of tax $ (1.2 ) $ (1.4 ) Total other comprehensive (loss) income (4.9 ) 1.3 Balance at end of period $ 1.7 $ 2.6 (1) In 2016 and 2015, no amounts were reclassified to earnings. (2) These amounts were included in the income tax provision on the accompanying Condensed Consolidated Statements of Income. (3) This amount was included in interest expense, net on the accompanying Condensed Consolidated Statements of Income. (4) This amount was included in cost of sales, net on the accompanying Condensed Consolidated Statements of Income. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock-based compensation expense | A summary of the Company’s stock-based compensation expense is presented in the following table. Three Months Ended (in millions) 2016 2015 PRSU expense $ 2.5 $ 2.0 Option expense 1.7 1.5 RSU/DSU expense 1.9 0.5 Total stock-based compensation expense $ 6.1 $ 4.0 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per common share | The following table sets forth the components of the numerator and denominator for the computation of basic and diluted earnings per share for net income attributable to Tempur Sealy International. As presented on the Company's Condensed Consolidated Statement of Income, the Company has included the effect of the $1.0 million Comfort Revolution redemption value adjustment, net of tax, for the three months ended March 31, 2015 in net income attributable to Tempur Sealy International, Inc. below. As of March 31, 2016 , the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary. Three Months Ended March 31, (in millions, except per common share amounts) 2016 2015 Numerator: Net income attributable to Tempur Sealy International, Inc. $ 39.6 $ 23.4 Denominator: Denominator for basic earnings per common share-weighted average shares 62.0 60.9 Effect of dilutive securities: Employee stock-based compensation 0.6 1.3 Denominator for diluted earnings per common share-adjusted weighted average shares 62.6 62.2 Basic earnings per common share $ 0.64 $ 0.38 Diluted earnings per common share $ 0.63 $ 0.38 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Total assets and long-lived assets by segment | The following table summarizes total assets by segment: March 31, December 31, (in millions) 2016 2015 North America $ 2,498.0 $ 2,533.1 International 488.0 477.1 Corporate 657.3 775.0 Inter-segment eliminations (1,066.5 ) (1,129.7 ) Total assets $ 2,576.8 $ 2,655.5 The following table summarizes property, plant and equipment, net by segment: March 31, December 31, (in millions) 2016 2015 North America $ 238.7 $ 239.2 International 56.2 54.8 Corporate 70.0 67.7 Total property, plant and equipment, net $ 364.9 $ 361.7 |
Segment financial information | The following table summarizes segment information for the three months ended March 31, 2016 : (in millions) North America International Corporate Eliminations Consolidated Bedding sales $ 554.4 $ 113.1 $ — $ — $ 667.5 Other sales 25.6 27.9 — — 53.5 Net sales 580.0 141.0 — — 721.0 Inter-segment sales $ 1.2 $ 0.1 $ — $ (1.3 ) $ — Inter-segment royalty expense (income) 1.7 (1.7 ) — — — Gross profit 214.5 76.5 — — 291.0 Operating income (loss) 77.3 27.3 (27.9 ) — 76.7 Income (loss) before income taxes 77.0 24.4 (45.1 ) — 56.3 Depreciation and amortization (1) $ 10.4 $ 3.8 $ 9.5 $ — $ 23.7 Capital expenditures 5.6 2.3 4.7 — 12.6 (1) Depreciation and amortization includes stock-based compensation amortization expense. The following table summarizes segment information for the three months ended March 31, 2015 : (in millions) North America International Corporate Eliminations Consolidated Bedding sales $ 558.6 $ 117.1 $ — $ — $ 675.7 Other sales 35.5 28.3 — — 63.8 Net sales 594.1 145.4 — — 739.5 Inter-segment sales $ 1.7 $ 0.1 $ — $ (1.8 ) $ — Inter-segment royalty expense (income) 1.5 (1.5 ) — — — Gross profit 203.1 75.6 — — 278.7 Operating income (loss) 57.9 25.3 (28.8 ) — 54.4 Income (loss) before income taxes 56.5 25.3 (46.5 ) — 35.3 Depreciation and amortization (1) $ 10.6 $ 4.0 $ 7.2 $ — $ 21.8 Capital expenditures 8.2 2.1 5.1 — 15.4 (1) Depreciation and amortization includes stock-based compensation amortization expense. |
Long-lived assets by geographic region | The following table summarizes property, plant and equipment, net by geographic region: March 31, December 31, (in millions) 2016 2015 United States $ 301.6 $ 300.1 Canada 7.2 6.8 Other International 56.1 54.8 Total property, plant and equipment, net $ 364.9 $ 361.7 Total International $ 63.3 $ 61.6 |
Net sales by geographic region | The following table summarizes net sales by geographic region: Three Months Ended March 31, (in millions) 2016 2015 United States $ 537.1 $ 547.7 Canada 42.9 46.4 Other International 141.0 145.4 Total net sales $ 721.0 $ 739.5 Total International $ 183.9 $ 191.8 |
Guarantor_Non-Guarantor Finan30
Guarantor/Non-Guarantor Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Schedule of supplemental condensed consolidated statements of income and comprehensive income | Supplemental Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended March 31, 2016 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 550.7 $ 184.1 $ (13.8 ) $ 721.0 Cost of sales — 348.4 95.4 (13.8 ) 430.0 Gross profit — 202.3 88.7 — 291.0 Selling and marketing expenses 1.8 102.1 46.2 — 150.1 General, administrative and other expenses 4.8 50.9 16.0 — 71.7 Equity income in earnings of unconsolidated affiliates — — (2.8 ) — (2.8 ) Royalty income, net of royalty expense — (4.7 ) — — (4.7 ) Operating (loss) income (6.6 ) 54.0 29.3 — 76.7 Other expense, net: Third party interest expense, net 20.0 0.8 0.6 — 21.4 Intercompany interest (income) expense, net (1.1 ) — 1.1 — — Interest expense, net 18.9 0.8 1.7 — 21.4 Other (income) expense, net — (1.7 ) 0.7 — (1.0 ) Total other expense (income), net 18.9 (0.9 ) 2.4 — 20.4 Income from equity investees 56.5 22.0 — (78.5 ) — Income before income taxes 31.0 76.9 26.9 (78.5 ) 56.3 Income tax benefit (provision) 8.0 (20.4 ) (4.9 ) — (17.3 ) Net income before non-controlling interest 39.0 56.5 22.0 (78.5 ) 39.0 Less: Net loss attributable to non-controlling interest (0.6 ) (0.6 ) — 0.6 (0.6 ) Net income attributable to Tempur Sealy International, Inc. $ 39.6 $ 57.1 $ 22.0 $ (79.1 ) $ 39.6 Comprehensive income attributable to Tempur Sealy International, Inc. $ 53.8 $ 57.3 $ 45.2 $ (102.5 ) $ 53.8 Supplemental Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended March 31, 2015 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 558.9 $ 192.9 $ (12.3 ) $ 739.5 Cost of sales — 367.6 105.5 (12.3 ) 460.8 Gross profit — 191.3 87.4 — 278.7 Selling and marketing expenses 0.8 105.5 47.5 — 153.8 General, administrative and other expenses 3.6 57.6 16.5 — 77.7 Equity income in earnings of unconsolidated affiliates — — (3.0 ) — (3.0 ) Royalty income, net of royalty expense — (4.2 ) — — (4.2 ) Operating (loss) income (4.4 ) 32.4 26.4 — 54.4 Other expense, net: Third party interest expense, net 6.7 13.1 0.6 — 20.4 Intercompany interest expense (income), net 8.2 (8.9 ) 0.7 — — Interest expense, net 14.9 4.2 1.3 — 20.4 Other income, net — (0.1 ) (1.2 ) — (1.3 ) Total other expense, net 14.9 4.1 0.1 — 19.1 Income from equity investees 37.5 20.9 — (58.4 ) — Income before income taxes 18.2 49.2 26.3 (58.4 ) 35.3 Income tax benefit (provision) 6.8 (11.7 ) (5.4 ) — (10.3 ) Net income before non-controlling interest 25.0 37.5 20.9 (58.4 ) 25.0 Less: Net income attributable to non-controlling interest 1.6 1.6 — (1.6 ) 1.6 Net income attributable to Tempur Sealy International, Inc. $ 23.4 $ 35.9 $ 20.9 $ (56.8 ) $ 23.4 Comprehensive (loss) income attributable to Tempur Sealy International, Inc. $ (12.8 ) $ 36.1 $ (18.3 ) $ (17.8 ) $ (12.8 ) |
