Guarantor/Non-Guarantor Financial Information (Tables)

12 Months Ended

Dec. 31, 2016

Guarantor/Non-Guarantor Financial Information

Schedule of Supplemental Condensed Consolidating Statements of Operations

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Statements of Income and Comprehensive Income

Year Ended December 31, 2016

(in millions)

	Tempur Sealy International, Inc. (Ultimate Parent)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	2,355.9		$	835.9		$	(64.5	)	$	3,127.3
Cost of sales	—			1,409.4			473.0			(64.5		)	1,817.9
Gross profit	—			946.5			362.9			—			1,309.4
Selling and marketing expenses	2.9			458.6			187.0			—			648.5
General, administrative and other expenses	14.8			186.8			76.6			—			278.2
Equity income in earnings of unconsolidated affiliates	—			—			(13.3		)	—			(13.3		)
Royalty income, net of royalty expense	—			(19.5		)	—			—			(19.5		)
Operating (loss) income	(17.7		)	320.6			112.6			—			415.5
Other expense, net:
Third party interest expense, net	66.0			15.4			3.8			—			85.2
Intercompany interest (income) expense, net	(4.1		)	(0.1		)	4.2			—			—
Interest expense, net	61.9			15.3			8.0			—			85.2
Loss on extinguishment of debt	34.3			12.9			—			—			47.2
Other (income) expense, net	—			(1.4		)	1.2			—			(0.2		)
Total other expense	96.2			26.8			9.2			—			132.2
Income from equity investees	271.6			76.8			—			(348.4		)	—
Income before income taxes	157.7			370.6			103.4			(348.4		)	283.3
Income tax benefit (provision)	38.8			(99.0		)	(26.6		)	—			(86.8		)
Net income before non-controlling interest	196.5			271.6			76.8			(348.4		)	196.5
Less: net loss attributable to non-controlling interests	(5.6		)	—			(5.6		)	5.6			(5.6		)
Net income attributable to Tempur Sealy International, Inc.	$	202.1		$	271.6		$	82.4		$	(354.0	)	$	202.1
Comprehensive income	$	190.8		$	271.7		$	71.2		$	(342.9	)	$	190.8

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Statements of Income and Comprehensive Income

Year Ended December 31, 2015

(in millions)

	Tempur Sealy International, Inc. (Ultimate Parent)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	2,422.9		$	778.9		$	(50.6	)	$	3,151.2
Cost of sales	—			1,532.6			420.3			(50.6		)	1,902.3
Gross profit	—			890.3			358.6			—			1,248.9
Selling and marketing expenses	4.1			460.1			183.8			—			648.0
General, administrative and other expenses	20.8			232.6			68.6			—			322.0
Equity income in earnings of unconsolidated affiliates	—			—			(11.9		)	—			(11.9		)
Royalty income, net of royalty expense	—			(18.3		)	—			—			(18.3		)
Operating (loss) income	(24.9		)	215.9			118.1			—			309.1
Other expense, net:
Third party interest expense, net	27.2			66.2			2.7			—			96.1
Intercompany interest expense (income), net	32.9			(35.5		)	2.6			—			—
Interest expense, net	60.1			30.7			5.3			—			96.1
Other (income) expense, net	—			(8.1		)	21.0			—			12.9
Total other expense	60.1			22.6			26.3			—			109.0
Income from equity investees	132.9			64.7			—			(197.6		)	—
Income before income taxes	47.9			258.0			91.8			(197.6		)	200.1
Income tax benefit (provision)	26.8			(125.1		)	(27.1		)	—			(125.4		)
Net income before non-controlling interest	74.7			132.9			64.7			(197.6		)	74.7
Less: net income attributable to non-controlling interests	1.2			1.2			—			(1.2		)	1.2
Net income attributable to Tempur Sealy International, Inc.	$	73.5		$	131.7		$	64.7		$	(196.4	)	$	73.5
Comprehensive income (loss)	$	19.1		$	130.9		$	(3.3	)	$	(127.6	)	$	19.1

