TRINITY, N.C., Jan. 23,
2013 /PRNewswire/ -- Sealy Corporation (NYSE: ZZ), a leading
global bedding manufacturer, today announced results for its fiscal
fourth quarter and full year 2012. The fiscal year ended
December 2, 2012 was a 53-week year
compared to a 52-week fiscal year ended November 27, 2011.
Fiscal 2012 4th Quarter Recap for Continuing Operations
- Net sales increased by $88.9
million or 33.0% to $358.1
million, compared to the same prior year quarter. The
increase in net sales attributable to the 53rd week was
approximately $37.1 million, which
added growth of 13.8% over the prior year quarter.
- Gross profit increased by $43.8
million to $141.9 million
compared to the same prior year quarter. The increase due to the
53rd week was approximately $14.5
million.
- Gross profit margin increased approximately 320 bps to 39.6% of
sales compared to 36.4% in the same prior year quarter.
- Income from operations increased by $12.3 million to $16.1
million compared to the same prior year quarter.
- Net loss from continuing operations attributable to common
shareholders was $2.7 million or
$0.03 per diluted share, compared to
net loss from continuing operations of $14.0
million or $0.14 per diluted
share in the prior year quarter. Excluding the impact of
restructuring expense, merger costs and income tax expense on
repatriated foreign earnings, our adjusted EPS was $0.04. Please see the attached reconciliation of
adjusted EPS.
- Adjusted EBITDA increased by $20.1
million to $35.2 million
compared to the same prior year quarter. The increase due to the
53rd week was approximately $3.9
million.
"We were pleased with our performance in 2012 as we continued to
execute on our strategic initiatives," stated Larry Rogers, Sealy's President and Chief
Executive Officer. "Strong product offerings in both the
specialty and innerspring lines, compelling advertising and
continued financial discipline led to these financial results and
we are working to ensure these trends continue."
Fiscal 2012 Fourth Quarter Results
Total U.S. net sales increased 32.9% to $269.7 million from the fourth quarter of fiscal
2011. The increase in net sales attributable to the 53rd week was
approximately $27.7 million. Also
contributing to the increase in U.S. net sales was a 13.3% increase
in wholesale unit volume, coupled with a 15.8% increase in
wholesale average unit selling price. The significant improvement
in both of these metrics was primarily driven by the success of the
Optimum by Sealy Posturepedic and Next Generation Stearns &
Foster product lines, both of which sell at higher price points in
the market.
International net sales increased $22.1
million, or 33.3%, from the fourth quarter of fiscal 2011 to
$88.4 million. The increase in net
sales attributable to the 53rd week was approximately
$9.3 million. This increase was
primarily attributable to the strong sales performance of
Canada, Mexico and South
America. In Canada, local
currency sales increases of 28.1% translated into increases of
31.8% in U.S. dollars due to the strengthening of the Canadian
dollar versus the U.S. dollar. Excluding the effects of
currency fluctuation, international net sales increased 32.1% from
the fourth quarter of fiscal 2011.
Gross profit for the fourth fiscal quarter increased by
$43.8 million to $141.9 million from the prior year quarter.
Gross margin increased 3.2 percentage points to 39.6%. The increase
as a percentage of net sales was primarily due to increases in
gross profit margins in U.S. operations partially offset by
declines in Canada. U.S. gross
profit margin increased 4.8 percentage points to 39.8%. The
increase as a percentage of net sales was primarily attributable to
improved operational efficiencies on higher sales volumes and an
improvement in manufacturing processes which resulted in a 2.4
percentage point increase in U.S. gross profit margin.
Additionally, the leveraging of fixed costs due to the higher sales
volumes contributed a 2.6 percentage point improvement in gross
margin. The local currency gross profit margin in
Canada was 37.6% as a percentage
of net sales which represents a decrease of 4.6 percentage points
from fiscal 2011. This decrease was primarily driven by the impact
of promotional activities to gain market share, and higher raw
material costs.