Schedule of supplemental condensed consolidated balance sheets | Supplemental Condensed Consolidated Balance Sheets March 31, 2016 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 6.3 $ 30.8 $ — $ 37.1 Accounts receivable, net — 239.0 145.7 — 384.7 Inventories, net — 154.6 59.8 — 214.4 Income taxes receivable 202.5 — — (202.5 ) — Prepaid expenses and other current assets 0.8 47.9 24.0 — 72.7 Total Current Assets 203.3 447.8 260.3 (202.5 ) 708.9 Property, plant and equipment, net — 301.6 63.3 — 364.9 Goodwill — 501.3 216.4 — 717.7 Other intangible assets, net — 609.7 86.4 — 696.1 Deferred income taxes 15.7 — 13.0 (15.7 ) 13.0 Other non-current assets — 27.0 49.2 — 76.2 Net investment in subsidiaries 2,059.8 — — (2,059.8 ) — Due from affiliates 451.3 1,772.6 2.7 (2,226.6 ) — Total Assets $ 2,730.1 $ 3,660.0 $ 691.3 $ (4,504.6 ) $ 2,576.8 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ 165.2 $ 50.3 $ — $ 215.5 Accrued expenses and other current liabilities 20.9 157.8 68.1 — 246.8 Income taxes payable — 212.9 3.5 (202.5 ) 13.9 Current portion of long-term debt — 170.5 8.4 — 178.9 Total Current Liabilities 20.9 706.4 130.3 (202.5 ) 655.1 Long-term debt, net 812.5 481.2 — — 1,293.7 Deferred income taxes — 187.1 22.7 (15.7 ) 194.1 Other non-current liabilities — 164.8 4.9 — 169.7 Due to affiliates 1,632.5 60.7 592.4 (2,285.6 ) — Total Liabilities 2,465.9 1,600.2 750.3 (2,503.8 ) 2,312.6 Redeemable non-controlling interest 11.8 11.8 — (11.8 ) 11.8 Total Stockholders’ Equity 252.4 2,048.0 (59.0 ) (1,989.0 ) 252.4 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity $ 2,730.1 $ 3,660.0 $ 691.3 $ (4,504.6 ) $ 2,576.8 Supplemental Condensed Consolidated Balance Sheets December 31, 2015 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ — $ 121.8 $ 32.1 $ — $ 153.9 Accounts receivable, net — 231.9 147.5 — 379.4 Inventories, net — 145.3 53.9 — 199.2 Income taxes receivable 193.1 — — (193.1 ) — Prepaid expenses and other current assets — 43.5 33.1 — 76.6 Total Current Assets 193.1 542.5 266.6 (193.1 ) 809.1 Property, plant and equipment, net — 300.1 61.6 — 361.7 Goodwill — 501.4 208.0 — 709.4 Other intangible assets, net — 612.9 82.5 — 695.4 Deferred income taxes 16.0 — 12.2 (16.0 ) 12.2 Other non-current assets — 23.3 44.4 — 67.7 Net investment in subsidiaries 1,960.5 — — (1,960.5 ) — Due from affiliates 548.1 1,655.3 4.8 (2,208.2 ) — Total Assets $ 2,717.7 $ 3,635.5 $ 680.1 $ (4,377.8 ) $ 2,655.5 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ 212.2 $ 54.1 $ — $ 266.3 Accrued expenses and other current liabilities 1.4 183.8 68.8 — 254.0 Deferred income taxes — — — — — Income taxes payable — 196.0 8.3 (193.1 ) 11.2 Current portion of long-term debt — 168.7 12.8 — 181.5 Total Current Liabilities 1.4 760.7 144.0 (193.1 ) 713.0 Long-term debt, net 811.9 461.4 — — 1,273.3 Deferred income taxes — 189.8 21.6 (16.0 ) 195.4 Other non-current liabilities — 166.6 4.6 — 171.2 Due to affiliates 1,601.8 96.5 604.9 (2,303.2 ) — Total Liabilities 2,415.1 1,675.0 775.1 (2,512.3 ) 2,352.9 Redeemable non-controlling interest 12.4 12.4 — (12.4 ) 12.4 Total Stockholders’ Equity 290.2 1,948.1 (95.0 ) (1,853.1 ) 290.2 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity $ 2,717.7 $ 3,635.5 $ 680.1 $ (4,377.8 ) $ 2,655.5 |
Schedule of supplemental condensed consolidated statements of cash flows | Supplemental Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2016 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash (used in) provided by operating activities $ (1.3 ) $ (37.4 ) $ 19.9 $ — $ (18.8 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment — (10.2 ) (2.4 ) — (12.6 ) Other — (0.2 ) — — (0.2 ) Net cash used in investing activities — (10.4 ) (2.4 ) — (12.8 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations — 96.3 5.2 — 101.5 Repayments of borrowings under long-term debt obligations — (76.5 ) (10.5 ) — (87.0 ) Net activity in investment in and advances from (to) subsidiaries and affiliates 99.1 (86.9 ) (12.2 ) — Proceeds from exercise of stock options 3.0 — — — 3.0 Excess tax benefit from stock-based compensation 1.2 — — — 1.2 Treasury stock repurchased (102.0 ) — — — (102.0 ) Other — (0.6 ) 1.0 — 0.4 Net cash provided by (used in) financing activities 1.3 (67.7 ) (16.5 ) — (82.9 ) NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — (2.3 ) — (2.3 ) Decrease in cash and cash equivalents — (115.5 ) (1.3 ) — (116.8 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD — 121.8 32.1 — 153.9 CASH AND CASH EQUIVALENTS, END OF PERIOD $ — $ 6.3 $ 30.8 $ — $ 37.1 Supplemental Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2015 (in millions) Tempur Sealy International, Inc. (Ultimate Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net cash (used in) provided by operating activities $ (13.5 ) $ 10.4 $ (3.3 ) $ — $ (6.4 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment — (13.1 ) (2.3 ) — (15.4 ) Net cash used in investing activities — (13.1 ) (2.3 ) — (15.4 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations — 93.5 4.4 — 97.9 Repayments of borrowings under long-term debt obligations — (98.8 ) — — (98.8 ) Net activity in investment in and advances from (to) subsidiaries and affiliates 12.6 (1.4 ) (11.2 ) — — Proceeds from exercise of stock options 1.6 — — — 1.6 Treasury stock repurchased (1.1 ) — — — (1.1 ) Other — (0.4 ) 0.6 — 0.2 Net cash provided by (used in) financing activities 13.1 (7.1 ) (6.2 ) — (0.2 ) NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — 4.5 — 4.5 Decrease in cash and cash equivalents (0.4 ) (9.8 ) (7.3 ) — (17.5 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0.4 25.5 36.6 — 62.5 CASH AND CASH EQUIVALENTS, END OF PERIOD $ — $ 15.7 $ 29.3 $ — $ 45.0 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Basis of presentation and description of business (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)channel | Dec. 31, 2015USD ($) | |
Business Acquisition [Line Items] | ||
Number of products sales channels | channel | 2 | |
Ownership percentage | 50.00% | |
Net investment | $ | $ 14.1 | $ 13.6 |
Comfort Revolution | ||
Business Acquisition [Line Items] | ||
Equity method investment, ownership percentage | 45.00% |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Inventory, warranty and other (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Inventory [Abstract] | ||
Finished goods | $ 137.5 | $ 126.7 |
Work-in-process | 13.6 | 14 |
Raw materials and supplies | 63.3 | 58.5 |
Total | 214.4 | 199.2 |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Accrued expenses | 14.2 | 14.9 |
Other non-current liabilities | 15 | 14.7 |
Revenue Recognition [Abstract] | ||
Allowance for doubtful accounts included in accounts receivable, net | 24.9 | $ 23.3 |
