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Mattress & pillow sales decline at Tempur-Pedic

17
Jul '09
Tempur-Pedic International Inc, the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced financial results for the second quarter ended June 30, 2009. The Company also confirmed its financial guidance for 2009.

Second Quarter Financial Summary:
• Earnings per share (EPS) were $0.22 per diluted share in the second quarter of 2009 as compared to $0.27 per diluted share in the second quarter of 2008. The Company reported net income of $16.9 million for the second quarter of 2009 as compared to net income of $20.2 million in the second quarter of 2008.

• Net sales declined 22% to $185.2 million in the second quarter of 2009 from $238.7 million in the second quarter of 2008. On a constant currency basis, net sales declined 19%. Net sales in the domestic segment declined 19%, while international segment net sales declined 29%. On a constant currency basis, international segment net sales declined 19%.

• Mattress sales declined 24% globally. Mattress sales declined 20% in the domestic segment and 31% in the international segment. On a constant currency basis, international mattress sales declined 21%. Pillow sales declined 17% globally. Pillow sales declined 12% domestically and 20% internationally. On a constant currency basis, international pillow sales declined 12%.

• Gross profit margin was 46.6% as compared to 44.4% in the second quarter of 2008. The gross profit margin increased as a result of lower commodity costs, improved efficiencies in manufacturing and improved pricing, partially offset by fixed cost de-leverage related to lower production volumes.

• Operating profit margin was 15.7% as compared to 15.2% in the second quarter of 2008. The Company reduced operating expenses by $12.5 million to $57.2 million in the second quarter of 2009 from $69.7 million in the second quarter of 2008.

• Reflecting the Company's continued focus on generating cash, the Company generated $39.5 million of operating cash flow in the second quarter of 2009.

• During the quarter, the Company reduced Total debt by $31.0 million to $369.0 million and increased cash by $3.8 million to $25.0. As of June 30, 2009, the Company's ratio of Funded debt to EBITDA was 2.29 times, well within the covenant in its credit facility, which requires that this ratio not exceed 3.00 times.

Chief Executive Officer Mark Sarvary commented, "During the second quarter, our initiatives to drive sales and margins continued to show progress. Our productivity projects helped us expand gross margins with improvement compared to last year and last quarter. Our focus on cash flow continued to display the strength of our business model as we lowered debt $31 million during the quarter. We believe we are well positioned for growth when the economy recovers."

2009 Financial Guidance:
The Company confirmed its prior guidance ranges for EPS and net sales for full year 2009. The Company continues to expect EPS to range from $0.70 to $0.90 per diluted share. The Company continues to expect net sales to range from $700 million to $740 million. The Company noted 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.

Tempur-Pedic International Inc


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