What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 173 added, 294 removed, 448 unchanged (51% of the section changed)

4 unchanged sentences

($ in millions, except per common share amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Net sales $ 1,043.8 $ 822.4

3 unchanged sentences

General, administrative and other expenses 79.5 80.6

Equity income in earnings of unconsolidated affiliates ( 4.8 ) ( 3.9 ) ( 9.6 ) ( 10.4 )

Equity (income) loss in earnings of unconsolidated affiliates ( 6.7 ) 0.2

Operating income 188.4 105.3

7 unchanged sentences

Income from continuing operations 130.9 61.0

Income (loss) from discontinued operations, net of tax 2.4 0.8 1.3 ( 0.8 )

Loss from discontinued operations, net of tax ( 0.2 ) ( 1.2 )

Net income before non-controlling interests 130.7 59.8

Net income (loss) attributable to non-controlling interests 0.4 ( 0.1 ) 0.7 —

Net income attributable to non-controlling interests 0.2 0.1

Net income attributable to Tempur Sealy International, Inc.

2 unchanged sentences

Earnings per share for continuing operations $ 0.64 $ 0.28

Earnings (loss) per share for discontinued operations 0.04 0.01 0.02 ( 0.01 )

Loss per share for discontinued operations — —

Earnings per share $ 0.64 $ 0.28

Earnings per share for continuing operations $ 0.62 $ 0.28

Earnings (loss) per share for discontinued operations 0.04 0.01 0.03 ( 0.01 )

Loss per share for discontinued operations — —

Earnings per share $ 0.62 $ 0.28

7 unchanged sentences

($ in millions)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Net income before non-controlling interests $ 130.7 $ 59.8

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Foreign currency translation adjustments ( 10.8 ) ( 23.0 )

Other comprehensive income (loss), net of tax 12.1 ( 6.7 ) ( 0.2 ) 0.3

Other comprehensive loss, net of tax ( 10.8 ) ( 23.0 )

Comprehensive income 119.9 36.8

Comprehensive income (loss) attributable to non-controlling interests 0.4 ( 0.1 ) 0.7 —

Comprehensive income attributable to non-controlling interests 0.2 0.1

Comprehensive income attributable to Tempur Sealy International, Inc.

5 unchanged sentences

($ in millions)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

ASSETS (Unaudited)

32 unchanged sentences

($ in millions)

Three Months Ended September 30, 2020

Three Months Ended March 31, 2021

Tempur Sealy International, Inc.

2 unchanged sentences

Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings

Balance as of June 30, 2020

Balance as of December 31, 2020

$ 8.9 283.8 $ 2.8 78.9 $ ( 2,096.8 ) $ 617.5 $ 2,045.6 $ ( 65.5 ) $ 1.0 $ 504.6

3 unchanged sentences

Exercise of stock options ( 0.4 ) 10.9 ( 4.3 ) 6.6

Issuances of PRSUs, RSUs, and DSUs

— 0.1 ( 0.1 ) —

Treasury stock repurchased - PRSU/RSU/DSU releases — ( 0.1 ) ( 0.1 )

Amortization of unearned stock-based compensation

Balance, September 30, 2020

$ 8.9 99.2 $ 1.0 47.7 $ ( 2,026.1 ) $ 658.4 $ 1,900.9 $ ( 87.9 ) $ 1.0 $ 447.3

Three Months Ended September 30, 2019

Tempur Sealy International, Inc.

Stockholders' Equity

Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Non-controlling Interest in Subsidiaries Total Stockholders' Equity

Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings

Balance as of June 30, 2019

Dividends on common stock ($ 0.07 per share)

( 14.8 ) ( 14.8 )

Net income 73.3 73.3

Net loss attributable to non-controlling interest ( 0.1 ) ( 0.1 )

Foreign currency adjustments, net of tax ( 6.7 ) ( 6.7 )

Exercise of stock options ( 0.1 ) 1.9 5.4 7.3

Issuances of PRSUs, RSUs, and DSUs

2 unchanged sentences

8.4 ( 299.8 ) ( 299.8 )

Treasury stock repurchased - PRSU/RSU/DSU releases — — —

Treasury stock repurchased - PRSU/RSU releases 0.5 ( 13.3 ) ( 13.3 )

Amortization of unearned stock-based compensation

Balance, September 30, 2019

Balance, March 31, 2021

$ 8.9 283.8 $ 2.8 85.9 $ ( 2,360.7 ) $ 590.0 $ 2,161.3 $ ( 76.3 ) $ 1.2 $ 318.3

See accompanying Notes to Condensed Consolidated Financial Statements .

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

(in millions) (unaudited)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2020

Tempur Sealy International, Inc.