Foreign Exchange Forward | ||
Revenue Recognition [Abstract] | ||
Notional amount | 81 | |
Gain on derivative | $ 1.7 | |
North America | Pillows | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 3 years | |
Non-prorated | International | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 5 years | |
Prorated | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 10 years | |
Minimum | North America | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 10 years | |
Minimum | International | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 5 years | |
Minimum | Non-prorated | North America | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 10 years | |
Maximum | North America | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 25 years | |
Maximum | International | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 15 years | |
Maximum | Non-prorated | North America | Mattresses | ||
Warranty Term [Abstract] | ||
Warranty term (in years) | 15 years | |
Sales Returns | ||
Sales returns [Roll Forward] | ||
Beginning balance | $ 28.5 | |
Amounts accrued | 34.2 | |
Returns charged to accrual | (32.8) | |
Ending balance | 29.9 | |
Warranty Reserves | ||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | 29.6 | |
Amounts accrued | 7.9 | |
Warranties charged to accrual | (8.3) | |
Ending balance | $ 29.2 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 709.4 |
Foreign currency translation adjustments | 8.3 |
Ending balance | 717.7 |
Operating Segments | North America | |
Goodwill [Roll Forward] | |
Beginning balance | 562.8 |
Foreign currency translation adjustments | 4 |
Ending balance | 566.8 |
Operating Segments | International | |
Goodwill [Roll Forward] | |
Beginning balance | 146.6 |
Foreign currency translation adjustments | 4.3 |
Ending balance | $ 150.9 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | |
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Total debt | $ 1,496,200,000 | $ 1,479,600,000 | |
Less: deferred financing costs | (23,600,000) | (24,800,000) | |
Total debt, net | 1,472,600,000 | 1,454,800,000 | |
Less: current portion | (178,900,000) | (181,500,000) | |
Total long-term debt, net | 1,293,700,000 | 1,273,300,000 | |
Line of Credit Facility [Abstract] | |||
Maximum borrowing capacity | 350,000,000 | ||
Subsequent Event | |||
Line of Credit Facility [Abstract] | |||
Write off of deferred financing costs | $ 11,000,000 | ||
2020 Senior Notes | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Senior notes | $ 375,000,000 | $ 375,000,000 | |
Line of Credit Facility [Abstract] | |||
Stated percentage | 6.875% | 6.875% | |
2023 Senior Notes | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Senior notes | $ 450,000,000 | $ 450,000,000 | |
Line of Credit Facility [Abstract] | |||
Stated percentage | 5.625% | 5.625% | |
Sealy notes | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
8.0% Sealy Notes | $ 112,800,000 | $ 111,100,000 | |
Line of Credit Facility [Abstract] | |||
Stated percentage | 8.00% | 8.00% | |
Capital lease obligations and other | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Capital lease obligations and other | $ 29,100,000 | $ 34,000,000 | |
Revolver | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Line of credit | $ 33,700,000 | 0 | |
Revolver | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Abstract] | |||
Index rate or LIBOR plus (in hundredths) | 2.50% | ||
Revolver | Base Rate | |||
Line of Credit Facility [Abstract] | |||
Index rate or LIBOR plus (in hundredths) | 1.50% | ||
2012 Credit Agreement | Term A Facility | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Line of credit | $ 396,600,000 | $ 409,400,000 | |
Line of Credit Facility [Abstract] | |||
Maximum borrowing capacity | $ 550,000,000 | ||
2012 Credit Agreement | Term A Facility | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Abstract] | |||
Index rate or LIBOR plus (in hundredths) | 1.75% | 2.00% | |
2012 Credit Agreement | Term B Facility | |||
Long-term Debt, by Current and Noncurrent [Abstract] | |||
Line of credit | $ 99,000,000 | $ 100,100,000 | |
Line of Credit Facility [Abstract] | |||
Maximum borrowing capacity | $ 870,000,000 | ||
2012 Credit Agreement | Term B Facility | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Abstract] | |||
Index rate or LIBOR plus (in hundredths) | 0.75% | 2.75% | |
Line of Credit | 2016 Credit Agreement | |||
Line of Credit Facility [Abstract] | |||
Maximum borrowing capacity | $ 500,000,000 | ||
Line of credit facility, incremental amount available | 500,000,000 | ||
Maximum borrowing capacity available in other currencies | 250,000,000 | ||
Line of credit facility, capacity available for issuance of letters of credit | 100,000,000 | ||
Line of credit facility, capacity available for swing line loans | $ 50,000,000 | ||
Equity interest of subsidiary guarantor (as a percent) | 100.00% | ||
Equity voting rights of subsidiary (as a percent) | 65.00% | ||
Domestic qualified cash excluded (in hundredths) | 100.00% | ||
Foreign qualified cash excluded (in hundredths) | 60.00% | ||
Domestic and foreign qualified cash exclusions, maximum | $ 150,000,000 | ||
Domestic qualified cash | 6,300,000 | ||
Foreign qualified cash | $ 18,500,000 | ||
Commitment Fee Percentage | 0.30% | ||
Line of Credit | London Interbank Offered Rate (LIBOR) | 2016 Credit Agreement | |||
Line of Credit Facility [Abstract] | |||
Index rate or LIBOR plus (in hundredths) | 1.75% | ||
Line of Credit | Base Rate | 2016 Credit Agreement | |||
Line of Credit Facility [Abstract] | |||
Index rate or LIBOR plus (in hundredths) | 0.75% | ||
Line of Credit | Term Loan Facility | 2016 Credit Agreement | |||
Line of Credit Facility [Abstract] | |||
Maximum borrowing capacity | $ 500,000,000 | ||
Line of Credit | Delayed Draw Term Loan Facility | 2016 Credit Agreement | |||
Line of Credit Facility [Abstract] | |||
Maximum borrowing capacity | $ 100,000,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
2020 Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated percentage | 6.875% | 6.875% |
2020 Senior Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notes, fair value | $ 395.2 | $ 393.8 |
2023 Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated percentage | 5.625% | 5.625% |
2023 Senior Notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notes, fair value | $ 462.9 | $ 0 |
Sealy notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated percentage | 8.00% | 8.00% |
Sealy notes | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Notes, fair value | $ 113.8 | $ 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Feb. 01, 2016 | |
Capital stock [Abstract] | |||
Common stock shares authorized (in shares) | 300,000,000 | ||
Common stock par value (USD per share) | $ 0.01 | ||
Preferred stock authorized shares (in shares) | 10,000 | ||
Value of treasury stock acquired (in shares) | $ 2,000,000 | $ 1,100,000 | |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | 19,100,000 | (37,600,000) | |
Total other comprehensive income | 14,200,000 | (36,200,000) | |
Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Balance at beginning of period | (115,400,000) | (54,000,000) | |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | 19,100,000 | (37,600,000) | |