Selling, general, and administrative expenses were $127.8 million for the fourth quarter of fiscal
2012, an increase of $28.9 million
versus the comparable period a year earlier. A portion of this
increased expense was driven by the 53rd week. The
increased variable expense was primarily driven by higher
cooperative advertising and promotional costs, and the increased
fixed expense was driven primarily by higher incentive compensation
and an increase in defined contribution costs and professional
fees. As a percentage of net sales, this expense was 35.7% and
36.7% for the quarters ended December 2,
2012 and November 27, 2011,
respectively, a decrease of 1.0 percentage points.
Cash flow from operations was $50.7
million for the fourth quarter of fiscal 2012, driven
primarily by improvements in working capital. As a result of
our cash generation and the repatriation of a portion of our non US
cash, subsequent to the end of the fiscal year, the Company
redeemed an additional $35 million of
its senior notes.
Fiscal 2012 Full Year Results
Net sales for the fiscal year ended December 2, 2012 increased 9.6% to $1,347.9 million from $1,230.2 million for the prior fiscal year. Gross
profit was $539.5 million, or 40.0%
of net sales, versus $478.7 million,
or 38.9% of net sales, for the prior fiscal year. For the
2012 fiscal year, net income attributable to common shareholders
from continuing operations was $2.0
million and net loss from discontinued operations was
$2.0 million, resulting in overall
net income for the fiscal year of $0.0
million. Adjusted EBITDA increased 18.9% to
$150.1 million, or 11.1% of net
sales, from $126.3 million, or 10.3%
of net sales, in the prior fiscal year. For further
information on the change in Adjusted EBITDA, please see the
attached Reconciliation of 2012 Adjusted EBITDA to Prior Year
schedule.
As of December 2, 2012, the
Company's debt net of cash was $641.4
million and Net Debt to Adjusted EBITDA ratio (excluding the
Convertible Payment In Kind Notes) was 2.94x.
"We were pleased to deliver improved year over year net sales,
gross margin, net income and Adjusted EBITDA results in 2012. As we
move into 2013, we expect to drive growth across our entire
portfolio in both our domestic and international markets,"
concluded Mr. Rogers.
Transaction Update
Sealy and Tempur-Pedic certified to substantial compliance with
the Request for Additional Information ("Second Request") issued by
the Federal Trade Commission under the Hart-Scott-Rodino Act on
January 22, 2013. By agreement of the
parties with the FTC, the FTC has up to 45 days following
substantial compliance to complete its review of the
transaction.
Results from Discontinued Operations
During the fourth quarter of 2010, the company divested the
assets of its manufacturing operations in France and Italy, which represented all of the assets in
its Europe segment. In
addition, the company discontinued manufacturing operations in
Brazil. The company has transitioned to a license arrangement
with third parties in both of these markets. These businesses
are accounted for as discontinued operations, and accordingly, the
company has reclassified its financial data for all periods
presented to reflect these actions. Unless otherwise noted,
the reported financial data pertains to Sealy's continuing
operations.
Non-GAAP Measures
Sealy provides information regarding Adjusted EBITDA and
Adjusted EBITDA Margin which are not recognized terms under GAAP
(Generally Accepted Accounting Principles) and do not purport to be
alternatives to operating income or net income as a measure of
operating performance or to cash flows from operating activities as
a measure of liquidity. The Company presents Adjusted EBITDA,
because the covenants contained in the Company's senior debt
agreements are based upon these measures and Adjusted EBITDA is a
material component of those covenants. Additionally, management
uses Adjusted EBITDA to evaluate the Company's operating
performance. The Company also presents Adjusted EBITDA
margin, which is Adjusted EBITDA reflected as a percentage of net
sales because it believes that this measure provides useful
incremental information to investors regarding the Company's
operating performance. Additionally, these measures are not
intended to be measures of available cash flow for management's
discretionary use, as these measures do not consider certain cash
requirements such as interest payments, tax payments and debt
service requirements. Because not all companies use identical
calculations, this presentation may not be comparable to other
similarly titled measures of other companies. A
reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to the
Company's net income is provided in the attached
schedule.