4 unchanged sentences

$ — 283.8 $ 2.8 75.1 $ ( 1,832.8 ) $ 573.9 $ 1,703.3 $ ( 87.7 ) $ 0.9 $ 360.4

Adoption of accounting standard effective January 1, 2020, net of tax ( 6.5 ) ( 6.5 )

Net income 59.7 59.7

Net income attributable to non-controlling interests 0.1 0.1

Adoption of accounting standard effective January 1, 2020, net of tax ( 6.5 ) ( 6.5 )

Acquisition of non-controlling interest in subsidiary 8.4 —

Dividend paid to non-controlling interest in subsidiary ( 0.1 ) —

Foreign currency adjustments, net of tax ( 23.0 ) ( 23.0 )

4 unchanged sentences

2.6 ( 187.5 ) ( 187.5 )

Treasury stock repurchased - PRSU/RSU/DSU releases 0.1 ( 12.1 ) ( 12.1 )

Amortization of unearned stock-based compensation

Balance, September 30, 2020

$ 8.9 99.2 $ 1.0 47.7 $ ( 2,026.1 ) $ 658.4 $ 1,900.9 $ ( 87.9 ) $ 1.0 $ 447.3

Nine Months Ended September 30, 2019

Tempur Sealy International, Inc.

Stockholders' Equity

Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Non-controlling Interest in Subsidiaries Total Stockholders' Equity

Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings

Balance as of December 31, 2018

$ — 99.2 $ 1.0 44.7 $ ( 1,737.0 ) $ 532.1 $ 1,513.8 $ ( 95.3 ) $ 2.9 $ 217.5

Net income 143.3 143.3

Net income attributable to non-controlling interest — —

Repurchase of interest in subsidiary ( 1.9 ) ( 1.9 )

Foreign currency adjustments, net of tax 0.3 0.3

Exercise of stock options ( 0.3 ) 3.6 9.2 12.8

Issuances of PRSUs, RSUs, and DSUs

( 0.2 ) 3.6 ( 3.6 ) —

Treasury stock repurchased

0.7 ( 52.3 ) ( 52.3 )

Treasury stock repurchased - PRSU/RSU/DSU releases 0.1 ( 3.2 ) ( 3.2 )

Treasury stock repurchased - PRSU/RSU releases 0.1 ( 11.8 ) ( 11.8 )

Amortization of unearned stock-based compensation

Balance, September 30, 2019

Balance, March 31, 2020

$ 8.4 283.8 $ 2.8 77.4 $ ( 2,026.5 ) $ 576.9 $ 1,756.5 $ ( 110.7 ) $ 1.0 $ 200.0

4 unchanged sentences

($ in millions) (unaudited)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:

Net income before non-controlling interests $ 130.7 $ 59.8

(Income) loss from discontinued operations, net of tax ( 1.3 ) 0.8

Loss from discontinued operations, net of tax 0.2 1.2

Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:

5 unchanged sentences

Dividends received from unconsolidated affiliates 2.5 —

Equity income in earnings of unconsolidated affiliates ( 9.6 ) ( 10.4 )

Equity (income) loss in earnings of unconsolidated affiliates ( 6.7 ) 0.2

Loss on extinguishment of debt 1.5 —

12 unchanged sentences

Treasury stock repurchased ( 313.1 ) ( 199.3 )

Dividends paid ( 14.3 ) —

Payments of deferred financing costs ( 12.7 ) —

Repayments of finance lease obligations and other ( 2.4 ) 6.0

Net cash used in financing activities from continuing operations ( 228.5 ) ( 124.8 )

Net cash provided by financing activities from continuing operations 168.9 188.1

Net cash provided by continuing operations 230.8 139.1

CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS

Operating cash flows 1.5 ( 1.7 )

Investing cash flows — —

Financing cash flows — —

Net cash provided by (used in) discontinued operations 1.5 ( 1.7 )

Net operating cash flows used in discontinued operations ( 0.4 ) ( 1.1 )

NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 4.9 ) ( 5.9 )

17 unchanged sentences

and its consolidated subsidiaries.

The Company develops, manufactures, markets and sells bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories.

The Company designs, manufactures and distributes bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories.

The Company also derives income from royalties by licensing Sealy® and Stearns & Foster® brands, technology and trademarks to other manufacturers.

4 unchanged sentences

The equity method of accounting is used for these joint ventures, over which the Company has significant influence but does not have control, and consolidation is not otherwise required.

The Company's carrying value in its equity method investments of $ 16.0 million and $ 22.5 million at September 30, 2020 and December 31, 2019, respectively, is recorded in other non-current assets within the accompanying Condensed Consolidated Balance Sheets.