Balance at end of period | (96,300,000) | (91,600,000) | |
Interest Rate Swap Agreement | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Balance at beginning of period | 0 | (700,000) | |
Other comprehensive income (loss): | |||
Net change from period revaluations | 0 | 700,000 | |
Tax expense | 0 | (300,000) | |
Total other comprehensive income before reclassifications, net of tax | 0 | 400,000 | |
Net amount reclassified to earnings (1) | 0 | (500,000) | |
Tax benefit | 0 | 200,000 | |
Total amount reclassified from accumulated other comprehensive loss, net of tax | 0 | (300,000) | |
Total other comprehensive income | 0 | 100,000 | |
Balance at end of period | 0 | (600,000) | |
Pensions | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Balance at beginning of period | (1,400,000) | (2,400,000) | |
Other comprehensive income (loss): | |||
Net change from period revaluations | 0 | 0 | |
Balance at end of period | (1,400,000) | (2,400,000) | |
Foreign Exchange Forward Contracts | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Balance at beginning of period | 6,600,000 | 1,300,000 | |
Other comprehensive income (loss): | |||
Net change from period revaluations | (5,000,000) | 3,700,000 | |
Tax benefit (expense) | 1,300,000 | (1,000,000) | |
Total other comprehensive income before reclassifications, net of tax | (3,700,000) | 2,700,000 | |
Net amount reclassified to earnings (1) | (1,600,000) | (1,900,000) | |
Tax benefit | 400,000 | 500,000 | |
Total amount reclassified from accumulated other comprehensive loss, net of tax | (1,200,000) | (1,400,000) | |
Total other comprehensive income | (4,900,000) | 1,300,000 | |
Balance at end of period | $ 1,700,000 | $ 2,600,000 | |
Performance-based Restricted Stock Units | |||
Capital stock [Abstract] | |||
Repurchase of shares upon vesting of PRSUs withheld to satisfy tax withholding obligations (in shares) | 100,000 | 0 | |
February 2016 Program | |||
Capital stock [Abstract] | |||
Maximum authorized amount under stock repurchase program | $ 200,000,000 | ||
Treasury stock acquired (in shares) | 1,700,000 | ||
Value of treasury stock acquired (in shares) | $ 100,000,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (benefit) | $ 6.1 | $ 4 | |
Accelerated amortization | 2 | ||
PRSU | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (benefit) | 2.5 | 2 | |
PRSU | Aspirational Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 1.4 | ||
Minimum Adjusted EBITDA (more than) | $ 650 | ||
Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (benefit) | 1.7 | 1.5 | |
RSU/DSU | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (benefit) | 1.9 | $ 0.5 | |
2018 if target is met | PRSU | Aspirational Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of target shares to vest | 33.33% | ||
If 2017 target is met | PRSU | Aspirational Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized stock-based compensation expense | $ 101.1 |
Income Taxes (Details)
Income Taxes (Details) DKK in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016USD ($) | Mar. 31, 2015 | Dec. 31, 2015USD ($) | Mar. 31, 2016DKK | Dec. 31, 2015DKK | Dec. 31, 2014USD ($) | |
Income Tax Examination [Line Items] | ||||||
Effective income tax provision (as a percent) | 30.70% | 29.20% | ||||
Statutory U.S. federal income tax (as a percent) | 35.00% | 35.00% | ||||
Increase in uncertain tax liability | $ 59.7 | |||||
Uncertain tax liability | $ 78.6 | 78.6 | $ 18.9 | |||
Unrecognized tax benefits that would impact effective tax rate | $ 67.9 | 67.7 | ||||
Danish tax authority | ||||||
Income Tax Examination [Line Items] | ||||||
Royalty Rate Assessed on Danish Earnings 9as a percent) | 20.00% | |||||
Cumulative Assessment Amount Including Interest And Penalties | $ 224.4 | 199.6 | DKK 1,479 | DKK 1,363.1 | ||
VAT Taxes Withheld by Tax Authority | $ 30 | $ 26 |
Major Customers (Details)
Major Customers (Details) - customer | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Customer Concentration Risk | Sales Revenue, Goods, Net | |||
Concentration Risk [Line Items] | |||
Number of customers | 5 | 5,000,000 | |
Concentration risk (as a percent) (more than for 10.0%) | 40.60% | 41.20% | |
Customer Concentration Risk | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Number of customers | 5 | 5 | |
Credit Concentration Risk | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk (as a percent) (more than for 10.0%) | 37.80% | 37.70% | |
North America | Sales Revenue, Goods, Net | |||
Concentration Risk [Line Items] | |||
Number of customers | 1 | 1 | |
North America | Customer Concentration Risk | Sales Revenue, Goods, Net | |||
Concentration Risk [Line Items] | |||
Number of customers | 5 | 5 | |
Concentration risk (as a percent) (more than for 10.0%) | 20.80% | 22.20% |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Redemption Value Adjustment | $ 1 | |
Numerator: | ||
Net income attributable to Tempur Sealy International, Inc. | $ 39.6 | $ 23.4 |
Denominator: | ||
Denominator for basic earnings per common share-weighted average shares (in shares) | 62 | 60.9 |
Effect of dilutive securities: | ||
Employee stock-based compensation (in shares) | 0.6 | 1.3 |
Denominator for diluted earnings per common share-adjusted weighted average shares | 62.6 | 62.2 |
Basic earnings per common share (in dollars per share) | $ 0.64 | $ 0.38 |
Diluted earnings per common share (in dollars per share) | $ 0.63 | $ 0.38 |
Shares excluded from diluted earnings per common share computation as anti-dilutive (in shares) | 0.5 | 0.3 |
Business Segment Information (D
Business Segment Information (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016USD ($)segment | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of business segments | segment | 2 | ||
Segment information [Abstract] | |||
Total assets | $ 2,576.8 | $ 2,655.5 | |
Total property, plant and equipment, net | 364.9 | 361.7 | |
Net sales | 721 | $ 739.5 | |
Inter-segment sales | 0 | 0 | |
Inter-segment royalty expense (income) | 0 | 0 | |
Gross profit | 291 | 278.7 | |
Operating income (loss) | 76.7 | 54.4 | |
Income (loss) before income taxes | 56.3 | 35.3 | |
Depreciation and amortization (including stock-based compensation amortization) | 23.7 | 21.8 | |
Capital expenditures | 12.6 | 15.4 | |
United States | |||
Segment information [Abstract] | |||
Total property, plant and equipment, net | 301.6 | 300.1 | |
Net sales | 537.1 | 547.7 | |
Canada | |||
Segment information [Abstract] | |||
Total property, plant and equipment, net | 7.2 | 6.8 | |
Net sales | 42.9 | 46.4 | |
Other International | |||
Segment information [Abstract] | |||
Total property, plant and equipment, net | 56.1 | 54.8 | |
Net sales | 141 | 145.4 | |
Total International | |||
Segment information [Abstract] | |||
Total property, plant and equipment, net | 63.3 | 61.6 | |
Net sales | 183.9 | 191.8 | |
Bedding sales | |||
Segment information [Abstract] | |||
Net sales | 667.5 | 675.7 | |
Other sales | |||
Segment information [Abstract] | |||
Net sales | 53.5 | 63.8 | |
Operating Segments | |||
Segment information [Abstract] | |||
Total property, plant and equipment, net | 364.9 | 361.7 | |
Operating Segments | North America | |||