In this release, Sealy also provides information regarding
Adjusted Earnings Per Share, which is GAAP earnings per share
adjusted to exclude the impact of restructuring expense, merger
costs and income tax expense on repatriated foreign earnings.
Adjusted Earnings Per Share is not a recognized term under GAAP and
does not purport to be an alternative to GAAP earnings per share as
a measure of operating performance. The Company presents Adjusted
Earnings Per Share because it believes that this measure provides
useful incremental information to investors regarding the Company's
operating performance. A reconciliation of Adjusted Earnings
Per Share to the Company's GAAP earnings per share is provided in
the attached schedule.
Additionally, the Company provides certain information on a
constant currency basis which reflects a comparison of current
period results translated at the prior period currency rates.
This information is provided because the Company believes that it
provides useful incremental information to investors regarding the
Company's operating performance.
About Sealy
Sealy owns one of the largest bedding brands in the world, with
sales of $1.3 billion in fiscal 2012.
The company manufactures and markets a broad range of mattresses
and foundations under the Sealy®, Sealy Posturepedic®, Sealy
Embody™, Optimum™ by Sealy Posturepedic®, Stearns & Foster®,
and Bassett® brands. Sealy operates 25 plants in North America, and has the largest market
share and highest consumer awareness of any bedding brand on the
continent. In the United States,
Sealy sells its products to approximately 3,000 customers with more
than 11,000 retail outlets. Sealy is also a leading supplier to the
hospitality industry. For more information, please visit
www.sealy.com.
This document contains forward-looking statements within the
meaning of the safe harbor provisions of the Securities Litigation
Reform Act of 1995. Terms such as "expect," "believe," "continue,"
and "grow," as well as similar comments, are forward-looking in
nature. Although the Company believes its growth plans are based
upon reasonable assumptions, it can give no assurances that such
expectations can be attained. Factors that could cause actual
results to differ materially from the Company's expectations
include: general business and economic conditions, competitive
factors, raw materials purchasing, fluctuations in demand and the
Company's pending business combination with Tempur-Pedic. Please
refer to the Company's Securities and Exchange Commission filings
for further information.
The condensed consolidated statements of operations and related
information presented below have been adjusted for discontinued
operations presentation for all periods presented. However,
the condensed consolidated balance sheets and statements of cash
flows have not been adjusted for such presentation.
SEALY
CORPORATION
|
CONSOLIDATED BALANCE SHEET
|
(In
thousands)
|
|
|
|
|
|
December 2,
|
|
November 27,
|
2012
|
|
2011
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
128,154
|
|
$
107,975
|
Accounts
receivable (net of allowance for doubtful accounts,
