LEXINGTON, Ky., Nov. 20, 2003 (PRIMEZONE) -- TWI Holdings, Inc. ("TWI Holdings" or the "Company") is releasing selected financial results for the nine months ended September 30, 2003 for the benefit of holders of the 10 1/4% Senior Subordinated Notes due 2010 issued by TWI Holdings' subsidiaries, Tempur-Pedic, Inc. and Tempur Production USA, Inc. (the "Issuers"). TWI Holdings is also announcing a conference call to discuss third quarter results with holders of the Notes on Thursday, November 20 at 4 p.m. Eastern Time (1 p.m. Pacific Time). The telephone number for the call is (800) 738-0876. The call will be recorded and can be reviewed until November 26 by calling (800) 642-1687 and using 4135541 as the passcode.
TWI Holdings completed the Tempur acquisition (which was accounted for using the purchase method of accounting) as of November 1, 2002. As a result of adjustments to the carrying value of assets and liabilities pursuant to the Tempur acquisition, the financial position and results of operations for periods subsequent to the Tempur acquisition are not comparable to those of the predecessor company, Tempur World, Inc., and are separated in the financial statements with a solid black line. All financial information presented below for the nine months ended September 30, 2002 represents the financial information for the predecessor company.
Summary of Results
For the nine months ended September 30, 2003, net sales were $342.4 million, operating income was $62.5 million, net income was $29.1 million and EBITDA was $73.2 million. For the same period in 2002, the predecessor company's net sales were $205.9 million, operating income was $32.5 million, net income was $14.9 million and EBITDA was $43.2 million.
Sales Results
Net sales for the nine months ended September 30, 2003 were $342.4 million as compared to $205.9 million for the nine months ended September 30, 2002, an increase of $136.5 million, or 66.3%. The increase in net sales was attributable to growth in Domestic net sales to $199.7 million for the nine months ended September 30, 2003 as compared to $114.0 million for the nine months ended September 30, 2002, an increase of $85.7 million, or 75.2%, and an increase in International net sales to $142.7 million for the nine months ended September 30, 2003 as compared to $91.9 million for the nine months ended September 30, 2002, an increase of $50.8 million, or 55.3%. The growth in Domestic net sales was attributable primarily to an increase in net sales in the retail channel of $60.4 million and in the direct channel of $24.1 million, and the growth in International net sales was attributable primarily to growth in the retail channel of $34.1 million. During the second quarter 2002, we introduced a new mattress called the Deluxe Mattress, which represented $23.2 million, or 11.6%, of Domestic net sales for the nine months ended September 30, 2003 and a new pillow product, the Comfort Pillow, which represented $6.0 million, or 3.0%, of Domestic net sales for the nine months ended September 30, 2003.
Additional Financial Information
Attached to this press release are consolidated condensed interim statements of income for the nine months ended September 30, 2003 and for the predecessor company, September 30, 2002.
In connection with the Issuers' obligations under the indenture governing the Notes to furnish interim financial information, the Company expects to file consolidated financial statements as of and for the nine months ended September 30, 2003, including the notes related thereto, by November 26, 2003, in pre-effective Amendment No. 2 to the Issuers' Registration Statement on Form S-4 (the "Registration Statement"), which was filed with the Securities and Exchange Commission ("SEC") in connection with the Issuers' exchange offer with respect to the Notes.
Forward-Looking Statements
This release contains "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this release, 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, management's examination of historical operating trends, are based upon current expectations and beliefs and various assumptions. The Company believes there is a reasonable basis for these expectations and beliefs, but 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 release. 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. Any forward-looking statement speaks only as of the date on which it is made, and except as required by law the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
SEC Review
In the course of any review by the SEC of the Registration Statement, the Company may be required to make changes to the information and financial data included in this release, and the changes may be significant. The SEC may not view certain adjustments to EBITDA or Adjusted EBITDA as complying with Article 11 of Regulation S-X, Regulation G or Item 10 of Regulation S-K. Further, the Company's definition of EBITDA or Adjusted EBITDA may not be comparable to those of other companies.
The Registration Statement relating to the exchange offer has been filed with the SEC but has not yet become effective. The securities registered thereunder may not be sold nor may offers to buy these securities be accepted prior to the time the Registration Statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Copies of the preliminary prospectus relating to the exchange offer, when available, may be obtained by writing to Chief Financial Officer, TWI Holdings, Inc., 1713 Jaggie Fox Way, Lexington, KY 40511.
