EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm
Investor Presentation
1Q09
 
 
 
2
Forward-Looking Statements
This presentation may contain “forward-looking statements,” within the meaning of federal securities laws, which include information
concerning the Company’s plans, objectives, goals, strategies, future revenues or performance, financing needs and other information that is
not historical information. When used in this presentation, 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, the Company’s expectations regarding improving the quality and range of existing products,
improving transportation and network design increasing brand awareness and adding new marketing initiatives, international and domestic
growth opportunities, increasing effectiveness with retailers, increasing market share, improving gross margin strengthening direct channel
and online sales efforts, , consumer preferences and behavior, meeting financial obligations, cost and operating expense reductions and
cash flow generation, 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 presentation. 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. These risk factors include general economic and industry conditions,
particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; the Company’s ability to reduce
expenses to align with reduced sales levels; uncertainties arising from global events; the effects of changes in foreign exchange rates on the
Company’s reported earnings; consumer acceptance of the Company’s products; industry competition; the efficiency and effectiveness of
the Company’s advertising campaigns and other marketing programs; the Company’s ability to increase sales productivity within existing
retail accounts and to further penetrate the U.S. retail furniture channel, including the timing of opening or expanding within large retail
accounts; the Company’s dependence on its significant customers; the Company’s ability to address issues in certain underperforming
international markets; the Company’s ability to continuously improve its product line, maintain efficient, timely and cost-effective production
and delivery of its products, and manage its growth; changes in foreign tax rates, including the ability to utilize tax loss carry forwards; rising
commodity costs; the Company’s ability to retain members of its senior management team; the effects of increased interest rates; the market
price for the Company’s common stock prevailing from time to time; and the nature of other investment opportunities presented to the
Company from time to time.
Additional information concerning these and other risks and uncertainties 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 "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 for any reason, including to reflect events or circumstances
after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
 
 
 
Mark Sarvary, President & CEO
 
 
 
4
 u Mattress industry experiencing unprecedented downturn, though the market remains
 large (~$13 billion worldwide wholesale)
 u 2008 represents by far the worst year on record for the bedding industry
 u 4Q industry sales volume sharply lower
 u Consumer credit, while still available, has tightened
 u Retailer bankruptcies continue
 u Many competitors in financial distress
Industry Situational Assessment
 
 
 
5
 u Great company with great potential
 u Strong brand, highly valued by consumer and customers
 u Brand recognition comparable to leading S brands
 u Extremely satisfied consumers who act as enthusiastic promoters
 u Most profitable and best financially positioned mattress company
 u Leading share in the specialty market
 u Unique marketing brings consumers to retail asking for the product
 u Advantaged business structure
 u Single product line
 u Global reach
 u Unique pricing and promotion
 u Vertically integrated
 u Differentiated R&D
Tempur-Pedic Situational Assessment
 
 
 
6
 u Strong management team with >130 years running large, international businesses
Management Team
 
 
 
7
 u For the short term, focused on costs and cash flow to ensure we come out of the
 current economic environment much stronger than our competitors
 u Full compliance with debt covenants
 u Continue to improve cost structure and set stage for a stronger base in 2010
 u Opportunities exist in both gross margin and operating expenses
 u Improve share versus our relevant competitive set, primarily premium and specialty
 u Maintain flexibility to respond to economic change
 u Set stage for growth in 2010 and beyond
Near-term Priorities
 
 
 
8
 u In 2009, we will set the stage for growth with focus on key strategic initiatives
 u Drive gross margin improvement
 uUtilization rates, network re-design, sourcing, commodity costs
 u Improve effectiveness with retail customers
 uArm retailers with ready-made advertising to tie our marketing with theirs
 u Improve the quality and range of products
 uUtilizing consumer research to design products for specific consumer needs,
 improve existing product line and optimize communications
 u Strengthened direct response channel
 uInvest and strengthen our on-line presence
 u Expand international household penetration
 uStrengthen product innovation, work closer with retail customers, increased
 marketing investment
Long-term Initiatives
 
 
 
9
 u 2008 and current economic environment is unprecedented
 u Current environment is not the “new normal”
 u Great company with great potential
 u For the short term, focused on costs and cash flow to emerge stronger
 u Management is simultaneously working on initiatives that will enable us to re-ignite
 growth when the market recovers
Summary
 
 
 
Dale Williams, CFO
 
 
 
11
 u Planning ’09 volumes flat to 4Q08
 u Pricing opportunities
 u Improving effectiveness with retailers
 u International household penetration
($ in millions)
 For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q08 results and the Company’s prior 10K and 10Q filings.
Net Sales
 
 
 
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 u Easing commodity costs
 u Transportation & network redesign
 u Operating expense reductions
 u Sourcing
 For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q08 results and the Company’s prior 10K and 10Q filings.
Operating Margin
 
 
 
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 u Receivables management
 u Reduced inventories
 u Repatriation initiative
($ in millions)
 For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q08 results and the Company’s prior 10K and 10Q filings.
Operating Cash Flow
 
 
 
14
 u 3.0x covenant through July 2012 (maturity)
 u Despite economic environment, held covenant ratio flat in 2H08
 u Substantial covenant cushion
 u Anticipate de-leverage in 2009
($ in millions)
Funded Debt to EBITDA Covenant
Notes:
1.           For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q08 results and the Company’s prior 10K and 10Q filings
 
2.           Please see appendix for a reconciliation of GAAP to Non-GAAP measures and calculation of Funded Debt to EBITDA ratio.

 
 
 
15
 u Strong brand
 u Leading share in the Specialty segment
 u Most profitable mattress company
 u Credit facility covenant cushion
 u Initiatives to drive long-term growth of sales and earnings
Conclusion
 
 
 
Appendix
 
 
 
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Reconciliation of EBITDA to Net Income and Funded debt to Total debt
Non-GAAP Measures
The Company provides information regarding EBITDA and Funded debt which are not recognized terms under GAAP (Generally Accepted Accounting Principles) and
do not purport to be alternatives to Net income as a measure of operating performance or Total debt. Because not all companies use identical calculations, these
presentations may not be comparable to other similarly titled measures of other companies. A reconciliation of EBITDA to the Company’s Net income and a
reconciliation of Funded debt to Total debt are provided below. Management believes that the use of these non-GAAP financial measures provides investors with
additional useful information with respect to the terms of the Company’s credit facility.
The following tables set forth the reconciliation of the Company’s reported Net income to the calculation of EBITDA and the reconciliation of the Company’s reported
Total debt to the calculation of Funded debt:
GAAP to Non-GAAP Reconciliations