Segment information [Abstract] | |||
Total assets | 2,498 | 2,533.1 | |
Total property, plant and equipment, net | 238.7 | 239.2 | |
Net sales | 580 | 594.1 | |
Inter-segment sales | 1.2 | 1.7 | |
Inter-segment royalty expense (income) | 1.7 | 1.5 | |
Gross profit | 214.5 | 203.1 | |
Operating income (loss) | 77.3 | 57.9 | |
Income (loss) before income taxes | 77 | 56.5 | |
Depreciation and amortization (including stock-based compensation amortization) | 10.4 | 10.6 | |
Capital expenditures | 5.6 | 8.2 | |
Operating Segments | North America | Bedding sales | |||
Segment information [Abstract] | |||
Net sales | 554.4 | 558.6 | |
Operating Segments | North America | Other sales | |||
Segment information [Abstract] | |||
Net sales | 25.6 | 35.5 | |
Operating Segments | International | |||
Segment information [Abstract] | |||
Total assets | 488 | 477.1 | |
Total property, plant and equipment, net | 56.2 | 54.8 | |
Net sales | 141 | 145.4 | |
Inter-segment sales | 0.1 | 0.1 | |
Inter-segment royalty expense (income) | (1.7) | (1.5) | |
Gross profit | 76.5 | 75.6 | |
Operating income (loss) | 27.3 | 25.3 | |
Income (loss) before income taxes | 24.4 | 25.3 | |
Depreciation and amortization (including stock-based compensation amortization) | 3.8 | 4 | |
Capital expenditures | 2.3 | 2.1 | |
Operating Segments | International | Bedding sales | |||
Segment information [Abstract] | |||
Net sales | 113.1 | 117.1 | |
Operating Segments | International | Other sales | |||
Segment information [Abstract] | |||
Net sales | 27.9 | 28.3 | |
Corporate | |||
Segment information [Abstract] | |||
Total assets | 657.3 | 775 | |
Total property, plant and equipment, net | 70 | 67.7 | |
Net sales | 0 | 0 | |
Inter-segment sales | 0 | 0 | |
Inter-segment royalty expense (income) | 0 | 0 | |
Gross profit | 0 | 0 | |
Operating income (loss) | (27.9) | (28.8) | |
Income (loss) before income taxes | (45.1) | (46.5) | |
Depreciation and amortization (including stock-based compensation amortization) | 9.5 | 7.2 | |
Capital expenditures | 4.7 | 5.1 | |
Corporate | Bedding sales | |||
Segment information [Abstract] | |||
Net sales | 0 | 0 | |
Corporate | Other sales | |||
Segment information [Abstract] | |||
Net sales | 0 | 0 | |
Inter-segment eliminations | |||
Segment information [Abstract] | |||
Total assets | (1,066.5) | $ (1,129.7) | |
Net sales | 0 | 0 | |
Inter-segment sales | (1.3) | (1.8) | |
Inter-segment royalty expense (income) | 0 | 0 | |
Gross profit | 0 | 0 | |
Operating income (loss) | 0 | 0 | |
Income (loss) before income taxes | 0 | 0 | |
Depreciation and amortization (including stock-based compensation amortization) | 0 | 0 | |
Capital expenditures | 0 | 0 | |
Inter-segment eliminations | Bedding sales | |||
Segment information [Abstract] | |||
Net sales | 0 | 0 | |
Inter-segment eliminations | Other sales | |||
Segment information [Abstract] | |||
Net sales | $ 0 | $ 0 |
Guarantor_Non-Guarantor Finan42
Guarantor/Non-Guarantor Financial Information (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | ||
Supplemental condensed consolidated statements of income and comprehensive income [Abstract] | |||||
Net sales | $ 721,000,000 | $ 739,500,000 | |||
Cost of sales | 430,000,000 | 460,800,000 | |||
Gross profit | 291,000,000 | 278,700,000 | |||
Selling and marketing expenses | 150,100,000 | 153,800,000 | |||
General, administrative and other expenses | 71,700,000 | 77,700,000 | |||
Equity income in earnings of unconsolidated affiliates | (2,800,000) | (3,000,000) | |||
Royalty income, net of royalty expense | (4,700,000) | (4,200,000) | |||
Operating income | 76,700,000 | 54,400,000 | |||
Other expense, net: | |||||
Interest expense, net | 21,400,000 | 20,400,000 | |||
Other (income) expense, net | (1,000,000) | (1,300,000) | |||
Total other expense, net | 20,400,000 | 19,100,000 | |||
Income before income taxes | 56,300,000 | 35,300,000 | |||
Income tax benefit (provision) | (17,300,000) | (10,300,000) | |||
Net income before non-controlling interest | 39,000,000 | 25,000,000 | |||
Less: Net income attributable to non-controlling interest | [1] | (600,000) | 1,600,000 | ||
Net income attributable to Tempur Sealy International, Inc. | 39,600,000 | 23,400,000 | |||
Comprehensive income attributable to Tempur Sealy International, Inc. | 53,200,000 | (11,200,000) | |||
Current Assets: | |||||
Cash and cash equivalents | 153,900,000 | 62,500,000 | $ 37,100,000 | $ 153,900,000 | |
Accounts receivable, net | 384,700,000 | 379,400,000 | |||
Inventories, net | 214,400,000 | 199,200,000 | |||
Total Current Assets | 708,900,000 | 809,100,000 | |||
Property, plant and equipment, net | 364,900,000 | 361,700,000 | |||
Goodwill | 717,700,000 | 709,400,000 | |||
Other intangible assets, net | 696,100,000 | 695,400,000 | |||
Deferred income taxes | 13,000,000 | 12,200,000 | |||
Other non-current assets | 76,200,000 | 67,700,000 | |||
Total Assets | 2,576,800,000 | 2,655,500,000 | |||
Current Liabilities: | |||||
Accounts payable | 215,500,000 | 266,300,000 | |||
Accrued expenses and other current liabilities | 246,800,000 | 254,000,000 | |||
Income taxes payable | 13,900,000 | 11,200,000 | |||
Current portion of long-term debt | 178,900,000 | 181,500,000 | |||
Total Current Liabilities | 655,100,000 | 713,000,000 | |||
Long-term debt, net | 1,293,700,000 | 1,273,300,000 | |||
Deferred income taxes | 194,100,000 | 195,400,000 | |||
Other non-current liabilities | 169,700,000 | 171,200,000 | |||
Total Liabilities | 2,312,600,000 | 2,352,900,000 | |||
Redeemable non-controlling interest | 11,800,000 | 12,400,000 | |||
Total Stockholders’ Equity | 252,400,000 | 290,200,000 | |||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | $ 2,576,800,000 | 2,655,500,000 | |||
Supplemental condensed consolidated statements of cash flows [Abstract] | |||||
Net cash (used in) provided by operating activities | (18,800,000) | (6,400,000) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (12,600,000) | (15,400,000) | |||
Other | (200,000) | 0 | |||
Net cash used in investing activities | (12,800,000) | (15,400,000) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings under long-term debt obligations | 101,500,000 | 97,900,000 | |||
Repayments of borrowings under long-term debt obligations | (87,000,000) | (98,800,000) | |||
Proceeds from exercise of stock options | 3,000,000 | 1,600,000 | |||
Excess tax benefit from stock-based compensation | 1,200,000 | 0 | |||
Treasury stock repurchased | (102,000,000) | (1,100,000) | |||
Other | 400,000 | 200,000 | |||
Net cash used in financing activities | (82,900,000) | (200,000) | |||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (2,300,000) | 4,500,000 | |||
Decrease in cash and cash equivalents | (116,800,000) | (17,500,000) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 153,900,000 | 62,500,000 | |||
CASH AND CASH EQUIVALENTS, end of period | 37,100,000 | 45,000,000 | |||
Tempur Sealy International, Inc. (Ultimate Parent) | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Ownership percentage by parent (in hundredths) | 100.00% | ||||
Supplemental condensed consolidated statements of income and comprehensive income [Abstract] | |||||
Net sales | 0 | 0 | |||
Cost of sales | 0 | 0 | |||
