Exhibit 99.1
TEMPUR-PEDIC INTERNATIONAL ACHIEVES 45% NET SALES INCREASE IN
FOURTH QUARTER OF 2004
REPORTS PRO FORMA NET INCOME OF $0.25 PER DILUTED SHARE, GAAP NET INCOME OF
$0.23 PER DILUTED SHARE
RAISES NET SALES AND EPS GUIDANCE FOR 2005
LEXINGTON, Ky., Jan. 27 /PRNewswire-FirstCall/ -- Tempur-Pedic
International Inc. (NYSE: TPX), the market-leading manufacturer, marketer and
distributor of premium mattresses and pillows worldwide, today announced net
sales and earnings for the fourth quarter and full year ended December 31, 2004.
Fourth Quarter 2004 Highlights
-- Pro forma net income rose 85% to $25.7 million, or $0.25 per diluted
share, from $13.9 million, or $0.14 per diluted share, in the fourth
quarter of 2003. The Company reported net income under GAAP of
$23.9 million, or $0.23 per diluted share, compared to $11.6 million,
or $0.12 per diluted share, in the fourth quarter of 2003, an increase
in net income of 106%.
-- Net sales rose 45% to $198.4 million from $136.8 million in the fourth
quarter of 2003.
-- Operating margin increased to 22.5% from 18.2% in the fourth quarter
of 2003.
-- Net sales increased in all channels, with particularly strong growth
in the Company's retail channel, where net sales rose 52%. Sales in
the U.S. retail channel were especially strong.
-- Worldwide, mattress net sales increased 59% on unit growth of 47%. In
addition, pillow net sales increased 20% on unit growth of 22%.
Chief Executive Officer Robert B. Trussell, Jr. commented, "The fourth
quarter continued an outstanding year for Tempur-Pedic International. We
achieved record growth in both sales and earnings, and reinforced our
leadership position in the premium bedding category by offering products that
provide greater overall comfort and sleep quality. We also successfully
expanded our distribution, broadened our product offering and increased our
global brand awareness worldwide, all key elements in our strategy to build
Tempur-Pedic into the world's largest and most profitable mattress company."
President H. Thomas Bryant added, "During 2004, we substantially exceeded
even the ambitious milestones we set for our Company at the beginning of the
year. On a global basis, retail store sales, which were an especially strong
driver throughout the year, rose 52% in the fourth quarter, accounting for 73%
of total net sales. In total, our products are now sold in approximately
4,100 furniture retail stores in the U.S. and approximately 3,300
internationally. While mattress sales jumped 59% as we continued to expand
the number of retail stores that carry Tempur-Pedic products, pillow sales
were also strong, driven by the new models we recently introduced in the U.S.,
resulting in a 28% U.S. net sales growth in pillows. Overall, net sales in
the U.S. climbed an impressive 53% in the fourth quarter, while international
net sales also increased sharply, rising 33%.
"In addition to delivering outstanding financial results, the Company made
progress in several other important areas. As planned, we completed the
expansion of our Denmark manufacturing facility, doubling its mattress
capacity. The construction of our new plant in Albuquerque, which will enable
us to better service the fast-growing U.S. market, is moving ahead according
to schedule. In January, we launched a new website, www.800pillows.com,
designed to help customers find the best pillow for their individual needs.
We also continued to receive recognition for the quality of our products. In
December, 'The ComfortPillow by TempurPedic' was awarded 'Best Buy' status in
the premium pillow category by Consumers Digest magazine. Also during the
quarter, our new Scandinavian mattress was selected by Elle Interior, the
Swedish Elle magazine, as first prize winner in the furniture category for the
magazine's Swedish Design 2004 nominees.
"We are continuing to manage Tempur-Pedic International's rapid growth
smoothly, and this discipline will serve us well as we continue to execute on
the Company's proven business model. In the fourth quarter we hired two key
executives. Matt Clift, our new Executive Vice President of Operations, and
Paul Coulis, President of our U.S. Medical Division, will contribute greatly
to the Company's efforts.
"In 2005, we plan to continue to expand our furniture retail base in both
the U.S. and internationally. We will also continue the roll-out of our futon
product, which began shipping to stores in the Japanese market in December,
and plan to introduce at least one more new mattress model in both the U.S.
and Europe in 2005. Additionally, we will continue to build global brand
awareness by expanding our targeted marketing and advertising campaigns."
2005 Guidance
Mr. Trussell concluded, "As a result of our strong performance in 2004 and
very positive outlook for the coming year, we are raising the full-year
guidance we previously provided for 2005. Based on the many initiatives we
have underway to add new accounts, new stores and new products, we now expect
the Company's net sales for 2005 to range from $830 million to $850 million,
rather than the $810 million to $830 million referred to in our previous
guidance. In addition, we expect pro forma diluted net income per share to
range between $1.00 to $1.05 rather than the $0.95 to $1.00 referred to in our
previous guidance.
"We expect sales and earnings in 2005 to follow a quarterly pattern
consistent with that of 2004. Our earnings guidance reflects the Company's
traditional practice of incurring heavier marketing expenditures as a
percentage of sales in the first quarter of each year."