The Company’s equity in the net income and losses of these investments is reported in equity income in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income.

4 unchanged sentences

It is the opinion of management that all necessary adjustments for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

(b) Adoption of New Accounting Standards.

Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") No.

2017-04, "Intangibles - Goodwill and Other (Topic 350)." The ASU simplifies the test for goodwill impairment, by eliminating Step 2 of the impairment test.

Under ASU 2017-04, the goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.

An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill for the reporting unit.

Adoption of this guidance did not have an impact on the Company's financial statements.

Credit Losses .

Effective January 1, 2020, the Company adopted ASU No.

2016-13 , "Financial Instruments - Credit Losses (Topic 326)," which requires entities to estimate expected lifetime credit losses on financial assets and provide expanded disclosures.

The ASU replaces the incurred loss impairment methodology with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company adopted the new credit losses standard using the modified retrospective approach.

The cumulative effect of adoption at January 1, 2020 was $ 6.5 million, net of tax.

The Company's primary financial assets are its trade accounts receivable, which are short-term financings with industry standard credit and trade terms.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

(b) Inventories .

Inventories are stated at the lower of cost and net realizable value, determined by the first-in, first-out method , and consist of the following:

September 30, December 31,

March 31, December 31,

(in millions) 2021 2020

3 unchanged sentences

$ 318.8 $ 312.1

(d) Accrued Sales Returns .

The Company allows product returns through certain sales channels and on certain products.

3 unchanged sentences

Accrued sales returns are included in accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

The Company had the following activity for sales returns from December 31, 2019 to September 30, 2020:

The Company had the following activity for sales returns from December 31, 2020 to March 31, 2021:

(in millions)

2 unchanged sentences

Returns charged to accrual ( 33.4 )

Balance as of September 30, 2020 $ 42.1

As of September 30, 2020 and December 31, 2019, $ 29.0 million and $ 26.2 million of accrued sales returns are included as a component of accrued expenses and other current liabilities and $ 13.1 million and $ 13.1 million of accrued sales returns are included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

(e) Warranties .

Balance as of March 31, 2021 $ 48.2

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

As of March 31, 2021 and December 31, 2020, $ 33.8 million and $ 31.6 million of accrued sales returns are included as a component of accrued expenses and other current liabilities and $ 14.4 million and $ 13.3 million of accrued sales returns are included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

(d) Warranties .

The Company provides warranties on certain products, which vary by segment, product and brand.

6 unchanged sentences

Tempur-Pedic pillows have a warranty term of 3 years, non-prorated.

The Company had the following activity for its accrued warranty expense from December 31, 2019 to September 30, 2020:

The Company had the following activity for its accrued warranty expense from December 31, 2020 to March 31, 2021:

(in millions)

2 unchanged sentences

Warranties charged to accrual ( 5.7 )

Balance as of September 30, 2020 $ 41.8

As of September 30, 2020 and December 31, 2019, $ 18.8 million and $ 19.4 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 23.0 million and $ 22.2 million of accrued warranty expense is included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

(f) Allowance for Credit Losses .

Balance as of March 31, 2021 $ 44.3

As of March 31, 2021 and December 31, 2020, $ 20.8 million and $ 20.3 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 23.5 million and $ 23.9 million of accrued warranty expense is included in other non-current liabilities on the Company’s accompanying Condensed Consolidated Balance Sheets, respectively.

(e) Allowance for Credit Losses .

The allowance for credit losses is the Company’s best estimate of the amount of expected lifetime credit losses in the Company’s accounts receivable.

The Company regularly reviews the adequacy of its allowance for credit losses.

The Company estimates losses over the contractual life using assumptions to capture the risk of loss, even if remote, based principally on how long a receivable has been outstanding.

Account balances are charged off against the allowance for credit losses after all reasonable means of collection have been exhausted and the potential for recovery is considered remote.

As of March 31, 2021, the Company's accounts receivable were substantially current.

Other factors considered include historical write-off experience, current economic conditions and also factors such as customer credit, past transaction history with the customer and changes in customer payment terms.

The allowance for credit losses is included in accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets.