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Statements of Income and Comprehensive Income

Year Ended December 31, 2014

(in millions)

	Tempur Sealy International, Inc. (Ultimate Parent)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	2,229.5		$	802.9		$	(42.6	)	$	2,989.8
Cost of sales	—			1,465.3			416.7			(42.6		)	1,839.4
Gross profit	—			764.2			386.2			—			1,150.4
Selling and marketing expenses	2.4			431.2			186.3			—			619.9
General, administrative and other expenses	13.4			200.5			66.7			—			280.6
Equity income in earnings of unconsolidated affiliates	—			—			(8.3		)	—			(8.3		)
Royalty income, net of royalty expense	—			(18.1		)	—			—			(18.1		)
Operating (loss) income	(15.8		)	150.6			141.5			—			276.3
Other expense, net:
Third party interest expense, net	27.0			62.4			2.5			—			91.9
Intercompany interest expense (income), net	32.7			(34.6		)	1.9			—			—
Interest expense, net	59.7			27.8			4.4			—			91.9
Loss on disposal, net	—			23.2			—			—			23.2
Other (income) expense, net	—			(17.2		)	3.5			—			(13.7		)
Total other expense	59.7			33.8			7.9			—			101.4
Income from equity investees	159.2			98.7			—			(257.9		)	—
Income before income taxes	83.7			215.5			133.6			(257.9		)	174.9
Income tax benefit (provision)	26.3			(56.3		)	(34.9		)	—			(64.9		)
Net income before non-controlling interest	110.0			159.2			98.7			(257.9		)	110.0
Less: net income attributable to non-controlling interests	1.1			1.1			—			(1.1		)	1.1
Net income attributable to Tempur Sealy International, Inc.	$	108.9		$	158.1		$	98.7		$	(256.8	)	$	108.9
Comprehensive income	$	66.9		$	163.3		$	60.3		$	(223.6	)	$	66.9

Schedule of Supplemental Condensed Consolidating Balance Sheets

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Balance Sheets

December 31, 2016

(in millions)

	Tempur Sealy International, Inc. (Ultimate Parent)			Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	—		$	7.9	$	57.8	$	—		$	65.7
Accounts receivable, net	—			197.7		147.4		—			345.1
Inventories	—			117.1		79.7		—			196.8
Income tax receivable	234.2			—		—		(234.2		)	—
Prepaid expenses and other current assets	—			48.9		15.0		—			63.9
Total Current Assets	234.2			371.6		299.9		(234.2		)	671.5
Property, plant and equipment,  net	—			346.9		75.3		—			422.2
Goodwill	—			500.2		222.3		—			722.5
Other intangible assets, net	—			589.8		88.9		—			678.7
Deferred income taxes	20.6			—		22.5		(20.6		)	22.5
Other non-current assets	—			41.7		143.5		—			185.2
Net investment in subsidiaries	2,207.4			77.7		—		(2,285.1		)	—
Due from affiliates	168.4			1,874.7		14.3		(2,057.4		)	—
Total Assets	$	2,630.6		$	3,802.6	$	866.7	$	(4,597.3	)	$	2,702.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	0.1		$	157.0	$	62.2	$	—		$	219.3
Accrued expenses and other current liabilities	6.8			172.6		70.7		—			250.1
Income taxes payable	—			235.9		4.1		(234.2		)	5.8
Current portion of long-term debt	—			34.4		35.9		—			70.3
Total Current Liabilities	6.9			599.9		172.9		(234.2		)	545.5
Long-term debt, net	1,040.4			776.5		0.9		—			1,817.8
Deferred income taxes	—			174.9		20.3		(20.6		)	174.6
Other non-current liabilities	—			43.3		126.0		—			169.3
Due to affiliates	1,587.9			0.6		468.9		(2,057.4		)	—
Total Liabilities	2,635.2			1,595.2		789.0		(2,312.2		)	2,707.2
Redeemable non-controlling interest	7.6			—		7.6		(7.6		)	7.6
Total stockholders’ (deficit) equity, net of non-controlling interests in subsidiaries	(15.2		)	2,207.4		67.1		(2,274.5		)	(15.2		)
Non-controlling interest in subsidiaries	3.0			—		3.0		(3.0		)	3.0
Total Stockholder's (Deficit) Equity	(12.2		)	2,207.4		70.1		(2,277.5		)	(12.2		)
Total Liabilities and Stockholders’ (Deficit) Equity	$	2,630.6		$	3,802.6	$	866.7	$	(4,597.3	)	$	2,702.6