Gross profit | 0 | 0 | |||
Selling and marketing expenses | 1,800,000 | 800,000 | |||
General, administrative and other expenses | 4,800,000 | 3,600,000 | |||
Equity income in earnings of unconsolidated affiliates | 0 | 0 | |||
Royalty income, net of royalty expense | 0 | 0 | |||
Operating income | (6,600,000) | (4,400,000) | |||
Other expense, net: | |||||
Third party interest expense, net | 20,000,000 | 6,700,000 | |||
Intercompany interest (income) expense, net | (1,100,000) | 8,200,000 | |||
Interest expense, net | 18,900,000 | 14,900,000 | |||
Other (income) expense, net | 0 | 0 | |||
Total other expense, net | 18,900,000 | 14,900,000 | |||
Income from equity investees | 56,500,000 | 37,500,000 | |||
Income before income taxes | 31,000,000 | 18,200,000 | |||
Income tax benefit (provision) | 8,000,000 | 6,800,000 | |||
Net income before non-controlling interest | 39,000,000 | 25,000,000 | |||
Less: Net income attributable to non-controlling interest | (600,000) | 1,600,000 | |||
Net income attributable to Tempur Sealy International, Inc. | 39,600,000 | 23,400,000 | |||
Comprehensive income attributable to Tempur Sealy International, Inc. | 53,800,000 | (12,800,000) | |||
Current Assets: | |||||
Cash and cash equivalents | 0 | 400,000 | $ 0 | 0 | |
Accounts receivable, net | 0 | 0 | |||
Inventories, net | 0 | 0 | |||
Income taxes receivable | 202,500,000 | 193,100,000 | |||
Prepaid expenses and other current assets | 800,000 | 0 | |||
Total Current Assets | 203,300,000 | 193,100,000 | |||
Property, plant and equipment, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Other intangible assets, net | 0 | 0 | |||
Deferred income taxes | 15,700,000 | 16,000,000 | |||
Other non-current assets | 0 | 0 | |||
Net investment in subsidiaries | 2,059,800,000 | 1,960,500,000 | |||
Due from affiliates | 451,300,000 | 548,100,000 | |||
Total Assets | 2,730,100,000 | 2,717,700,000 | |||
Current Liabilities: | |||||
Accounts payable | 0 | 0 | |||
Accrued expenses and other current liabilities | 20,900,000 | 1,400,000 | |||
Deferred income taxes | 0 | ||||
Income taxes payable | 0 | 0 | |||
Current portion of long-term debt | 0 | 0 | |||
Total Current Liabilities | 20,900,000 | 1,400,000 | |||
Long-term debt, net | 812,500,000 | 811,900,000 | |||
Deferred income taxes | 0 | 0 | |||
Other non-current liabilities | 0 | 0 | |||
Due to affiliates | 1,632,500,000 | 1,601,800,000 | |||
Total Liabilities | 2,465,900,000 | 2,415,100,000 | |||
Redeemable non-controlling interest | 11,800,000 | 12,400,000 | |||
Total Stockholders’ Equity | 252,400,000 | 290,200,000 | |||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | 2,730,100,000 | 2,717,700,000 | |||
Supplemental condensed consolidated statements of cash flows [Abstract] | |||||
Net cash (used in) provided by operating activities | (1,300,000) | (13,500,000) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | 0 | 0 | |||
Other | 0 | ||||
Net cash used in investing activities | 0 | 0 | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings under long-term debt obligations | 0 | 0 | |||
Repayments of borrowings under long-term debt obligations | 0 | 0 | |||
Net activity in investment in and advances from (to) subsidiaries and affiliates | 99,100,000 | 12,600,000 | |||
Proceeds from exercise of stock options | 3,000,000 | 1,600,000 | |||
Excess tax benefit from stock-based compensation | 1,200,000 | ||||
Treasury stock repurchased | (102,000,000) | (1,100,000) | |||
Other | 0 | 0 | |||
Net cash used in financing activities | 1,300,000 | 13,100,000 | |||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |||
Decrease in cash and cash equivalents | 0 | (400,000) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 0 | 400,000 | |||
CASH AND CASH EQUIVALENTS, end of period | 0 | 0 | |||
Combined Guarantor Subsidiaries | |||||
Supplemental condensed consolidated statements of income and comprehensive income [Abstract] | |||||
Net sales | 550,700,000 | 558,900,000 | |||
Cost of sales | 348,400,000 | 367,600,000 | |||
Gross profit | 202,300,000 | 191,300,000 | |||
Selling and marketing expenses | 102,100,000 | 105,500,000 | |||
General, administrative and other expenses | 50,900,000 | 57,600,000 | |||
Equity income in earnings of unconsolidated affiliates | 0 | 0 | |||
Royalty income, net of royalty expense | (4,700,000) | (4,200,000) | |||
Operating income | 54,000,000 | 32,400,000 | |||
Other expense, net: | |||||
Third party interest expense, net | 800,000 | 13,100,000 | |||
Intercompany interest (income) expense, net | 0 | (8,900,000) | |||
Interest expense, net | 800,000 | 4,200,000 | |||
Other (income) expense, net | (1,700,000) | (100,000) | |||
Total other expense, net | (900,000) | 4,100,000 | |||
Income from equity investees | 22,000,000 | 20,900,000 | |||
Income before income taxes | 76,900,000 | 49,200,000 | |||
Income tax benefit (provision) | (20,400,000) | (11,700,000) | |||
Net income before non-controlling interest | 56,500,000 | 37,500,000 | |||
Less: Net income attributable to non-controlling interest | (600,000) | 1,600,000 | |||
Net income attributable to Tempur Sealy International, Inc. | 57,100,000 | 35,900,000 | |||
Comprehensive income attributable to Tempur Sealy International, Inc. | 57,300,000 | 36,100,000 | |||
Current Assets: | |||||
Cash and cash equivalents | 121,800,000 | 25,500,000 | 6,300,000 | 121,800,000 | |
Accounts receivable, net | 239,000,000 | 231,900,000 | |||
Inventories, net | 154,600,000 | 145,300,000 | |||
Income taxes receivable | 0 | 0 | |||
Prepaid expenses and other current assets | 47,900,000 | 43,500,000 | |||
Total Current Assets | 447,800,000 | 542,500,000 | |||
Property, plant and equipment, net | 301,600,000 | 300,100,000 | |||
Goodwill | 501,300,000 | 501,400,000 | |||
Other intangible assets, net | 609,700,000 | 612,900,000 | |||
Deferred income taxes | 0 | 0 | |||
Other non-current assets | 27,000,000 | 23,300,000 | |||
Net investment in subsidiaries | 0 | 0 | |||
Due from affiliates | 1,772,600,000 | 1,655,300,000 | |||
Total Assets | 3,660,000,000 | 3,635,500,000 | |||
Current Liabilities: | |||||
Accounts payable | 165,200,000 | 212,200,000 | |||
Accrued expenses and other current liabilities | 157,800,000 | 183,800,000 | |||
Deferred income taxes | 0 | ||||
Income taxes payable | 212,900,000 | 196,000,000 | |||
Current portion of long-term debt | 170,500,000 | 168,700,000 | |||
Total Current Liabilities | 706,400,000 | 760,700,000 | |||
Long-term debt, net | 481,200,000 | 461,400,000 | |||
Deferred income taxes | 187,100,000 | 189,800,000 | |||
Other non-current liabilities | 164,800,000 | 166,600,000 | |||
Due to affiliates | 60,700,000 | 96,500,000 | |||
Total Liabilities | 1,600,200,000 | 1,675,000,000 | |||
Redeemable non-controlling interest | 11,800,000 | 12,400,000 | |||
Total Stockholders’ Equity | 2,048,000,000 | 1,948,100,000 | |||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | 3,660,000,000 | 3,635,500,000 | |||
Supplemental condensed consolidated statements of cash flows [Abstract] | |||||
Net cash (used in) provided by operating activities | (37,400,000) | 10,400,000 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (10,200,000) | (13,100,000) | |||
Other | (200,000) | ||||
