GRAPHIC
 
TEMPUR-PEDIC REPORTS RECORD FOURTH QUARTER AND FULL YEAR EARNINGS
 
-- Reports Fourth Quarter Sales Up 20% and EPS Up 74% at $0.66
 
-- Fourth Quarter Gross Margin Up 340 Basis Points to 51.9% and Operating Margin Up 520 Basis Points to 24.5%
 
-- Announces New $200 Million Share Repurchase Program
 
-- Issues Financial Guidance For 2011

LEXINGTON, KY, January 20, 2011
– Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the fourth quarter and year ended December 31, 2010. The Company also announced a $200 million share repurchase program and issued financial guidance for 2011.

FOURTH QUARTER FINANCIAL SUMMARY
 
●  
Earnings per share (EPS) were $0.66 per diluted share in the fourth quarter of 2010 as compared to EPS of $0.38 per diluted share in the fourth quarter of 2009. The Company reported net income of $46.3 million for the fourth quarter of 2010 as compared to net income of $29.1 million in the fourth quarter of 2009.
 
●  
Net sales increaed 20% to $292.7 million in the fouth quarter of 2010 from $244.8 million in the fourth quarter of 2009. On a constant currency basis, net sales increased 21%. Net sales in the North American segment increased 31%, while international segment net sales increased 1%. On a constant currency basis, international segment net sales increased 6%.

●  
Mattress sales increased 20% globally. Mattress sales increased 32% in the North American segment and decreased 1% in the international segment. On a constant currency basis, international mattress sales increased 4%. Pillow sales increased 18% globally. Pillow sales increased 31% in North America and 8% internationally. On a constant currency basis, international pillow sales increased 11%.

●  
Gross profit margin was 51.9% as compared to 48.5% in the fourth quarter of 2009. The gross profit margin increased as a result of improved efficiencies in manufacturing, fixed cost leverage related to higher production volumes and favorable product mix, partially offset by higher commodity costs and geographic mix.

●  
Operating profit margin was 24.5% as compared to 19.3% in the fourth quarter of 2009.

●  
The Company generated $44.5 million of operating cash flow as compared to $14.6 million in the fourth quarter of 2009.

 ●  
During the quarter, the Company reduced Total debt by $29.0 million to $407.0 million and increased cash by $15.6 million to $53.6 million. As of December 31, 2010, the Company’s ratio of Funded debt to EBITDA was 1.45 times, well within the covenant in its credit facility, which requires that this ratio not exceed 3.00 times. For additional information about EBITDA and Funded debt (which are non-GAAP measures) please refer to the reconciliation and other information included in the attached schedule.
 
FULL YEAR FINANCIAL SUMMARY
 
●  
Earnings per share (EPS) were $2.16 per diluted share for the full year 2010 as compared to EPS of $1.12 per diluted share for the full year 2009. The Company reported net income of $157.1 million for the full year 2010 as compared to net income of $85.0 million for the full year 2009.
 
●  
Net sales increased 33% to $1,105.4 million for the full year 2010 from $831.2 million for the full year 2009. On a constant currency basis, net sales increased 34%. Net sales in the North American segment increased 47%, while international segment net sales increased 9%. On a constant currency basis, international segment net sales increased 11%.

 ●  
Gross profit margin was 50.2% for the full year 2010 as compared to 47.4% for the full year 2009. The gross profit margin increased as a result of improved efficiencies in manufacturing and fixed cost leverage related to higher production volumes, partially offset by higher commodity costs and geographic mix.

●  
Operating profit margin was 22.2% as compared to 17.4% for the full year 2009.

●  
The Company generated $184.1 million of operating cash flow as compared to $135.0 million for the full year 2009.

●  
During 2010, the Company purchased 8.5 million shares of its common stock at an average price of $29.41 for a total cost of $250.0 million.
 
Chief Executive Officer Mark Sarvary commented, “In 2010 we delivered strong financial results and at the same time executed well on our strategic growth initiatives; we strengthened the product range and greatly improved how well consumers understand and appreciate the unique benefits of Tempur-Pedic. In 2011 we will implement the next phases of our plan to become the world’s favorite mattress and pillow brand. We will continue to enhance our product range both in the U.S. and internationally, increase our investment in consumer communication and broaden distribution in all geographies."
 
 

The following information was filed by Tempur Sealy International, Inc. (TPX) on Thursday, January 20, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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