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Guarantor/Non-Guarantor Financial Information
9 Months Ended
Sep. 30, 2015
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
Guarantor/Non-Guarantor Financial Information
Guarantor/Non-Guarantor Financial Information

The $375.0 million and $450.0 million aggregate principal amount of 2020 Senior Notes and 2023 Senior Notes (collectively the "Senior Notes"), respectively, are general unsecured senior obligations of Tempur Sealy International and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by all of Tempur Sealy International’s 100% directly or indirectly owned current and future domestic subsidiaries (the "Combined Guarantor Subsidiaries"). The foreign subsidiaries (the "Combined Non-Guarantor Subsidiaries") represent the foreign operations of the Company and do not guarantee the Senior Notes. A subsidiary guarantor will be released from its obligations under the applicable indenture governing the Senior Notes when: (a) the subsidiary guarantor is sold or sells all or substantially all of its assets; (b) the subsidiary is declared "unrestricted" under the applicable indenture governing the Senior Notes; (c) the subsidiary’s guarantee of indebtedness under the 2012 Credit Agreement (as it may be amended, refinanced or replaced) is released (other than a discharge through repayment); or (d) the requirements for legal or covenant defeasance or discharge of the applicable indenture have been satisfied. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, including transactions with the Company’s wholly-owned subsidiary guarantors and non-guarantor subsidiaries. The Company has accounted for its investments in its subsidiaries under the equity method.
 
The following financial information presents Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014, the Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2015 and 2014, and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 for Tempur Sealy International, Combined Guarantor Subsidiaries and Combined Non-Guarantor Subsidiaries.
TEMPUR SEALY INTERNATIONAL, INC.
Supplemental Condensed Consolidated Statements of Operations and Comprehensive Income
Three Months Ended September 30, 2015
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
697.8

 
$
195.6

 
$
(13.4
)
 
$
880.0

Cost of sales

 
427.2

 
106.6

 
(13.4
)
 
520.4

Gross profit

 
270.6

 
89.0

 

 
359.6

Selling and marketing expenses
1.1

 
129.4

 
45.1

 

 
175.6

General, administrative and other expenses
4.2

 
59.1

 
16.5

 

 
79.8

Equity income in earnings of unconsolidated affiliates

 

 
(2.0
)
 

 
(2.0
)
Royalty income, net of royalty expense

 
(4.7
)
 

 

 
(4.7
)
Operating (loss) income
(5.3
)
 
86.8

 
29.4

 

 
110.9

 
 
 
 
 
 
 
 
 
 
Other expense, net:
 

 
 

 
 

 
 

 
 
Third party interest expense, net
6.7

 
25.8

 
0.7

 

 
33.2

Intercompany interest expense (income), net
8.3

 
(8.9
)
 
0.6

 

 

Interest expense, net
15.0

 
16.9

 
1.3

 

 
33.2

Other (income) expense, net

 
(8.6
)
 
20.4

 

 
11.8

Total other expense, net
15.0

 
8.3

 
21.7

 

 
45.0

 
 
 
 
 
 
 
 
 
 
Income from equity investees
55.0

 
1.4

 

 
(56.4
)
 

 
 
 
 
 
 
 
 
 
 
Income before income taxes
34.7

 
79.9

 
7.7

 
(56.4
)
 
65.9

Income tax benefit (provision)
6.2

 
(24.9
)
 
(6.3
)
 

 
(25.0
)
Net income before non-controlling interest
40.9

 
55.0

 
1.4

 
(56.4
)
 
40.9

Less: Net income attributable to non-controlling interest
0.7

 
0.7

 

 
(0.7
)
 
0.7

Net income attributable to Tempur Sealy International, Inc.
$
40.2

 
$
54.3

 
$
1.4

 
$
(55.7
)
 
$
40.2

 
 
 
 
 
 
 
 
 
 
Comprehensive income attributable to Tempur Sealy International, Inc.
$
24.6

 
$
53.9

 
$
(21.3
)
 
$
(32.6
)
 
$
24.6

 
TEMPUR SEALY INTERNATIONAL, INC.
Supplemental Condensed Consolidated Statements of Operations and Comprehensive Income
Three Months Ended September 30, 2014
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
639.3

 
$
203.9

 
$
(15.8
)
 