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Balance Sheets

December 31, 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	$	—	$	119.7	$	34.2		$	—		$	153.9
Accounts receivable, net	—		231.9		147.5			—			379.4
Inventories	—		145.3		53.9			—			199.2
Income tax receivable	193.1		—		—			(193.1		)	—
Prepaid expenses and other current assets	—		45.6		31.0			—			76.6
Total Current Assets	193.1		542.5		266.6			(193.1		)	809.1
Property, plant and equipment, net	—		300.1		61.6			—			361.7
Goodwill	—		501.4		208.0			—			709.4
Other intangible assets, net	—		612.9		82.5			—			695.4
Deferred tax asset	16.0		—		12.2			(16.0		)	12.2
Other non-current assets	—		23.3		44.4			—			67.7
Net investment in subsidiaries	1,960.5		—		—			(1,960.5		)	—
Due from affiliates	548.1		1,655.3		4.8			(2,208.2		)	—
Total Assets	$	2,717.7	$	3,635.5	$	680.1		$	(4,377.8	)	$	2,655.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	—	$	212.2	$	54.1		$	—		$	266.3
Accrued expenses and other current liabilities	1.4		183.8		68.8			—			254.0
Income taxes payable	—		196.0		8.3			(193.1		)	11.2
Current portion of long-term debt	—		168.7		12.8			—			181.5
Total Current Liabilities	1.4		760.7		144.0			(193.1		)	713.0
Long-term debt, net	811.9		461.4		—			—			1,273.3
Deferred income taxes	—		189.8		21.6			(16.0		)	195.4
Other non-current liabilities	—		166.6		4.6			—			171.2
Due to affiliates	1,601.8		96.5		604.9			(2,303.2		)	—
Total Liabilities	2,415.1		1,675.0		775.1			(2,512.3		)	2,352.9
Redeemable non-controlling interest	12.4		12.4		—			(12.4		)	12.4
Total Stockholders’ (Deficit) Equity	290.2		1,948.1		(95.0		)	(1,853.1		)	290.2
Total Liabilities and Stockholders’ (Deficit) Equity	$	2,717.7	$	3,635.5	$	680.1		$	(4,377.8	)	$	2,655.5

Schedule of Supplemental Condensed Consolidating Statements of Cash Flows

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Statements of Cash Flows

Year Ended December 31, 2016

(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	$	(63.1	)	$	110.7		$	117.9		$	—	$	165.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Contributions (paid to) received from subsidiaries and affiliates	—			(76.7		)	76.7			—		—
Purchases of property, plant and equipment	—			(43.0		)	(19.4		)			(62.4		)
Net cash (used in) provided by investing activities	—			(119.7		)	57.3			—		(62.4		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under long-term debt obligations	600.0			1,523.6			109.7			—		2,233.3
Repayments of borrowings under long-term debt obligations	(375.0		)	(1,406.2		)	(86.5		)	—		(1,867.7		)
Net activity in investment in and advances from (to) subsidiaries and affiliates	383.1			(212.5		)	(170.6		)	—		—
Proceeds from exercise of stock options	15.7			—			—			—		15.7
Excess tax benefit from stock-based compensation	7.0			—			—			—		7.0
Treasury stock repurchased	(535.0		)	—			—			—		(535.0		)
Payment of deferred financing costs	(3.1		)	(3.8		)	—			—		(6.9		)
Fees paid to lenders	(6.0		)	(1.8		)	—			—		(7.8		)
Call premium on 2020 Senior Notes	(23.6		)	—			—			—		(23.6		)
Other	—			(2.1		)	2.0			—		(0.1		)
Net cash provided by (used in) financing activities	63.1			(102.8		)	(145.4		)	—		(185.1		)
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			(6.2		)	—		(6.2		)
(Decrease) increase in cash and cash equivalents	—			(111.8		)	23.6			—		(88.2		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	—			119.7			34.2			—		153.9
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	7.9		$	57.8		$	—	$	65.7