The Company had the following activity for its allowance for credit losses from December 31, 2019 to September 30, 2020:

The Company had the following activity for its allowance for credit losses from December 31, 2020 to March 31, 2021:

(in millions)

Balance as of December 31, 2020

ASU 2016-13 adoption impact 8.9

Amounts accrued 2.5

Write-offs charged against the allowance ( 1.6 )

Balance as of September 30, 2020

(2) Net Sales

The following table presents the Company's disaggregated revenue by channel, product and geographical region, including a reconciliation of disaggregated revenue by segment, for the three and nine months ended September 30, 2020:

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020

(in millions) North America International Consolidated North America International Consolidated

Wholesale $ 869.1 $ 118.1 $ 987.2 $ 1,973.3 $ 300.0 $ 2,273.3

Direct 107.4 37.7 145.1 250.9 95.7 346.6

Net sales $ 976.5 $ 155.8 $ 1,132.3 $ 2,224.2 $ 395.7 $ 2,619.9

North America International Consolidated North America International Consolidated

Bedding $ 913.0 $ 123.6 $ 1,036.6 $ 2,086.3 $ 313.4 $ 2,399.7

Other 63.5 32.2 95.7 137.9 82.3 220.2

Net sales $ 976.5 $ 155.8 $ 1,132.3 $ 2,224.2 $ 395.7 $ 2,619.9

North America International Consolidated North America International Consolidated

Geographical region

United States $ 904.3 $ — $ 904.3 $ 2,078.8 $ — $ 2,078.8

Canada 72.2 — 72.2 145.4 — 145.4

International — 155.8 155.8 — 395.7 395.7

Net sales $ 976.5 $ 155.8 $ 1,132.3 $ 2,224.2 $ 395.7 $ 2,619.9

Balance as of March 31, 2021

TEMPUR SEALY INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

(2) Net Sales

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020

(in millions) North America International Consolidated North America International Consolidated

9 unchanged sentences

United States $ 818.5 $ — $ 818.5 $ 632.5 $ — $ 632.5

Canada 60.6 — 60.6 161.8 — 161.8

International — 139.0 139.0 — 420.6 420.6

All Other 64.8 160.5 225.3 59.8 130.1 189.9

Net sales $ 883.3 $ 160.5 $ 1,043.8 $ 692.3 $ 130.1 $ 822.4

3 unchanged sentences

The Company accounted for this transaction as a business combination.

The preliminary allocation of the purchase price is based on estimated fair values of the assets acquired and liabilities assumed as of January 31, 2020, which included the following:

The final allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of January 31, 2020, which included the following:

(in millions)

5 unchanged sentences

Operating lease liabilities ( 19.9 )

Non-controlling interest ( 8.4 )

Redeemable non-controlling interest ( 8.4 )

Purchase price, net of cash acquired $ 37.9

Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the private label product growth opportunities and expected synergistic manufacturing benefits to be realized from the acquisition.

The goodwill is deductible for income tax purposes and will be included within the North American reporting unit for goodwill impairment assessments.

The goodwill is deductible for income tax purposes and is included within the North American reporting unit for goodwill impairment assessments.

TEMPUR SEALY INTERNATIONAL, INC.

4 unchanged sentences

Balance as of December 31, 2020 $ 610.3 $ 156.0 $ 766.3

Goodwill resulting from acquisitions 26.7 — 26.7

Foreign currency translation and other 1.6 ( 2.7 ) ( 1.1 )

Balance as of September 30, 2020 $ 601.7 $ 159.4 $ 761.1

Balance as of March 31, 2021 $ 611.9 $ 153.3 $ 765.2

Debt for the Company consists of the following:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(in millions, except percentages) Amount Rate Amount Rate Maturity Date

2 unchanged sentences

Revolver — (1) — (2) October 16, 2024

2029 Senior Notes 800.0 4.00 % — N/A April 15, 2029

2026 Senior Notes 600.0 5.500 % 600.0 5.500 % June 15, 2026

2023 Senior Notes 450.0 5.625 % 450.0 5.625 % October 15, 2023

2023 Senior Notes — N/A 250.0 5.625 % October 15, 2023

Securitized debt — (3) 33.9 (4) April 6, 2023

7 unchanged sentences

Total long-term debt, net $ 1,822.4 $ 1,323.0

(1) Interest at LIBOR plus applicable margin of 1.250 % as of September 30, 2020.

(1) Interest at LIBOR plus applicable margin of 1.250 % as of March 31, 2021.

(2) Interest at LIBOR plus applicable margin of 1.250 % as of December 31, 2020.

(3) Interest at one month LIBOR index plus 70 basis points.

(4) Finance lease obligations are a non-cash financing activity.

(4) Interest at one month LIBOR index plus 80 basis points.

(5) New finance lease obligations are a non-cash financing activity.

Refer to Note 6, "Leases".

As of September 30, 2020, the Company was in compliance with all applicable debt covenants.

As of March 31, 2021, the Company was in compliance with all applicable debt covenants.

2019 Credit Agreement

2 unchanged sentences

The 2019 Credit Agreement has a $ 60.0 million sub-facility for the issuance of letters of credit.