TWI HOLDINGS, INC. AND SUBSIDIARIES
(Successor to Tempur World, Inc.)
CONSOLIDATED CONDENSED INTERIM STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
TEMPUR WORLD, INC. AND SUBSIDIARIES
(Predecessor to TWI Holdings, Inc.)
CONSOLIDATED CONDENSED INTERIM STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
Predecessor Successor
----------- ---------
Nine Months Ended
-----------------
September 30, September 30,
2002 2003
---- ----
(Unaudited) (Unaudited)
Net sales $205,944,079 $342,358,507
Cost of sales 95,822,448 158,804,175
------------ ------------
Gross profit 110,121,631 183,554,332
Selling expenses 51,851,751 75,229,044
General and administrative expenses 24,855,176 44,614,407
Research and development expenses 919,771 1,191,169
------------ ------------
Operating income 32,494,933 62,519,712
Other income (expense), net:
Interest expense, net (5,713,052) (13,741,242)
Foreign currency exchange losses (734,698) (2,177,585)
Other income, net 1,386,918 700,520
------------ ------------
Total other expense (5,060,832) (15,218,307)
------------ ------------
Income before income taxes 27,434,101 47,301,405
Income tax provision 12,493,231 18,213,335
------------ ------------
Net income 14,940,870 29,088,070
Preferred stock dividends 1,108,904 8,763,743
------------ ------------
Net income available to common
shareholders $ 13,831,966 $ 20,324,327
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Non GAAP Financial Data:
EBITDA (1) $ 43,213,498 $ 73,219,565
Adjusted EBITDA (2) 43,213,498 86,840,794
(1) EBITDA is defined as net income (loss) plus interest expense,
income taxes and depreciation and amortization. Management
considers EBITDA a measure of the Company's liquidity, and uses
this measure as an indicator of cash generated from operating
activities. Further, it provides management with a consistent
measurement tool for evaluating the Company's operating
financial performance under GAAP and may not be comparable to
similarly captioned information reported by other companies. In
addition, it does not replace net income, operating income or
cash flow provided by operating activities as indicators of
operating performance. Management believes the most directly
comparable GAAP financial measure is "net cash provided by
operating activities" presented in the Consolidated Statement of
Cash Flows. EBITDA is reconciled directly to net cash provided
by operating activities as follows:
Predecessor Successor
----------- ---------
Nine Months Ended
-----------------
September 30, September 30,
2002 2003
---- ----
(Unaudited) (Unaudited)
EBITDA $ 43,213,498 $ 73,219,565
Depreciation and amortization (10,066,345) (12,176,918)
Net interest expense, net (5,713,052) (13,741,242)
Provision for income taxes (12,493,231) (18,213,335)
------------ ------------
Net income/(loss) 14,940,870 29,088,070
------------ ------------
Depreciation and amortization 10,066,345 12,176,918
(Gain)/loss on sale or disposal of
property, plant and equipment (299,172) (138,230)
Change in working capital and other,
net (9,617,130) 643,206
------------ ------------
Net cash provided by operating
activities $ 15,090,913 $ 41,769,964
============ ============
(2) Adjusted EBITDA is defined as EBITDA plus certain items that
management believes are not indicative of the Company's future
operating performance. Adjusted EBITDA is not a measurement of
financial performance under GAAP or a measure of the Company's
liquidity and may not be comparable to similarly captioned
information reported by other companies. Management believes
Adjusted EBITDA provides a useful indicator of levels of
financial performance and is frequently used by securities
analysts, investors and other interested parties in the
evaluation of companies in our industry. It does not replace net
income, operating income or cash flow provided by operating
activities as indicators of operating performance. Adjusted
EBITDA should not be considered in isolation or as a substitute
for net income, operating cash flows or other cash flow
statement data determined in accordance with generally accepted
accounting principles. Pro forma Adjusted EBITDA for the nine
months ended September 30, 2003 excludes $4.2 million in charges
related to a purchase accounting adjustment to the Company's
inventory, calculated as if the Tempur acquisition had occurred
as of January 1, 2003, which was fully included in the results
of operations during the nine months ended September 30, 2003
and is not expected to occur in the future.
Predecessor Successor
----------- ---------
Nine Months Ended
-----------------
September 30, September 30,
2002 2003
---- ----
(Unaudited) (Unaudited)
EBITDA $43,213,498 $73,219,565
Deferred financing fee write-off -- 13,621,229
----------- -----------
Adjusted EBITDA $43,213,498 $86,840,794
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