$
827.4

Cost of sales

 
414.7

 
110.0

 
(15.8
)
 
508.9

Gross profit

 
224.6

 
93.9

 

 
318.5

Selling and marketing expenses
0.8

 
121.1

 
44.9

 

 
166.8

General, administrative and other expenses
3.8

 
49.5

 
17.5

 

 
70.8

Equity income in earnings of unconsolidated affiliates

 

 
(1.8
)
 

 
(1.8
)
Royalty income, net of royalty expense

 
(4.4
)
 

 

 
(4.4
)
Operating (loss) income
(4.6
)
 
58.4

 
33.3

 

 
87.1

 
 
 
 
 
 
 
 
 
 
Other expense, net:
 

 
 

 
 

 
 

 
 

Third party interest expense, net
6.7

 
17.9

 
0.7

 

 
25.3

Intercompany interest expense (income), net
8.2

 
(8.7
)
 
0.5

 

 

Interest expense, net
14.9

 
9.2

 
1.2

 

 
25.3

Loss on disposal, net

 
2.8

 

 

 
2.8

Other income, net

 
(0.7
)
 
(0.2
)
 

 
(0.9
)
Total other expense, net
14.9

 
11.3

 
1.0

 

 
27.2

 
 
 
 
 
 
 
 
 
 
Income from equity investees
50.0

 
25.3

 

 
(75.3
)
 

 
 
 
 
 
 
 
 
 
 
Income before income taxes
30.5

 
72.4

 
32.3

 
(75.3
)
 
59.9

Income tax benefit (provision)
7.0

 
(22.4
)
 
(7.0
)
 

 
(22.4
)
Net income before non-controlling interest
37.5

 
50.0

 
25.3

 
(75.3
)
 
37.5

Less: Net income attributable to non-controlling interest
0.4

 
0.4

 

 
(0.4
)
 
0.4

Net income attributable to Tempur Sealy International, Inc.
$
37.1

 
$
49.6

 
$
25.3

 
$
(74.9
)
 
$
37.1

 
 
 
 
 
 
 
 
 
 
Comprehensive income attributable to Tempur Sealy International, Inc.
$
14.5

 
$
47.3

 
$
0.5

 
$
(47.8
)
 
$
14.5

 

TEMPUR SEALY INTERNATIONAL, INC.
Supplemental Condensed Consolidated Statements of Operations and Comprehensive Income
Nine Months Ended September 30, 2015
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
1,849.2

 
$
572.7

 
$
(38.0
)
 
$
2,383.9

Cost of sales

 
1,173.6

 
312.5

 
(38.0
)
 
1,448.1

Gross profit

 
675.6

 
260.2

 

 
935.8

Selling and marketing expenses
2.8

 
358.1

 
137.1

 

 
498.0

General, administrative and other expenses
15.3

 
177.5

 
49.8

 

 
242.6

Equity income in earnings of unconsolidated affiliates

 

 
(8.4
)
 

 
(8.4
)
Royalty income, net of royalty expense

 
(13.7
)
 

 

 
(13.7
)
Operating (loss) income
(18.1
)
 
153.7

 
81.7

 

 
217.3

 
 
 
 
 
 
 
 
 
 
Other expense, net:
 
 
 
 
 
 
 
 
 
Third party interest expense, net
20.1

 
52.0

 
2.0

 

 
74.1

Intercompany interest expense (income), net
24.6

 
(26.5
)
 
1.9

 

 

Interest expense, net
44.7

 
25.5

 
3.9

 

 
74.1

Other (income) expense, net

 
(8.2
)
 
20.9

 

 
12.7

Total other expense, net
44.7

 
17.3

 
24.8

 

 
86.8

 
 
 
 
 
 
 
 
 
 
Income from equity investees
130.0

 
40.1

 

 
(170.1
)
 

 
 
 
 
 
 
 
 
 
 
Income before income taxes
67.2

 
176.5

 
56.9

 
(170.1
)
 
130.5

Income tax benefit (provision)
19.7

 
(46.5
)
 
(16.8
)
 

 
(43.6
)
Net income before non-controlling interest
86.9

 
130.0

 
40.1

 
(170.1
)
 
86.9

Less: Net income attributable to non-controlling interest
2.1

 
2.1

 