discounts and returns, 2012—$29,959;
2011—$30,104)
|
|
|
|
152,619
|
|
126,494
|
Inventories
|
72,364
|
|
57,002
|
Prepaid
expenses
|
31,358
|
|
29,275
|
Deferred
income taxes
|
21,579
|
|
21,349
|
Total
current assets
|
406,074
|
|
342,095
|
|
|
|
|
Property,
plant and equipment—at cost:
|
|
|
|
Land
|
6,761
|
|
7,351
|
Buildings
and improvements
|
128,039
|
|
128,700
|
Machinery
and equipment
|
281,345
|
|
261,650
|
Construction in progress
|
7,861
|
|
8,414
|
|
424,006
|
|
406,115
|
Less
accumulated depreciation
|
(259,983)
|
|
(239,370)
|
|
164,023
|
|
166,745
|
|
|
|
|
Other
assets:
|
|
|
|
Goodwill
|
363,229
|
|
361,026
|
Other
intangibles—net of accumulated amortization
|
|
|
|
(2012—$4,614; 2011—$3,496)
|
14,710
|
|
1,116
|
Deferred
income taxes
|
3,945
|
|
1,772
|
Debt
issuance costs, net, and other assets
|
53,364
|
|
46,440
|
|
435,248
|
|
410,354
|
Total
Assets
|
$
1,005,345
|
|
$
919,194
|
|
|
|
|
|
|
|
|
|
December 2,
|
|
November 27,
|
2012
|
|
2011
|
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Current
portion-long term obligations
|
$
4,045
|
|
$
1,584
|
Accounts
payable
|
100,796
|
|
68,774
|
Accrued
expenses:
|
|
|
|
Customer
incentives and advertising
|
34,664
|
|
26,038
|
Compensation
|
33,065
|
|
17,601
|
Interest
|
14,484
|
|
14,074
|
Warranty
|
9,785
|
|
7,522
|
Other
|
26,128
|
|
20,904
|
Deferred
income taxes
|
3,000
|
|
-
|
Total
current liabilities
|
225,967
|
|
156,497
|
Long term
obligations, net of current portion
|
765,521
|
|
790,297
|
Other
noncurrent liabilities
|
60,249
|
|
52,415
|
Deferred
income taxes
|
93
|
|
549
|
|
|
|
|
Commitments and contingencies
|
—
|
|
—
|
|
|
|
|
Redeemable
noncontrolling interest
|
11,035
|
|
-
|
|
|
|
|
Stockholders' deficit:
|
|
|
|
Preferred
stock, $0.01 par value; Authorized 50,000 shares;
|
|
|
|
Issued,
none
|
—
|
|
—
|
Common
stock, $0.01 par value; Authorized 600,000 shares;
|
|
|
|
Issued and
outstanding: 2012—104,322; 2011—100,916
|
1,045
|
|
1,010
|
Additional
paid-in capital
|
955,777
|
|
935,512
|
Treasury
stock, at cost: 2012—655,046; 2011—0
|
(1,138)
|
|
—
|
Accumulated deficit
|
(1,016,567)
|
|
(1,016,577)
|
Accumulated other comprehensive income
(loss)
|
3,363
|
|
(509)
|
|
(57,520)
|
|
(80,564)
|
Total
Liabilities and Stockholders' Deficit
|
$
1,005,345
|
|
$
919,194
|
|
|
|
|
|
|
|
|
|
|
SEALY CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
December 2,
|
November 27,
|
|
|
|
2012
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
358,115
|
|
$
269,259
|
Cost of
goods sold
|
216,208
|
|
171,135
|
|
Gross
profit
|
141,907
|
|
98,124
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
127,791
|
|
98,927
|
Asset
impairment loss
|
827
|
|
-
|
Amortization expense
|
461
|
|
72
|
Restructuring expenses and asset
impairment
|
2,421
|
|
-
|
Royalty
income, net of royalty expense
|
(5,645)
|
|
(4,617)
|
|
|
|
|
|
|
|
|
Income
from operations
|
16,052
|
|
3,742
|
|
|
|
|
|
|
Interest
expense
|
23,751
|
|
22,434
|
Refinancing and extinguishment of debt
|
407
|
|
(42)
|
Other
income, net
|
(195)
|
|
(114)
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
(7,911)