As of September 30, 2020, total availability under the revolving credit facility was $ 424.9 million after a $ 0.1 million reduction for outstanding letters of credit.

On February 2, 2021, the Company entered into an amendment to the 2019 Credit Agreement.

The amendment increased the revolving credit facility from $ 425.0 million to $ 725.0 million.

As of March 31, 2021, total availability under the revolving credit facility was $ 724.9 million after a $ 0.1 million reduction for outstanding letters of credit.

TEMPUR SEALY INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

On May 13, 2020, the Company and certain of its subsidiaries entered into an amendment to the existing 2019 Credit Agreement.

The amendment provided for a new 364-day $ 200.0 million term loan (the "364-Day Loan").

The Company used the proceeds of the 364-Day Loan to repay borrowings under the existing $ 425.0 million revolving credit facility and to pay fees and expenses in connection with the amendment.

On September 14, 2020, the Company repaid the 364-Day Loan.

Repayment of the 364-Day Loan lifted certain restrictions on dividends, share repurchases and the Company's ability to make certain investments.

Securitized Debt

The Company and certain of its subsidiaries are party to a securitization transaction with respect to certain accounts receivable due to the Company and certain of its subsidiaries (as amended, the "Accounts Receivable Securitization").

As of September 30, 2020, the Company had availability of $ 83.6 million under the Accounts Receivable Securitization.

As of March 31, 2021, the Company had availability of $ 87.2 million under the Accounts Receivable Securitization.

On April 6, 2021, the Company and certain of its subsidiaries entered into a new amendment to the Accounts Receivable Securitization.

The amendment, among other things, extended the maturity date of the Accounts Receivable Securitization to April 6, 2023 and increased the overall limit from $ 120.0 million to $ 200.0 million.

2029 Senior Notes

On October 8, 2020, the Company announced its election to conditionally redeem $ 200.0 million of the $ 450.0 million of its issued and outstanding 2023 Senior Notes on November 9, 2020 (the "Redemption Date").

The 2023 Senior Notes selected for redemption will be redeemed at 101.406 % of their principal amount, plus the accrued and unpaid interest.

The redemption is conditioned on the determination by the Company's Chief Financial Officer, in his sole discretion, as of the second business day before the Redemption Date, that the redemption continues to be reasonably prudent and consistent with the Company's objectives concerning liquidity, financing needs and funding costs.

The Company intends to primarily use current cash and cash equivalents to fund the redemption.

On March 25, 2021, Tempur Sealy International issued $ 800.0 million in aggregate principal amount of 4.00 % senior notes due 2029 (the "2029 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S.

persons in accordance with Regulation S under the Securities Act.

The 2029 Senior Notes were issued pursuant to an indenture, dated as of March 25, 2021 (the "2029 Indenture"), among Tempur Sealy International, certain subsidiaries of Tempur Sealy International as guarantors (the "Guarantors"), and The Bank of New York Mellon Trust Company, N.A., as trustee.

The 2029 Senior Notes are general unsecured senior obligations of Tempur Sealy International and are guaranteed on a senior unsecured basis by the Guarantors.

The 2029 Senior Notes mature on April 15, 2029, and interest is payable semi-annually in arrears on each April 15 and October 15, beginning on October 15, 2021.

Tempur Sealy International has the option to redeem all or a portion of the 2029 Senior Notes at any time on or after April 15, 2024.

The initial redemption price is 102.000 % of the principal amount, plus accrued and unpaid interest, if any.

The redemption price will decline each year after 2024 until it becomes 100.0 % of the principal amount beginning on April 15, 2026.

In addition, Tempur Sealy International has the option at any time prior to April 15, 2024 to redeem some or all of the 2029 Senior Notes at 100.0 % of the original principal amount plus a “make-whole” premium and accrued and unpaid interest, if any.

Tempur Sealy International may also redeem up to 40.0 % of the 2029 Senior Notes prior to April 15, 2024, under certain circumstances with the net cash proceeds from certain equity offerings, at 104.000 % of the principal amount plus accrued and unpaid interest, if any.

Tempur Sealy International may make such redemptions as described in the preceding sentence only if, after any such redemption, at least 60.0 % of the original aggregate principal amount of the 2029 Senior Notes issued remains outstanding.

The 2029 Indenture restricts the ability of Tempur Sealy International and the ability of certain of its subsidiaries to, among other things:

(i) incur, directly or indirectly, debt;

(ii) make, directly or indirectly, certain investments and restricted payments;

(iii) incur or suffer to exist, directly or indirectly, liens on its properties or assets;

(iv) sell or otherwise dispose of, directly or indirectly, assets;

(v) create or otherwise cause or suffer to exist any consensual restriction on the right of certain of the subsidiaries of Tempur Sealy International to pay dividends or make any other distributions on or in respect of their capital stock;

and (vi) enter into transactions with affiliates.

