SECOND QUARTER FINANCIAL SUMMARY
Earnings per diluted share ("EPS") under U.S. generally accepted accounting principles ("GAAP") in the second quarter of 2013 were $(0.03), and reflect transaction and integration costs and a purchase price allocation ("PPA") inventory adjustment related to the acquisition of Sealy Corporation ("Sealy") as well as tax provision adjustments related to the repatriation of foreign earnings utilized in connection with the Sealy acquisition and interest fees related to the Company's refinancing of its Term B loans under its senior secured credit facilities.
Adjusted EPS were $0.36 in the second quarter of 2013 as compared to GAAP EPS of $0.45 in the second quarter of 2012. The Company completed its acquisition of Sealy in March 2013, and results for 2012 do not include the Sealy results of operations.
GAAP net loss in the second quarter of 2013 was $1.6 million. The Company reported adjusted net income of $22.3 million for the second quarter of 2013 as compared to GAAP net income of $29.1 million in the second quarter of 2012. For additional information regarding adjusted EPS and adjusted net income (which are non-GAAP measures), please refer to the reconciliations and other information included in the attached schedules.
Total net sales increased 100.5% to $660.6 million in the second quarter of 2013 from $329.5 million in the second quarter of 2012. The net sales increase was due to the inclusion of $344.6 million of Sealy net sales for the second quarter of 2013.
Gross profit margin was 38.6% as compared to 50.7% in the second quarter of 2012. The gross profit margin decreased primarily as a result of the inclusion of Sealy, which has lower margins than the Tempur North America and Tempur International segments, changes in product mix and higher new product launch costs, offset partially by improved efficiencies in manufacturing and distribution and lower sourcing costs.
Operating income was $44.0 million, or 6.7% of net sales as compared to $47.5 million in the second quarter of 2012. Operating income included $11.9 million of transaction and integration costs related to the Sealy acquisition. Excluding these costs, the higher operating income reflects the inclusion of Sealy.
Adjusted EBITDA (which is a non-GAAP measure) for the second quarter of 2013 was $84.2 million as compared to $60.0 million in the second quarter of 2012.
The Company ended the quarter with consolidated funded debt less qualified cash of $1.9 billion. The ratio of consolidated funded debt less qualified cash to adjusted EBITDA was 4.6 times, calculated on a combined basis for Tempur-Pedic and Sealy in accordance with the Company's new senior secured credit facility.
Tempur Sealy International
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