|
|
(18,536)
|
Income tax
provision
|
(2,273)
|
|
(3,675)
|
Equity in
earnings of unconsolidated affiliates
|
1,892
|
|
836
|
|
|
Loss from
continuing operations
|
(3,746)
|
|
(14,025)
|
Loss from
discontinued operations
|
(148)
|
|
(1,182)
|
|
|
Net
loss
|
(3,894)
|
|
(15,207)
|
Net loss
attributable to noncontrolling interests
|
1,096
|
|
-
|
|
|
Net (loss)
income attributable to common shareholders
|
$
(2,798)
|
|
$
(15,207)
|
|
|
|
|
|
|
Loss per
common share attributable to common shareholders—Basic
|
|
|
|
|
Loss from
continuing operations per common share
|
$
(0.03)
|
|
$
(0.14)
|
|
Loss from
discontinued operations per common share
|
-
|
|
(0.01)
|
Loss per
common share attributable to common shareholders—Basic
|
$
(0.03)
|
|
$
(0.15)
|
|
|
|
|
|
|
Loss per
common share attributable to common shareholders—Diluted
|
|
|
|
|
Loss from
continuing operations per common share
|
$
(0.03)
|
|
$
(0.14)
|
|
Loss from
discontinued operations per common share
|
-
|
|
(0.01)
|
Loss per
common share attributable to common shareholders—Diluted
|
$
(0.03)
|
|
$
(0.15)
|
Weighted
average number of common shares outstanding:
|
|
|
|
|
Basic
|
104,194
|
|
100,865
|
|
Diluted
|
104,194
|
|
100,865
|
|
|
|
|
|
|
SEALY
CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
|
|
|
|
December 2,
|
|
November 27,
|
|
November 28,
|
|
2012
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Net
sales
|
$
1,347,870
|
|
$
1,230,151
|
|
$
1,219,471
|
Cost of
goods sold
|
808,363
|
|
751,449
|
|
709,971
|
|
|
|
|
|
|
Gross profit
|
539,507
|
|
478,702
|
|
509,500
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
455,045
|
|
414,235
|
|
398,053
|
Asset
impairment loss
|
827
|
|
-
|
|
-
|
Amortization expense
|
678
|
|
289
|
|
289
|
Restructuring expenses
|
2,421
|
|
-
|
|
-
|
Royalty
income, net of royalty expense
|
(20,070)
|
|
(19,413)
|
|
(17,529)
|
|
|
|
|
|
|
Income
from operations
|
100,606
|
|
83,591
|
|
128,687
|
|
|
|
|
|
|
Interest
expense
|
89,305
|
|
87,743
|
|
85,617
|
Refinancing and extinguishment of
debt
|
3,748
|
|
1,222
|
|
3,759
|
Other
income, net
|
(605)
|
|
(451)
|
|
(226)
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
8,158
|
|
(4,923)
|
|
39,537
|
Income tax
provision
|
12,548
|
|
4,104
|
|
18,488
|
Equity in
earnings of unconsolidated affiliates
|
5,175
|
|
3,371
|
|
3,611
|
Income
(loss) from continuing operations
|
785
|
|
(5,656)
|
|
24,660
|
Loss from
discontinued operations
|
(1,962)
|
|
(4,232)
|
|
(38,399)
|
|
|
|
|
|
|
Net
loss
|
(1,177)
|
|
(9,888)
|
|
(13,739)
|
Net loss
attributable to noncontrolling interests
|
1,187
|
|
-
|
|
-
|
Net income
attributable to common shareholders
|
$
10
|
|
$
(9,888)
|
|
$
(13,739)
|
|
|
|
|
|
|
Earnings
(loss) per common share attributable to common
shareholders—Basic
|
|
|
|
|
|
Income (loss) from
continuing operations per common share
|
$
0.02
|
|
$
(0.06)
|
|
$
0.26
|
Loss from discontinued
operations per common share
|
(0.02)
|
|
(0.04)
|
|
(0.40)
|
Earnings
(loss) per common share attributable to common
shareholders—Basic
|
$
-
|
|
$
(0.10)
|
|
$
(0.14)
|
|
|
|
|
|
|
Earnings
(loss) per common share attributable to common