 
(2.1
)
 
2.1

Net income attributable to Tempur Sealy International, Inc.
$
84.8

 
$
127.9

 
$
40.1

 
$
(168.0
)
 
$
84.8

 
 
 
 
 
 
 
 
 
 
Comprehensive income attributable to Tempur Sealy International, Inc.
$
40.2

 
$
127.5

 
$
(14.0
)
 
$
(113.5
)
 
$
40.2

 

 

TEMPUR SEALY INTERNATIONAL, INC.
Supplemental Condensed Consolidated Statements of Operations and Comprehensive Income
Nine Months Ended September 30, 2014
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
1,684.1

 
$
592.7

 
$
(32.5
)
 
$
2,244.3

Cost of sales

 
1,112.6

 
307.9

 
(32.5
)
 
1,388.0

Gross profit

 
571.5

 
284.8

 

 
856.3

Selling and marketing expenses
1.7

 
326.5

 
136.8

 

 
465.0

General, administrative and other expenses
9.5

 
148.6

 
52.5

 

 
210.6

Equity income in earnings of unconsolidated affiliates

 

 
(5.6
)
 

 
(5.6
)
Royalty income, net of royalty expense

 
(13.5
)
 

 

 
(13.5
)
Operating (loss) income
(11.2
)
 
109.9

 
101.1

 

 
199.8

 
 
 
 
 
 
 
 
 
 
Other expense, net:
 

 
 

 
 

 
 

 
 
Third party interest expense, net
20.2

 
48.6

 
1.7

 

 
70.5

Intercompany interest expense (income), net
24.4

 
(25.9
)
 
1.5

 

 

Interest expense, net
44.6

 
22.7

 
3.2

 

 
70.5

Loss on disposal, net

 
23.2

 

 

 
23.2

Other (income) expense, net

 
(1.6
)
 
1.2

 

 
(0.4
)
Total other expense, net
44.6

 
44.3

 
4.4

 

 
93.3

 
 
 
 
 
 
 
 
 
 
Income from equity investees
99.2

 
74.8

 

 
(174.0
)
 

 
 
 
 
 
 
 
 
 
 
Income before income taxes
43.4

 
140.4

 
96.7

 
(174.0
)
 
106.5

Income tax benefit (provision)
19.4

 
(41.2
)
 
(21.9
)
 

 
(43.7
)
Net income before non-controlling interest
62.8

 
99.2

 
74.8

 
(174.0
)
 
62.8

Less: Net income attributable to non-controlling interest
0.5

 
0.5

 

 
(0.5
)
 
0.5

Net income attributable to Tempur Sealy International, Inc.
$
62.3

 
$
98.7

 
$
74.8

 
$
(173.5
)
 
$
62.3

 
 
 
 
 
 
 
 
 


Comprehensive income attributable to Tempur Sealy International, Inc.
$
43.6

 
$
98.8

 
$
53.4

 
$
(152.2
)
 
$
43.6












TEMPUR SEALY INTERNATIONAL, INC.
Supplemental Condensed Consolidated Balance Sheets
September 30, 2015
(in millions) 
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
40.0

 
$
31.8

 
$

 
$
71.8

Accounts receivable, net

 
304.2

 
150.5

 

 
454.7

Inventories, net

 
152.7

 
60.4

 

 
213.1

Income taxes receivable
184.8

 

 

 
(184.8
)
 

Prepaid expenses and other current assets
0.4

 
31.0

 
32.1

 

 
63.5

Deferred income taxes
15.0

 
30.0

 
6.2

 

 
51.2

Total Current Assets
200.2

 
557.9

 
281.0

 
(184.8
)
 
854.3

Property, plant and equipment, net

 
298.0

 
62.5

 

 
360.5

Goodwill

 
501.4

 
211.3

 

 
712.7

Other intangible assets, net

 
615.5

 
86.8

 

 
702.3

Deferred income taxes

 

 
9.3

 

 
9.3

Other non-current assets
5.6

 
51.6

 
43.1

 

 
100.3

Net investment in subsidiaries
1,982.0

 

 

 
(1,982.0
)
 

Due from affiliates
114.9

 
2,103.0

 
6.6

 
(2,224.5
)
 