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Statements of Cash Flows

Year Ended December 31, 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	$	(87.0	)	$	274.7		$	46.5		$	—	$	234.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of business	—			7.2			—			—		7.2
Purchases of property, plant and equipment	—			(49.9		)	(16.0		)	—		(65.9		)
Other	—			(0.7		)	(0.3		)	—		(1.0		)
Net cash used in investing activities	—			(43.4		)	(16.3		)	—		(59.7		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under long-term debt obligations	450.0			402.9			10.6			—		863.5
Repayments of borrowings under long-term debt obligations	—			(988.3		)	—			—		(988.3		)
Net activity in investment in and advances (to) from subsidiaries and affiliates	(401.3		)	453.4			(52.1		)	—		—
Proceeds from exercise of stock options	20.4			—			—			—		20.4
Excess tax benefit from stock-based compensation	21.8			—			—			—		21.8
Proceeds from purchase of treasury shares by CEO	5.0			—			—			—		5.0
Treasury stock repurchased	(1.3		)	—			—			—		(1.3		)
Payment of deferred financing costs	(8.0		)	—			—			—		(8.0		)
Other	—			(3.0		)	(0.8		)	—		(3.8		)
Net cash provided by (used in) financing activities	86.6			(135.0		)	(42.3		)	—		(90.7		)
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			7.6			—		7.6
(Decrease) increase in cash and cash equivalents	(0.4		)	96.3			(4.5		)	—		91.4
CASH AND CASH EQUIVALENTS, BEGININNG OF PERIOD	0.4			23.4			38.7			—		62.5
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—		$	119.7		$	34.2		$	—	$	153.9

TEMPUR SEALY INTERNATIONAL, INC.

Supplemental Consolidated Statements of Cash Flows

Year Ended December 31, 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	$	(62.7	)	$	191.5		$	96.4		$	—	$	225.2
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	—			(31.3		)	(16.2		)	—		(47.5		)
Other	—			3.0			(0.9		)	—		2.1
Net cash provided by (used in) investing activities	—			15.2			(25.6		)	—		(10.4		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under long-term debt obligations	—			271.5			—			—		271.5
Repayments of borrowings under long-term debt obligations	—			(510.9		)	—			—		(510.9		)
Net activity in investment in and advances from (to) subsidiaries and affiliates	59.3			32.1			(91.4		)	—		—
Proceeds from exercise of stock options	4.3			—			—			—		4.3
Excess tax benefit from stock-based compensation	1.7			—			—			—		1.7
Treasury stock repurchased	(2.2		)	—			—			—		(2.2		)
Payment of deferred financing costs	—			(3.1		)	—			—		(3.1		)
Other	—			(1.7		)	2.3			—		0.6
Net cash provided by (used in) financing activities	63.1			(212.1		)	(89.1		)	—		(238.1		)
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			4.8			—		4.8
Increase (decrease) in cash and cash equivalents	0.4			(5.4		)	(13.5		)	—		(18.5		)
CASH AND CASH EQUIVALENTS, BEGININNG OF PERIOD	—			28.8			52.2			—		81.0
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	0.4		$	23.4		$	38.7		$	—	$	62.5