These covenants are subject to a number of exceptions and qualifications.

As a result of the issuance of the 2029 Senior Notes, $ 11.4 million of deferred financing costs were capitalized in the first quarter of 2021 and will be amortized as interest expense over the respective debt instrument period, 8 years, using the effective interest method.

2026 Senior Notes

On April 28, 2021, the Company announced its election to conditionally redeem the $ 600.0 million issued and outstanding 2026 Senior Notes, in full, on June 15, 2021 (the "Redemption Date").

The 2026 Senior Notes will be redeemed at 102.750 % of their principal amount, plus the accrued and unpaid interest.

The redemption is conditional on the determination by the Company's Chief Financial Officer, in his sole discretion, as of the second business day before the Redemption Date, that the redemption continues to be reasonably prudent and consistent with the Company's objectives concerning liquidity, financing needs and funding costs.

The Company intends to use net proceeds from the 2029 Senior Notes primarily to fund the redemption.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

2023 Senior Notes

On November 9, 2020, the Company redeemed the first $ 200.0 million of the issued and outstanding 2023 Senior Notes at 101.406 % of the principal amount, plus the accrued and unpaid interest.

During the first quarter of 2021, the Company redeemed the remaining $ 250.0 million of the issued and outstanding 2023 Senior Notes at 101.406 % of the principal amount, plus the accrued and unpaid interest.

In the first quarter of 2021, the Company recognized $ 5.0 million of loss on extinguishment of debt, which includes a prepayment premium of $ 3.5 million and the write-off of $ 1.5 million of deferred financing costs, associated with the redemption of the remaining amount outstanding of the 2023 Senior Notes.

Fair Value of Financial Instruments

4 unchanged sentences

The fair values of these material financial instruments are as follows:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

2023 Senior Notes $ — $ 255.1

2026 Senior Notes 625.2 625.4

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table summarizes the classification of operating and finance lease assets and obligations in the Company's Condensed Consolidated Balance Sheet as of September 30, 2020 and December 31, 2019:

(in millions) September 30, 2020 December 31, 2019

2029 Senior Notes 798.2 —

The following table summarizes the classification of operating and finance lease assets and obligations in the Company's Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020:

(in millions) March 31, 2021 December 31, 2020

Operating lease assets Operating lease right-of-use assets $ 294.1 $ 304.3

6 unchanged sentences

Total lease obligations $ 397.1 $ 407.5

The following table summarizes the classification of lease expense in the Company's Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended Nine Months Ended

September 30, September 30,

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table summarizes the classification of lease expense in the Company's Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in millions) 2021 2020

7 unchanged sentences

Total lease expense $ 33.6 $ 29.9

The following table sets forth the scheduled maturities of lease obligations as of September 30, 2020:

The following table sets forth the scheduled maturities of lease obligations as of March 31, 2021:

(in millions) Operating Leases Finance Leases Total

Year Ended December 31,

2020 (excluding the nine months ended September 30, 2020)

2021 (excluding the three months ended March 31, 2021)

$ 55.5 $ 11.6 $ 67.1

7 unchanged sentences

Present value of lease obligations $ 327.4 $ 69.7 $ 397.1

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table provides lease term and discount rate information related to operating and finance leases as of September 30, 2020:

September 30, 2020

The following table provides lease term and discount rate information related to operating and finance leases as of March 31, 2021:

March 31, 2021

Weighted average remaining lease term (years):

4 unchanged sentences

Finance leases 5.75 %

The following table provides supplemental information related to the Company's Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019:

Nine Months Ended

(in millions) September 30, 2020 September 30, 2019

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table provides supplemental information related to the Company's Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in millions) March 31, 2021 March 31, 2020

Cash paid for amounts included in the measurement of lease obligations:

Operating cash flows paid for operating leases $ 51.0 $ 42.5

Operating cash flows paid for operating leases (a)

$ 18.2 $ 17.3

Operating cash flows paid for finance leases $ 1.1 $ 1.2

2 unchanged sentences

Right-of-use assets obtained in exchange for new finance lease obligations $ 1.2 $ 8.2

(a) Operating cash flows paid for operating leases are included within the change in other assets and liabilities within the Condensed Consolidated Statement of Cash Flows offset by non-cash right-of-use asset amortization and lease liability accretion.

(7) Stockholders' Equity

(a) Treasury Stock.

As of September 30, 2020, the Company had approximately $ 131.3 million remaining under the existing share repurchase program initially authorized by the Board of Directors in 2016.

The Company did not repurchase shares under the program during the three months ended September 30, 2020.