Total Assets
$
2,302.7

 
$
4,127.4

 
$
700.6

 
$
(4,391.3
)
 
$
2,739.4

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 

 
 

 
 

 
 

 
 

Accounts payable
$

 
$
217.2

 
$
55.1

 
$

 
$
272.3

Accrued expenses and other current liabilities
7.8

 
198.8

 
84.7

 

 
291.3

Deferred income taxes

 

 
0.2

 

 
0.2

Income taxes payable

 
189.9

 
12.6

 
(184.8
)
 
17.7

Current portion of long-term debt

 
166.8

 
7.0

 

 
173.8

Total Current Liabilities
7.8

 
772.7

 
159.6

 
(184.8
)
 
755.3

Long-term debt
375.0

 
937.5

 

 

 
1,312.5

Deferred income taxes

 
216.9

 
25.5

 

 
242.4

Other non-current liabilities

 
109.1

 
6.5

 

 
115.6

Due to affiliates
1,606.3

 
109.2

 
617.9

 
(2,333.4
)
 

Total Liabilities
1,989.1

 
2,145.4

 
809.5

 
(2,518.2
)
 
2,425.8

 
 
 
 
 
 
 
 
 
 
Redeemable non-controlling interest
14.3

 
14.3

 

 
(14.3
)
 
14.3

 
 
 
 
 
 
 
 
 
 
Total Stockholders’ Equity
299.3

 
1,967.7

 
(108.9
)
 
(1,858.8
)
 
299.3

Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity
$
2,302.7

 
$
4,127.4

 
$
700.6

 
$
(4,391.3
)
 
$
2,739.4

TEMPUR SEALY INTERNATIONAL, INC.
Supplemental Condensed Consolidated Balance Sheets
December 31, 2014
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
0.4

 
$
25.5

 
$
36.6

 
$

 
$
62.5

Accounts receivable, net

 
241.2

 
144.6

 

 
385.8

Inventories, net

 
158.3

 
58.9

 

 
217.2

Income taxes receivable
144.1

 

 

 
(144.1
)
 

Prepaid expenses and other current assets

 
28.2

 
28.3

 

 
56.5

Deferred income taxes
12.4

 
26.8

 
5.2

 

 
44.4

Total Current Assets
156.9

 
480.0

 
273.6

 
(144.1
)
 
766.4

Property, plant and equipment, net

 
287.3

 
68.3

 

 
355.6

Goodwill

 
557.2

 
179.3

 

 
736.5

Other intangible assets, net

 
611.9

 
115.2

 

 
727.1

Deferred income taxes

 

 
8.6

 

 
8.6

Other non-current assets
6.3

 
46.4

 
15.7

 

 
68.4

Net investment in subsidiaries
1,808.4

 

 

 
(1,808.4
)
 

Due from affiliates
51.4

 
2,226.0

 
5.3

 
(2,282.7
)
 

Total Assets
$
2,023.0

 
$
4,208.8

 
$
666.0

 
$
(4,235.2
)
 
$
2,662.6

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 

 
 

 
 

 
 

 
 

Accounts payable
$

 
$
170.4

 
$
56.0

 
$

 
$
226.4

Accrued expenses and other current liabilities
1.4

 
166.1

 
65.8

 

 
233.3

Deferred income taxes

 

 
0.2

 

 
0.2

Income taxes payable

 
163.0

 
(6.9
)
 
(144.1
)
 
12.0

Current portion of long-term debt

 
61.8

 
4.6

 

 
66.4

Total Current Liabilities
1.4

 
561.3

 
119.7

 
(144.1
)
 
538.3

Long-term debt
375.0

 
1,160.9

 

 

 
1,535.9

Deferred income taxes

 
229.1

 
29.7

 

 
258.8

Other non-current liabilities

 
109.3

 
5.0

 

 
114.3

Due to affiliates
1,431.3

 
340.2

 
849.4

 
(2,620.9
)
 

Total Liabilities
1,807.7

 
2,400.8

 
1,003.8

 
(2,765.0
)
 
2,447.3

 
 
 
 
 
 
 
 
 
 
Redeemable non-controlling interest
12.6

 
12.6

 

 
(12.6
)
 
12.6

 
 
 
 
 
 
 
 
 
 