Net cash used in investing activities | (10,400,000) | (13,100,000) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings under long-term debt obligations | 96,300,000 | 93,500,000 | |||
Repayments of borrowings under long-term debt obligations | (76,500,000) | (98,800,000) | |||
Net activity in investment in and advances from (to) subsidiaries and affiliates | (86,900,000) | (1,400,000) | |||
Proceeds from exercise of stock options | 0 | 0 | |||
Excess tax benefit from stock-based compensation | 0 | ||||
Treasury stock repurchased | 0 | 0 | |||
Other | (600,000) | (400,000) | |||
Net cash used in financing activities | (67,700,000) | (7,100,000) | |||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |||
Decrease in cash and cash equivalents | (115,500,000) | (9,800,000) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 121,800,000 | 25,500,000 | |||
CASH AND CASH EQUIVALENTS, end of period | 6,300,000 | 15,700,000 | |||
Combined Non-Guarantor Subsidiaries | |||||
Supplemental condensed consolidated statements of income and comprehensive income [Abstract] | |||||
Net sales | 184,100,000 | 192,900,000 | |||
Cost of sales | 95,400,000 | 105,500,000 | |||
Gross profit | 88,700,000 | 87,400,000 | |||
Selling and marketing expenses | 46,200,000 | 47,500,000 | |||
General, administrative and other expenses | 16,000,000 | 16,500,000 | |||
Equity income in earnings of unconsolidated affiliates | (2,800,000) | (3,000,000) | |||
Royalty income, net of royalty expense | 0 | 0 | |||
Operating income | 29,300,000 | 26,400,000 | |||
Other expense, net: | |||||
Third party interest expense, net | 600,000 | 600,000 | |||
Intercompany interest (income) expense, net | 1,100,000 | 700,000 | |||
Interest expense, net | 1,700,000 | 1,300,000 | |||
Other (income) expense, net | 700,000 | (1,200,000) | |||
Total other expense, net | 2,400,000 | 100,000 | |||
Income from equity investees | 0 | 0 | |||
Income before income taxes | 26,900,000 | 26,300,000 | |||
Income tax benefit (provision) | (4,900,000) | (5,400,000) | |||
Net income before non-controlling interest | 22,000,000 | 20,900,000 | |||
Less: Net income attributable to non-controlling interest | 0 | 0 | |||
Net income attributable to Tempur Sealy International, Inc. | 22,000,000 | 20,900,000 | |||
Comprehensive income attributable to Tempur Sealy International, Inc. | 45,200,000 | (18,300,000) | |||
Current Assets: | |||||
Cash and cash equivalents | 32,100,000 | 36,600,000 | 30,800,000 | 32,100,000 | |
Accounts receivable, net | 145,700,000 | 147,500,000 | |||
Inventories, net | 59,800,000 | 53,900,000 | |||
Income taxes receivable | 0 | 0 | |||
Prepaid expenses and other current assets | 24,000,000 | 33,100,000 | |||
Total Current Assets | 260,300,000 | 266,600,000 | |||
Property, plant and equipment, net | 63,300,000 | 61,600,000 | |||
Goodwill | 216,400,000 | 208,000,000 | |||
Other intangible assets, net | 86,400,000 | 82,500,000 | |||
Deferred income taxes | 13,000,000 | 12,200,000 | |||
Other non-current assets | 49,200,000 | 44,400,000 | |||
Net investment in subsidiaries | 0 | 0 | |||
Due from affiliates | 2,700,000 | 4,800,000 | |||
Total Assets | 691,300,000 | 680,100,000 | |||
Current Liabilities: | |||||
Accounts payable | 50,300,000 | 54,100,000 | |||
Accrued expenses and other current liabilities | 68,100,000 | 68,800,000 | |||
Deferred income taxes | 0 | ||||
Income taxes payable | 3,500,000 | 8,300,000 | |||
Current portion of long-term debt | 8,400,000 | 12,800,000 | |||
Total Current Liabilities | 130,300,000 | 144,000,000 | |||
Long-term debt, net | 0 | 0 | |||
Deferred income taxes | 22,700,000 | 21,600,000 | |||
Other non-current liabilities | 4,900,000 | 4,600,000 | |||
Due to affiliates | 592,400,000 | 604,900,000 | |||
Total Liabilities | 750,300,000 | 775,100,000 | |||
Redeemable non-controlling interest | 0 | 0 | |||
Total Stockholders’ Equity | (59,000,000) | (95,000,000) | |||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | 691,300,000 | 680,100,000 | |||
Supplemental condensed consolidated statements of cash flows [Abstract] | |||||
Net cash (used in) provided by operating activities | 19,900,000 | (3,300,000) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (2,400,000) | (2,300,000) | |||
Other | 0 | ||||
Net cash used in investing activities | (2,400,000) | (2,300,000) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings under long-term debt obligations | 5,200,000 | 4,400,000 | |||
Repayments of borrowings under long-term debt obligations | (10,500,000) | 0 | |||
Net activity in investment in and advances from (to) subsidiaries and affiliates | (12,200,000) | (11,200,000) | |||
Proceeds from exercise of stock options | 0 | 0 | |||
Excess tax benefit from stock-based compensation | 0 | ||||
Treasury stock repurchased | 0 | 0 | |||
Other | 1,000,000 | 600,000 | |||
Net cash used in financing activities | (16,500,000) | (6,200,000) | |||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (2,300,000) | 4,500,000 | |||
Decrease in cash and cash equivalents | (1,300,000) | (7,300,000) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 32,100,000 | 36,600,000 | |||
CASH AND CASH EQUIVALENTS, end of period | 30,800,000 | 29,300,000 | |||
Eliminations | |||||
Supplemental condensed consolidated statements of income and comprehensive income [Abstract] | |||||
Net sales | (13,800,000) | (12,300,000) | |||
Cost of sales | (13,800,000) | (12,300,000) | |||
Gross profit | 0 | 0 | |||
Selling and marketing expenses | 0 | 0 | |||
General, administrative and other expenses | 0 | 0 | |||
Equity income in earnings of unconsolidated affiliates | 0 | 0 | |||
Royalty income, net of royalty expense | 0 | 0 | |||
Operating income | 0 | 0 | |||
Other expense, net: | |||||
Third party interest expense, net | 0 | 0 | |||
Intercompany interest (income) expense, net | 0 | 0 | |||
Interest expense, net | 0 | 0 | |||
Other (income) expense, net | 0 | 0 | |||
Total other expense, net | 0 | 0 | |||
Income from equity investees | (78,500,000) | (58,400,000) | |||
Income before income taxes | (78,500,000) | (58,400,000) | |||
Income tax benefit (provision) | 0 | 0 | |||
Net income before non-controlling interest | (78,500,000) | (58,400,000) | |||
Less: Net income attributable to non-controlling interest | 600,000 | (1,600,000) | |||
Net income attributable to Tempur Sealy International, Inc. | (79,100,000) | (56,800,000) | |||
Comprehensive income attributable to Tempur Sealy International, Inc. | (102,500,000) | (17,800,000) | |||
Current Assets: | |||||
Cash and cash equivalents | 0 | 0 | 0 | 0 | |
Accounts receivable, net | 0 | 0 | |||
Inventories, net | 0 | 0 | |||
Income taxes receivable | (202,500,000) | (193,100,000) | |||
Prepaid expenses and other current assets | 0 | 0 | |||
Total Current Assets | (202,500,000) | (193,100,000) | |||
Property, plant and equipment, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Other intangible assets, net | 0 | 0 | |||
Deferred income taxes | (15,700,000) | (16,000,000) | |||
Other non-current assets | 0 | 0 | |||
Net investment in subsidiaries | (2,059,800,000) | (1,960,500,000) | |||
Due from affiliates | (2,226,600,000) | (2,208,200,000) | |||
Total Assets | (4,504,600,000) | (4,377,800,000) | |||