shareholders—Diluted
|
|
|
|
|
|
Income (loss) from
continuing operations per common share
|
$
0.02
|
|
$
(0.06)
|
|
$
0.14
|
Loss from discontinued
operations per common share
|
(0.02)
|
|
(0.04)
|
|
(0.13)
|
Earnings
(loss) per common share attributable to common
shareholders—Diluted
|
$
-
|
|
$
(0.10)
|
|
$
0.01
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding:
|
|
|
|
|
|
Basic
|
102,470
|
|
99,261
|
|
95,934
|
Diluted
|
109,151
|
|
99,261
|
|
289,857
|
|
|
|
|
|
|
SEALY
CORPORATION
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
Fiscal
Year Ended
|
|
|
|
|
|
December 2,
|
|
November 27,
|
|
November 28,
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
Operating
activities:
|
|
|
|
|
|
|
Net
loss
|
$
(1,177)
|
|
$
(9,888)
|
|
$
(13,739)
|
|
Adjustments to reconcile net income to cash provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
26,379
|
|
24,234
|
|
28,676
|
|
|
Deferred
income taxes
|
1,646
|
|
1,905
|
|
1,121
|
|
|
Amortization of deferred gain on
sale-leaseback
|
(49)
|
|
(624)
|
|
(646)
|
|
|
Paid in
kind interest on convertible notes
|
24,539
|
|
19,994
|
|
16,109
|
|
|
Amortization of discount on new senior secured
notes
|
1,578
|
|
1,485
|
|
1,431
|
|
|
Amortization of debt issuance costs and
other
|
3,975
|
|
4,673
|
|
4,750
|
|
|
Impairment
charges
|
827
|
|
288
|
|
22,963
|
|
|
Share-based compensation
|
8,117
|
|
13,243
|
|
15,864
|
|
|
Excess tax
benefits from share-based payment arrangements
|
-
|
|
-
|
|
(417)
|
|
|
Loss
(gain) on sale of assets
|
327
|
|
(215)
|
|
260
|
|
|
Write-off
of debt issuance costs related to debt extinguishments
|
1,862
|
|
643
|
|
2,709
|
|
|
Loss on
repurchase of senior notes
|
1,050
|
|
300
|
|
1,050
|
|
|
Dividends
received from unconsolidated affiliates
|
6,500
|
|
1,011
|
|
-
|
|
|
Equity in
earnings of unconsolidated affiliates
|
(5,175)
|
|
(3,371)
|
|
-
|
|
|
Loss on
disposition of subsidiary
|
-
|
|
206
|
|
2,399
|
|
|
Other,
net
|
(2,850)
|
|
(2,217)
|
|
2,618
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(20,332)
|
|
10,296
|
|
(3,226)
|
|
|
Inventories
|
(20,302)
|
|
(666)
|
|
(12,115)
|
|
|
Other
current assets
|
(4,654)
|
|
(6,418)
|
|
(3,628)
|
|
|
Other
assets
|
(1,495)
|
|
4,271
|
|
(3,791)
|
|
|
Accounts
payable
|
29,856
|
|
4,774
|
|
(4,873)
|
|
|
Accrued
expenses
|
28,769
|
|
(24,382)
|
|
(8,711)
|
|
|
Other
liabilities
|
2,717
|
|
(5,790)
|
|
(338)
|
|
|
|
Net cash
provided by operating activities
|
82,108
|
|
33,752
|
|
48,466
|
Investing
activities:
|
|
|
|
|
|
|
Purchase
of property, plant and equipment
|
(15,914)
|
|
(22,408)
|
|
(16,578)
|
|
Acquisition of Comfort Revolution, inclusive of cash
acquired of $159 (1)
|
159
|
|
-
|
|
|
|
Proceeds
from sale of property, plant and equipment
|
2,383
|
|
227
|
|
124
|
|
Net
proceeds (outflow) from disposition of subsidiary
|
-
|
|
-
|
|
(340)
|
|
Advances
to Comfort Revolution
|
(7,833)
|
|
-
|
|
-
|
|
Repayments
of loans and capital from unconsolidated affiliate
|
-
|
|
-
|
|
3,205
|
|
|
|
|
Net cash
used in investing activities
|
(21,205)
|
|
(22,181)
|
|
(13,589)
|
Financing
activities:
|
|
|
|
|
|