The Company notes that its expectations are based on information available
at the time of this release, and are subject to changing conditions, many of
which are outside the Company's control.
Full-year 2004 Financial Summary
For the full year ended December 31, 2004, net sales totaled $684.9
million, 43% higher than net sales for the year ended December 31, 2003. The
Company also reported full year 2004 pro forma net income of $84.4 million, or
$0.82 per diluted share, compared to $52.1 million, or $0.55 per diluted
share, for 2003. This represents a 62% increase in pro forma net income and a
49% increase in pro forma net income per diluted share. The Company reported
full year 2004 net income under Generally Accepted Accounting Principles
("GAAP") of $75.0 million, or $0.73 per diluted share, compared to $37.6
million, or $0.39 per diluted share, for 2003.
For a complete discussion of pro forma adjustments, see the Supplemental
Information included later in this press release.
Conference Call Information
As previously announced, Tempur-Pedic International will host a live
conference call featuring Chief Executive Officer Robert Trussell, Jr.,
President H. Thomas Bryant, and Chief Financial Officer Dale Williams to
discuss fourth quarter and full-year financial results today, January 27, 2005
at 5:00 p.m. Eastern Time (2 p.m. Pacific Time). The dial-in number for the
conference call is 706-634-0167. The call is also being webcast, and can be
accessed at http://www.tempurpedic.com.
For those who cannot listen to the live broadcast, a replay of the call
will be available from January 27, 2005 at 8:00 p.m. Eastern Time through
February 03, 2005. To listen to the telephone replay, dial 706-645-9291,
conference ID #3344900.
An archived webcast will also be available on the Tempur-Pedic
International investor relations website at http://www.tempurpedic.com/ir.
Forward-Looking Statements
This release contains "forward-looking statements," which include
information concerning one or more of the Company's plans, objectives, goals,
strategies, future revenues and performance, capital expenditures, financing
needs and other information that is not historical information. When used in
this release, the words "estimates," "expects," "anticipates," "projects,"
"plans," "intends," "believes," and variations of such words or similar
expressions are intended to identify forward-looking statements. All forward-
looking statements, including without limitation, management's expectations
regarding continued growth and its net sales and pro forma and GAAP net income
for 2005, the construction of its Albuquerque facility and the timing of new
products, are based upon current expectations and beliefs and various
assumptions. There can be no assurance that the Company will realize these
expectations or that these beliefs will prove correct.
There are a number of risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements contained in
this release. Numerous factors, many of which are beyond the Company's
control, could cause actual results to differ materially from those expressed
as forward-looking statements. Certain of these risk factors are discussed in
the Company's filings with the Securities and Exchange Commission, including
without limitation the Company's annual report on Form 10-K under the headings
"Special Note Regarding Forward Looking Statements" and "Business-Risk
Factors". Any forward-looking statement speaks only as of the date on which
it is made, and the Company undertakes no obligation to update any forward-
looking statements to reflect events or circumstances after the date on which
it is made or to reflect the occurrence of anticipated or unanticipated events
or circumstances.
About the Company
Tempur-Pedic International Inc. (NYSE: TPX) manufactures and distributes
Swedish Mattresses and Neck Pillows(TM) made from its proprietary Tempur(R)
pressure-relieving material, a visco-elastic material that conforms to the
body to provide support and help alleviate pressure points. Products are
currently sold in 60 countries under the Tempur(R) and Tempur-Pedic(R) brand
names. World headquarters for Tempur-Pedic International are in Lexington, KY.
For more information, visit http://www.tempurpedic.com or call 800-805-
3635. To visit Tempur-Pedic's celebrity connection, visit
http://www.mattressofthestars.com.