Current Liabilities: | |||||
Accounts payable | 0 | 0 | |||
Accrued expenses and other current liabilities | 0 | 0 | |||
Deferred income taxes | 0 | ||||
Income taxes payable | (202,500,000) | (193,100,000) | |||
Current portion of long-term debt | 0 | 0 | |||
Total Current Liabilities | (202,500,000) | (193,100,000) | |||
Long-term debt, net | 0 | 0 | |||
Deferred income taxes | (15,700,000) | (16,000,000) | |||
Other non-current liabilities | 0 | 0 | |||
Due to affiliates | (2,285,600,000) | (2,303,200,000) | |||
Total Liabilities | (2,503,800,000) | (2,512,300,000) | |||
Redeemable non-controlling interest | (11,800,000) | (12,400,000) | |||
Total Stockholders’ Equity | (1,989,000,000) | (1,853,100,000) | |||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | (4,504,600,000) | (4,377,800,000) | |||
Supplemental condensed consolidated statements of cash flows [Abstract] | |||||
Net cash (used in) provided by operating activities | 0 | 0 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | 0 | 0 | |||
Other | 0 | ||||
Net cash used in investing activities | 0 | 0 | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings under long-term debt obligations | 0 | 0 | |||
Repayments of borrowings under long-term debt obligations | 0 | 0 | |||
Net activity in investment in and advances from (to) subsidiaries and affiliates | 0 | ||||
Proceeds from exercise of stock options | 0 | 0 | |||
Excess tax benefit from stock-based compensation | 0 | ||||
Treasury stock repurchased | 0 | 0 | |||
Other | 0 | 0 | |||
Net cash used in financing activities | 0 | 0 | |||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |||
Decrease in cash and cash equivalents | 0 | 0 | |||
CASH AND CASH EQUIVALENTS, beginning of period | 0 | 0 | |||
CASH AND CASH EQUIVALENTS, end of period | 0 | 0 | |||
Consolidated | |||||
Supplemental condensed consolidated statements of income and comprehensive income [Abstract] | |||||
Net sales | 721,000,000 | 739,500,000 | |||
Cost of sales | 430,000,000 | 460,800,000 | |||
Gross profit | 291,000,000 | 278,700,000 | |||
Selling and marketing expenses | 150,100,000 | 153,800,000 | |||
General, administrative and other expenses | 71,700,000 | 77,700,000 | |||
Equity income in earnings of unconsolidated affiliates | (2,800,000) | (3,000,000) | |||
Royalty income, net of royalty expense | (4,700,000) | (4,200,000) | |||
Operating income | 76,700,000 | 54,400,000 | |||
Other expense, net: | |||||
Third party interest expense, net | 21,400,000 | 20,400,000 | |||
Intercompany interest (income) expense, net | 0 | 0 | |||
Interest expense, net | 21,400,000 | 20,400,000 | |||
Other (income) expense, net | (1,000,000) | (1,300,000) | |||
Total other expense, net | 20,400,000 | 19,100,000 | |||
Income from equity investees | 0 | 0 | |||
Income before income taxes | 56,300,000 | 35,300,000 | |||
Income tax benefit (provision) | (17,300,000) | (10,300,000) | |||
Net income before non-controlling interest | 39,000,000 | 25,000,000 | |||
Less: Net income attributable to non-controlling interest | (600,000) | 1,600,000 | |||
Net income attributable to Tempur Sealy International, Inc. | 39,600,000 | 23,400,000 | |||
Comprehensive income attributable to Tempur Sealy International, Inc. | 53,800,000 | (12,800,000) | |||
Current Assets: | |||||
Cash and cash equivalents | 153,900,000 | 62,500,000 | 37,100,000 | 153,900,000 | |
Accounts receivable, net | 384,700,000 | 379,400,000 | |||
Inventories, net | 214,400,000 | 199,200,000 | |||
Income taxes receivable | 0 | 0 | |||
Prepaid expenses and other current assets | 72,700,000 | 76,600,000 | |||
Total Current Assets | 708,900,000 | 809,100,000 | |||
Property, plant and equipment, net | 364,900,000 | 361,700,000 | |||
Goodwill | 717,700,000 | 709,400,000 | |||
Other intangible assets, net | 696,100,000 | 695,400,000 | |||
Deferred income taxes | 13,000,000 | 12,200,000 | |||
Other non-current assets | 76,200,000 | 67,700,000 | |||
Net investment in subsidiaries | 0 | 0 | |||
Due from affiliates | 0 | 0 | |||
Total Assets | 2,576,800,000 | 2,655,500,000 | |||
Current Liabilities: | |||||
Accounts payable | 215,500,000 | 266,300,000 | |||
Accrued expenses and other current liabilities | 246,800,000 | 254,000,000 | |||
Deferred income taxes | 0 | ||||
Income taxes payable | 13,900,000 | 11,200,000 | |||
Current portion of long-term debt | 178,900,000 | 181,500,000 | |||
Total Current Liabilities | 655,100,000 | 713,000,000 | |||
Long-term debt, net | 1,293,700,000 | 1,273,300,000 | |||
Deferred income taxes | 194,100,000 | 195,400,000 | |||
Other non-current liabilities | 169,700,000 | 171,200,000 | |||
Due to affiliates | 0 | 0 | |||
Total Liabilities | 2,312,600,000 | 2,352,900,000 | |||
Redeemable non-controlling interest | 11,800,000 | 12,400,000 | |||
Total Stockholders’ Equity | 252,400,000 | 290,200,000 | |||
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | 2,576,800,000 | 2,655,500,000 | |||
Supplemental condensed consolidated statements of cash flows [Abstract] | |||||
Net cash (used in) provided by operating activities | (18,800,000) | (6,400,000) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property, plant and equipment | (12,600,000) | (15,400,000) | |||
Other | (200,000) | ||||
Net cash used in investing activities | (12,800,000) | (15,400,000) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from borrowings under long-term debt obligations | 101,500,000 | 97,900,000 | |||
Repayments of borrowings under long-term debt obligations | (87,000,000) | (98,800,000) | |||
Net activity in investment in and advances from (to) subsidiaries and affiliates | 0 | 0 | |||
Proceeds from exercise of stock options | 3,000,000 | 1,600,000 | |||
Excess tax benefit from stock-based compensation | 1,200,000 | ||||
Treasury stock repurchased | (102,000,000) | (1,100,000) | |||
Other | 400,000 | 200,000 | |||
Net cash used in financing activities | (82,900,000) | (200,000) | |||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (2,300,000) | 4,500,000 | |||
Decrease in cash and cash equivalents | (116,800,000) | (17,500,000) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 153,900,000 | 62,500,000 | |||
CASH AND CASH EQUIVALENTS, end of period | $ 37,100,000 | $ 45,000,000 | |||
2020 Senior Notes | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Senior notes | 375,000,000 | 375,000,000 | |||
2023 Senior Notes | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Senior notes | $ 450,000,000 | $ 450,000,000 | |||
[1] | (Loss) income attributable to the Company's redeemable non-controlling interest in Comfort Revolution, LLC for the three months ended March 31, 2016 and 2015 represented $(0.6) million and $0.6 million, respectively. As of March 31, 2015, the redemption value exceeded the accumulated earnings of the Company's redeemable non-controlling interest in Comfort Revolution, LLC. Accordingly, the Company's net income for the three months ended March 31, 2015 includes a $1.0 million adjustment, net of tax, to adjust the carrying value of redeemable non-controlling interest to its redemption value. As of March 31, 2016, the accumulated earnings exceeded the redemption value and, accordingly, a redemption value adjustment was not necessary. |