|
Proceeds
from issuance of long-term obligations
|
5,236
|
|
3,387
|
|
4,702
|
|
Repayments
of long-term obligations
|
(11,446)
|
|
(4,619)
|
|
(15,068)
|
|
Repayment
of senior secured notes, including premium of $1,050, $300 and
$1,050
|
(36,050)
|
|
(10,300)
|
|
(36,050)
|
|
Repurchase
of common stock associated with vesting of employee share-based
awards
|
(3,059)
|
|
(3,746)
|
|
(4,806)
|
|
Exercise
of employee stock options
|
104
|
|
630
|
|
714
|
|
Debt
issuance costs
|
(908)
|
|
(147)
|
|
-
|
|
Other
|
-
|
|
(34)
|
|
(8)
|
|
|
|
Net cash
used in financing activities
|
(46,123)
|
|
(14,829)
|
|
(50,516)
|
Effect of
exchange rate changes on cash
|
5,399
|
|
1,978
|
|
(6,533)
|
Change in
cash and equivalents
|
20,179
|
|
(1,280)
|
|
(22,172)
|
Cash and
equivalents:
|
|
|
|
|
|
|
Beginning
of period
|
107,975
|
|
109,255
|
|
131,427
|
|
|
|
|
|
|
|
|
|
|
|
End of
period
|
$
128,154
|
|
$
107,975
|
|
$
109,255
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
Taxes paid
(net of tax refunds of $3,157, $5 and $8,000 in fiscal 2012,
2011
|
|
|
|
|
|
|
|
and 2010,
respectively)
|
$
10,487
|
|
$
16,198
|
|
$
20,069
|
|
Interest
paid
|
$
58,803
|
|
$
61,875
|
|
$
66,071
|
|
|
|
|
|
|
|
|
|
|
Noncash
investing transaction:
|
|
|
|
|
|
|
Extension
of capital lease
|
$
-
|
|
$
2,181
|
|
$
-
|
|
Promotional displays transferred to property, plant
and equipment
|
$
10,131
|
|
$
-
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
(1) Cash
contributed to Comfort Revolution for initial investment
|
$
10,000
|
|
$
-
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Income
(Loss)
Non-GAAP Measure
|
|
|
Three
Months Ended:
|
|
Twelve
Months Ended:
|
|
December 2, 2012
|
|
November 27, 2011
|
|
December 2, 2012
|
|
November 27, 2011
|
|
(in
thousands)
|
|
(in
thousands)
|
Net
loss
|
$
(3,894)
|
|
$
(15,207)
|
|
$
(1,177)
|
|
$
(9,888)
|
Interest
expense
|
23,751
|
|
22,434
|
|
89,305
|
|
87,743
|
Income
taxes
|
(2,273)
|
|
(3,675)
|
|
12,548
|
|
4,104
|
Depreciation and
amortization
|
7,626
|
|
6,233
|
|
26,379
|
|
24,234
|
|
|
|
|
|
|
|
|
|
25,210
|
|
9,785
|
|
127,055
|
|
106,193
|
Adjustments for debt covenants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refinancing
charges
|
407
|
|
-
|
|
3,748
|
|
1,222
|
Non-cash
compensation
|
1,551
|
|
4,004
|
|
8,117
|
|
13,243
|
Merger costs
|
2,538
|
|
-
|
|
2,538
|
|
-
|
Comfort Revolution
acquisition costs
|
895
|
|
-
|
|
1,158
|
|
-
|
Discontinued
operations
|
148
|
|
891
|
|
1,962
|
|
4,232
|
Noncontrolling
interest
|
1,096
|
|
-
|
|
1,187
|
|
-
|
Restructuring
expenses
|
2,421
|
|
-
|
|
2,421
|
|
-
|
Other (various)
(a)
|
905
|
|
427
|
|
1,948
|
|
1,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
35,171
|
|
$
15,107
|
|
$
150,134
|
|
$
126,295
|
|
|
|
|
|
|
|
|
(a)
Consists of various immaterial adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
SEALY
CORPORATION
|
SHARE
COUNT RECONCILIATION
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Twelve
Months Ended
|
|
December 2, 2012
|
|
November 27, 2011
|
|
December 2, 2012
|
|
November 27, 2011
|
|
(in
thousands)
|
|
(in
thousands)
|
Numerator:
|
|
|
|