The Company repurchased 0.7 million shares under the program for approximately $ 50.0 million during the three months ended September 30, 2019.

The Company repurchased 2.6 million shares and 0.7 million shares for approximately $ 187.5 million and $ 52.3 million during the nine months ended September 30, 2020 and 2019, respectively.

In October 2020, the Board of Directors authorized an increase, of $ 168.7 million, to the existing share repurchase authorization of Tempur Sealy International's common stock to $ 300.0 million.

In addition, the Company acquired shares upon the vesting of certain restricted stock units ("RSUs"), which were withheld to satisfy tax withholding obligations during each of the three and nine months ended September 30, 2020 and 2019.

The shares withheld were valued at the closing price of the stock on the New York Stock Exchange on the vesting date or first business day prior to vesting, resulting in approximately $ 0.1 million and $ 0.0 million in treasury stock acquired during the three months ended September 30, 2020 and 2019, respectively.

The Company acquired approximately $ 12.1 million and $ 3.2 million in treasury stock during the nine months ended September 30, 2020 and 2019, respectively.

(b) Shareholder Rights Agreement.

On March 27, 2020, the Board of Directors authorized and declared a dividend distribution of one right (a "Right") for each outstanding share of common stock of the Company to stockholders of record at the close of business on April 7, 2020 (the “Record Date”).

Each Right entitled the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, $ 0.01 par value per share (the “Preferred Shares”), of the Company at an exercise price of $273.00 per one one-thousandth of a Preferred Share, subject to adjustment (the “Exercise Price”).

In accordance with their terms, the Rights were set to expire at the close of business on March 26, 2021 or such other date as may be established by the Board of Directors as permitted under the Rights Agreement.

On September 11, 2020, the Board of Directors accelerated the expiration of the Rights to the close of business on September 14, 2020, at which time the Rights expired and the Rights Agreement was terminated.

On February 11, 2021, the Board of Directors authorized an increase, of $ 211.4 million, to the existing share repurchase authorization of Tempur Sealy International's common stock.

The Company repurchased 8.4 million and 2.6 million shares, under the program, for approximately $ 299.8 million and $ 187.5 million during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, the Company had approximately $ 113.2 million remaining under its share repurchase authorization.

On April 29, 2021, the Company announced that its Board of Directors authorized an increase to the share repurchase authorization bringing the total authorization to $ 400.0 million.

In addition, the Company acquired shares upon the vesting of certain restricted stock units ("RSUs") and performance restricted stock units ("PRSUs"), which were withheld to satisfy tax withholding obligations during each of the three months ended March 31, 2021 and 2020.

The shares withheld were valued at the closing price of the stock on the New York Stock Exchange on the vesting date or first business day prior to vesting, resulting in approximately $ 13.3 million and $ 11.8 million in treasury stock acquired during the three months ended March 31, 2021 and 2020, respectively.

TEMPUR SEALY INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

On October 28, 2020, the Board of Directors approved a four -for-one split of the Company's common stock.

The stock split will be effected through a stock dividend entitling each shareholder of record on November 10, 2020 to receive an additional three shares of common stock for each share owned.

The shares will be distributed after the close of trading on November 23, 2020, and trading of the Company’s common stock will begin on a split-adjusted basis on November 24, 2020.

The Company’s consolidated financial statements as of and for the three and nine-month periods ended September 30, 2020 and 2019 do not reflect the four -for-one stock split, which will be effective on November 24, 2020.

AOCL consisted of the following:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2021 2020

9 unchanged sentences

Tax expense (2)

— — ( 0.1 ) —

Total other comprehensive income before reclassifications, net of tax $ — $ —

6 unchanged sentences

(2) These amounts were included in the income tax provision in the accompanying Condensed Consolidated Statements of Income.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

(8) Other Items

1 unchanged sentence

Accrued expenses and other current liabilities consisted of the following:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

Taxes $ 145.0 $ 150.4

5 unchanged sentences

(9) Stock-Based Compensation

The Company’s stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019 included performance restricted stock units ("PRSUs"), non-qualified stock options, restricted stock units ("RSUs") and deferred stock units ("DSUs").

The Company’s stock-based compensation expense for the three months ended March 31, 2021 and 2020 included PRSUs, non-qualified stock options, RSUs and deferred stock units ("DSUs").

A summary of the Company’s stock-based compensation expense is presented in the following table:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2021 2020

3 unchanged sentences

Total stock-based compensation expense $ 15.1 $ 7.3

The Company grants PRSUs to executive officers and certain members of management.

Actual payout under the PRSUs is dependent upon the achievement of certain financial goals.