Total Stockholders’ Equity
202.7

 
1,795.4

 
(337.8
)
 
(1,457.6
)
 
202.7

Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity
$
2,023.0

 
$
4,208.8

 
$
666.0

 
$
(4,235.2
)
 
$
2,662.6




 
Supplemental Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2015
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net cash (used in) provided by operating activities
$
(63.3
)
 
$
158.5

 
$
38.0

 
$

 
$
133.2

 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

 
 

 
 

 
 

Proceeds from disposition of business and other

 
7.2

 

 

 
7.2

Purchases of property, plant and equipment

 
(40.3
)
 
(10.8
)
 

 
(51.1
)
Other

 

 
(0.3
)
 

 
(0.3
)
Net cash (used in) investing activities

 
(33.1
)
 
(11.1
)
 

 
(44.2
)
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

 
 

 
 

 
 

Proceeds from issuance of 2023 Notes

 
450.0

 

 

 
450.0

Proceeds from borrowings under long-term debt obligations

 
402.9

 
2.5

 

 
405.4

Repayments of borrowings under long-term debt obligations

 
(974.4
)
 

 

 
(974.4
)
Net activity in investment in and advances from (to) subsidiaries and affiliates
22.8

 
19.5

 
(42.3
)
 
 
 

Proceeds from exercise of stock options
16.7

 

 

 

 
16.7

Excess tax benefit from stock-based compensation
19.7

 

 

 

 
19.7

Proceeds from issuance of treasury shares
5.0

 

 

 

 
5.0

Treasury stock repurchased
(1.3
)
 

 

 

 
(1.3
)
Payment of deferred financing costs

 
(6.4
)
 

 

 
(6.4
)
Other

 
(2.5
)
 
0.4

 

 
(2.1
)
Net cash provided by (used in) financing activities
62.9

 
(110.9
)
 
(39.4
)
 

 
(87.4
)
 
 
 
 
 
 
 
 
 
 
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 
7.7

 

 
7.7

(Decrease) increase in cash and cash equivalents
(0.4
)
 
14.5

 
(4.8
)
 

 
9.3

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
0.4

 
25.5

 
36.6

 

 
62.5

CASH AND CASH EQUIVALENTS, END OF PERIOD
$

 
$
40.0

 
$
31.8

 
$

 
$
71.8

 
TEMPUR SEALY INTERNATIONAL, INC. 
Supplemental Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2014
(in millions)
 
Tempur Sealy International, Inc. (Ultimate Parent)
 
Combined Guarantor Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net cash (used in) provided by operating activities
$
(41.1
)
 
$
146.0

 
$
76.0

 
$

 
$
180.9

 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:


 


 


 


 


Acquisition of business, net of cash acquired

 

 
(8.5
)
 

 
(8.5
)
Proceeds from disposition of business

 
43.5

 

 
 
 
43.5

Purchases of property, plant and equipment

 
(20.7
)
 
(9.6
)
 

 
(30.3
)
Other

 
2.9

 
(0.9
)
 

 
2.0

Net cash provided by (used in) investing activities

 
25.7

 
(19.0
)
 

 
6.7

 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

 
 

 
 

 
 

Proceeds from borrowings under long-term debt obligations

 
239.5

 

 

 
239.5

Repayments of borrowings under long-term debt obligations

 
(432.7
)
 

 

 
(432.7
)
Net activity in investment in and advances from (to) subsidiaries and affiliates
38.1

 
32.5

 
(70.6
)
 

 

Proceeds from exercise of stock options
3.9

 

 

 

 
3.9

Excess tax benefit from stock-based compensation
1.6

 

 

 

 
1.6

Treasury stock repurchased
(2.2
)
 

 

 

 
(2.2
)
Other

 
(1.2
)
 
1.6

 

 
0.4

Net cash provided by (used in) financing activities
41.4

 
(161.9
)
 
(69.0
)
 

 
(189.5
)
 
 
 
 
 
 
 
 
 
 
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 
2.7

 

 
2.7

Increase (decrease) in cash and cash equivalents
0.3

 
9.8

 
(9.3
)
 

 
0.8

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 
30.9

 
50.1

 

 
81.0

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
0.3

 
$
40.7

 
$
40.8

 
$

 
$
81.8