|
|
|
|
Net income
from continuing operations, as reported
|
$
(2,650)
|
|
$
(14,025)
|
|
$
1,972
|
|
$
(5,656)
|
Net income
attributable to participating securities
|
9
|
|
17
|
|
(6)
|
|
10
|
Interest
on convertible notes
|
-
|
|
(14,551)
|
|
-
|
|
-
|
Net income
from continuing operations available to common
shareholders
|
$
(2,641)
|
|
$
(28,559)
|
|
$
1,966
|
|
$
(5,646)
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings per share—weighted
average shares
|
104,194
|
|
100,865
|
|
102,470
|
|
99,261
|
Effect of
dilutive securities:
|
|
|
|
|
|
|
|
Convertible debt
|
-
|
|
-
|
|
-
|
|
-
|
Stock
options
|
-
|
|
-
|
|
449
|
|
-
|
Restricted
share units
|
-
|
|
-
|
|
5,640
|
|
-
|
Other
|
-
|
|
-
|
|
592
|
|
-
|
Denominator for diluted earnings per share—adjusted
weighted average shares and assumed conversions
|
104,194
|
|
100,865
|
|
109,151
|
|
99,261
|
|
|
|
|
|
|
|
|
|
SEALY
CORPORATION
|
INTEREST EXPENSE
|
|
|
Three
Months Ended:
|
|
Twelve
Months Ended:
|
|
December 2, 2012
|
|
November 27, 2011
|
|
December 2, 2012
|
|
November 27, 2011
|
Cash
interest expense
|
$
15,111
|
|
$
15,445
|
|
$
59,213
|
|
$
61,591
|
Non-cash
interest expense
|
8,640
|
|
6,988
|
|
30,092
|
|
26,152
|
|
$
23,751
|
|
$
22,433
|
|
$
89,305
|
|
$
87,743
|
|
|
|
|
|
|
|
|
Sealy
Corporation
|
Non-GAAP Earnings Per Share
|
Three
Months Ended December 2, 2012
|
(amounts and shares presented in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
Adjustments
|
|
As
adjusted
|
Net income
(loss) from continuing operations, net (1)
|
$
(2,650)
|
|
$
9,377
|
|
$
6,727
|
Net (loss)
income attributable to participating securities
|
9
|
|
(33)
|
|
(24)
|
Interest
on convertible notes (2)
|
-
|
|
7,475
|
|
7,475
|
Net income
(loss) from continuing operations available to common
shareholders
|
$
(2,641)
|
|
$
16,819
|
|
$
14,178
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share - adjusted
weighted average shares and
assumed conversion (3)
|
|
|
|
|
|
104,194
|
|
227,650
|
|
331,844
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations per common share -
Diluted
|
$
(0.03)
|
|
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes
the following adjustments to net income from continuing
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring expense
|
$
2,421
|
|
|
|
|
|
|
Merger
costs
|
2,538
|
|
|
|
|
|
|
Income tax
expense on repatriation of foreign earnings
|
4,418
|
|
|
|
|
|
|
Total
|
$
9,377
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Reflects
the inclusion of convertible note interest as the impact of the
adjustments in (1) above causes the Convertible Notes to become
dilutive for the purposes of calculating diluted earnings per
share.
|
|
|
|
|
|
|
|
|
(3)
|
Reflects
the inclusion of outstanding share-based awards and convertible
notes that are considered dilutive based on the inclusion of the
adjustments in (1) above:
|
|
|
|
|
|
|
|
|
|
|
Convertible notes
|
221,156
|
|
|
|
|
|
|
Stock
options
|
518
|
|
|
|
|
|
|
Restricted
share units
|
5,333
|
|
|
|
|
|
|
Other
|
643
|
|
|
|
|
|
|
|
227,650
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Sealy Corporation