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands,
except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ---------- ------------------------ ----------
2004 2003 Chg % 2004 2003 Chg %
---------- ---------- ---------- ---------- ---------- ----------
Net sales $ 198,406 $ 136,776 45% $ 684,866 $ 479,135 43%
Cost of sales 95,624 65,060 323,852 223,865
Gross profit 102,782 71,716 43% 361,014 255,270 41%
Selling expenses 37,216 31,201 138,735 106,700
General and
administrative
expenses 19,987 15,345 68,961 50,001
Research and
development
expenses 902 305 2,283 1,495
Operating income 44,677 24,865 80% 151,035 97,074 56%
Other income
(expense), net:
Interest expense,
net (5,685) (6,778) (23,550) (20,521)
Loss on debt
extinguishment - - (5,381) (13,669)
Other income
(expense), net 62 (207) 83 (1,682)
Total other expense,
net (5,623) (6,985) (28,848) (35,872)
Income before
income taxes 39,054 17,880 122,187 61,202
Income tax
provision 15,174 6,295 47,180 23,627
Net Income $ 23,880 $ 11,585 106% $ 75,007 $ 37,575 100%
Basic earnings
per share $ 0.24 $ 0.53 (55)% $ 0.77 $ 3.32 (77)%
Diluted earnings
per share $ 0.23 $ 0.12 92% $ 0.73 $ 0.39 87%
Dilutive weighted
average shares
outstanding
(in thousands) 103,208 97,266 102,876 95,331
Supplemental Information
Pro Forma Net Income and Other Financial Data
To further provide investors useful information, pro forma net income is
presented and represents the Company's GAAP net income before non-cash stock-
based compensation expense of $0.9 million and $2.4 million for the three
months ended December 31, 2004 and 2003, respectively, and $5.2 million and
$4.1 million for the twelve months ended December 31, 2004 and 2003,
respectively. The Company has unearned non-cash stock-based compensation of
$3.8 million as of December 31, 2004 that will be recognized as expense in
future periods. For the three and twelve months ended December 31, 2004, GAAP
net income includes $0.9 million of secondary public offering expenses related
to the registration and offering of the company's common stock in the fourth
quarter of 2004, while pro forma net income excludes these expenses. In
addition to these pro forma adjustments, GAAP net income includes, and pro
forma net income excludes, a loss on debt extinguishment totaling $3.3
million, net of tax, for the twelve months ended December 31, 2004 relating to
the Company's redemption in January 2004 of $52.5 million aggregate principal
amount of the outstanding 10-1/4% Senior Subordinated Notes due 2010 issued by
its subsidiaries Tempur-Pedic, Inc. and Tempur Production USA, Inc. For the
twelve months ended December 31, 2003, GAAP net income includes, and pro forma
net income excludes, transaction related expenses totaling $10.4 million, net
of tax, relating to the write-off of deferred financing fess, original issue
discount and prepayment penalties relating to the Company's re-capitalization
in August 2003, and these amounts are included in loss on debt extinguishment,
net of tax.
The Company believes that excluding non-cash stock-based compensation
expense, secondary public offering expenses, and loss on debt extinguishment
provides a measure that is more representative of ongoing costs and therefore
more comparable to the Company's historical operations. The following is a
reconciliation of GAAP net income to pro forma net income and per share
amounts:
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Pro Forma Net Income,
and Other Financial Data
($ in thousands,
except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
GAAP net income $ 23,880 $ 11,585 $ 75,007 $ 37,575
Non-cash stock-based
compensation expense 915 2,358 5,171 4,078
Secondary public
offering expenses 939 - 939 -
Loss on debt
extinguishment, net of tax - - 3,309 10,401
Pro forma net income $ 25,734 $ 13,943 $ 84,426 $ 52,054
GAAP net income per
share, diluted $ 0.23 $ 0.12 $ 0.73 $ 0.39
Pro forma net income
per share, diluted $ 0.25 $ 0.14 $ 0.82 $ 0.55
Other financial data
Depreciation and
amortization $ 7,325 $ 7,659 $ 28,519 $ 23,975
Net debt $ 261,303 $ 362,292 $ 261,303 $ 362,292
Summary of Channel Sales
The Company generates sales through four distribution channels: retail,
direct, healthcare and third party. The retail channel sells to furniture,
specialty and department stores globally. The direct channel sells directly
to consumers. The healthcare channel sells to hospitals, nursing homes,
healthcare professionals and medical retailers. The third party channel sells
to distributors in countries where Tempur-Pedic International does not operate
its own distribution company.
The following table highlights net sales information, by channel and by
segment, for the fourth quarter of 2004 compared to 2003:
($ in thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
December 31, December 31, December 31,
----------------------- ----------------------- -----------------------
2004 2003 2004 2003 2004 2003
---------- ---------- ---------- ---------- ---------- ----------
By Sales
Channel
Retail $ 145,321 $ 95,905 $ 97,826 $ 58,526 $ 47,495 $ 37,379
Direct 27,120 23,178 22,446 19,673 4,674 3,505
Healthcare 12,869 11,260 3,231 2,869 9,638 8,391
Third Party 13,096 6,433 2,959 1,524 10,137 4,909
Total $ 198,40 $ 136,776 $ 126,462 $ 82,592 $ 71,944 $ 54,184
By Segment
Domestic $ 126,462 $ 82,592
International 71,944 54,184
Total $ 198,406 $ 136,776
Summary of Product Sales
A summary of net sales by product is reported below:
($ in thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
December 31, December 31, December 31,
----------------------- ----------------------- -----------------------
2004 2003 2004 2003 2004 2003
---------- ---------- ---------- ---------- ---------- ----------
Net Sales
Mattresses $ 127,176 $ 80,032 $ 87,488 $ 54,049 $ 39,688 $ 25,983
Pillows 37,762 31,495 17,487 13,633 20,275 17,862
Other 33,468 25,249 21,487 14,910 11,981 10,339
Total
$ 198,406 $ 136,776 $ 126,462 $ 82,592 $ 71,944 $ 54,184
Units Sold(1)
Mattresses 154,908 105,208 90,072 58,507 64,836 46,701
Pillows 784,478 645,375 366,671 294,629 417,807 350,746
(1) Units sold represent net sales after consideration of returned
mattresses and pillows and excludes units shipped to fulfill warranty
claims and promotional activities.
SOURCE Tempur-Pedic International Inc.
-0- 01/27/2005
/CONTACT: Harriet Fried, +1-212-838-3777, for Tempur-Pedic International
Inc./
/Web site: http://www.tempurpedic.com /