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Tempur-Pedic CEO pleased with Q3 results globally
21
Oct '11
Tempur-Pedic International Inc, the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced financial results for the third quarter ended September 30, 2011. The Company also increased full year 2011 financial guidance and announced an increase to its existing share repurchase authorization.

Financial Summary
Earnings per diluted share (EPS) increased 45% to $0.90 in the third quarter of 2011 as compared to $0.62 in the third quarter of 2010. The Company reported net income of $61.9 million in the third quarter of 2011 as compared to $44.2 million in the third quarter of 2010.

Net sales increased 30% to $383.1 million in the third quarter of 2011 from $295.8 million in the third quarter of 2010. On a constant currency basis, net sales increased 26%. Net sales in the North American segment increased 30%, while International segment net sales increased 28%. On a constant currency basis, International segment net sales increased 15%.
Mattress sales increased 28% globally.

Mattress sales increased 28% in the North American segment and 31% in the International segment. On a constant currency basis, International mattress sales increased 18%. Pillow sales increased 12% globally. Pillow sales increased 5% in North America and 21% in the International segment. On a constant currency basis, International pillow sales increased 9%.

Gross profit margin was 52.4% as compared to 51.0% in the third quarter of 2010. The gross profit margin increased as a result of improved efficiencies in manufacturing, favorable mix and fixed cost leverage related to higher production volumes, partially offset by commodity costs and new product introductions.

Operating profit margin was 25.2% as compared to 23.0% in the third quarter of 2010. The increase was driven by improved gross profit margin and operating expense leverage, partially offset by increased marketing investments.

The Company generated $75.0 million of operating cash flow in the third quarter of 2011 as compared to $71.9 million in the third quarter of 2010. In addition, the Company increased its cash balance by $16.3 million to $103.0 million in the third quarter.

Chief Executive Officer Mark Sarvary commented, "We are pleased with our third quarter results globally. Our strategic investments in brand awareness and new products continue to deliver growth. We remain confident of the potential to grow sales and earnings over the long term."

Chief Financial Officer Dale Williams commented, "We are pleased with our sales and earnings in the quarter, and our continued improvement in margins. However, gross margins declined sequentially this quarter primarily related to a transitory productivity issue at our Danish manufacturing facility."

Share Repurchase Program
During the third quarter of 2011, the Company purchased 1.34 million shares of its common stock for a total cost of $80.0 million. During the first three quarters of 2011, the Company purchased 4.25 million shares of its common stock for a total cost of $240.0 million.


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