During the first quarter of 2020, the Company granted PRSUs as a component of the long-term incentive plan ("2020 PRSUs").

The Company has recorded stock-based compensation expense related to the 2020 PRSUs during the three and nine months ended September 30, 2020, as it was probable that the Company would achieve the specified performance target for the performance period.

During 2017, the Company granted executive officers and certain members of management PRSUs if the Company achieves a certain level of adjusted earnings before interest, tax, depreciation and amortization as defined in the Company’s Credit Agreement ("adjusted EBITDA per credit facility") during four consecutive fiscal quarters as described below (the "2019 Aspirational Plan PRSUs").

The 2019 Aspirational Plan PRSUs will vest based on the highest adjusted EBITDA per credit facility in any four consecutive fiscal quarter period ending between (and including) March 31, 2018 and December 31, 2019 (the “First Designated Period”).

At the end of the First Designated Period, the adjusted EBITDA per credit facility targets were not met and one-half of the total 2019 Aspirational Plan PRSUs were forfeited.

The remaining one-half of the total 2019 Aspirational Plan PRSUs will vest based on the highest adjusted EBITDA per credit facility in any four consecutive fiscal quarter period ending between (and including) March 31, 2020 and December 31, 2020 (the "Second Designated Period").

If the highest adjusted EBITDA per credit facility in the Second Designated Period is $ 600.0 million then 66 % of the remaining 2019 Aspirational Plan PRSUs will vest;

if the adjusted EBITDA per credit facility is $ 650.0 million or more 100 % will vest;

if adjusted EBITDA per credit facility is between $ 600.0 million and $ 650.0 million then a pro rata portion will vest;

and if adjusted EBITDA per credit facility is below $ 600.0 million then all of the remaining 2019 Aspirational Plan PRSUs will be forfeited.

TEMPUR SEALY INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The Company recorded $ 45.2 million of stock-based compensation expense related to the 2019 Aspirational Plan PRSUs during the three months ended September 30, 2020, as it became probable the Company would achieve the highest specified performance target.

Based on the price of the Company’s common stock on the grant date, the remaining unrecognized compensation expense related to this award is approximately $ 4.2 million, which will be recognized in the fourth quarter of 2020, commensurate with the remaining requisite service period.

The Company grants PRSUs to executive officers and certain members of management.

Actual payout under the PRSUs is dependent upon the achievement of certain financial goals.

During the first quarter of 2021, the Company granted PRSUs as a component of the long-term incentive plan ("2021 PRSUs").

The Company has recorded stock-based compensation expense related to the 2021 PRSUs during the three months ended March 31, 2021, as it was probable that the Company would achieve the specified performance target for the performance period.

(10) Commitments and Contingencies

2 unchanged sentences

(11) Income Taxes

The Company’s effective tax rate for the three months ended September 30, 2020 and 2019 was 25.2 % and 26.5 %, respectively.

The Company's effective tax rate for the nine months ended September 30, 2020 and 2019 was 26.5 % and 29.0 %, respectively.

The Company's effective tax rate for the three and nine months ended September 30, 2020 and 2019 differed from the U.S.

federal statutory rate of 21.0% principally due to subpart F income (i.e., GILTI earned by the Company’s foreign subsidiaries), certain foreign income tax rate differentials, state and local taxes, changes in the Company’s uncertain tax positions, the excess tax deficiency (or benefit) related to stock-based compensation and certain other permanent items.

On March 27, 2020, the U.S.

Government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) which includes modifications to the limitation on business interest expense and net operating loss provisions.

The CARES Act is not expected to have a material impact on the Company’s consolidated financial statements.

The Company’s effective tax rate for the three months ended March 31, 2021 and 2020 was 23.6 % and 27.8 %, respectively.

The Company's effective tax rate for the three months ended March 31, 2021 and 2020 differed from the U.S.

federal statutory rate of 21.0% principally due to subpart F income (i.e., global intangible low-taxed income, or "GILTI," earned by the Company’s foreign subsidiaries), foreign income tax rate differentials, state and local taxes, changes in the Company’s uncertain tax positions, the excess tax deficiency (or benefit) related to stock-based compensation and certain other permanent items.

The Company has been involved in a dispute with the Danish Tax Authority ("SKAT") regarding the royalty paid by a U.S.

3 unchanged sentences

production process.

At September 30, 2020 and December 31, 2019, the Danish income tax liability recorded in the Company’s balance sheet for the periods 2001 through September 30, 2020 and December 31, 2019, respectively, is DKK 1,126.3 million and DKK 1,110.6 million, respectively (approximately $ 177.4 million and $ 166.7 million using the applicable exchange rates at September 30, 2020 and December 31, 2019, respectively).

The liability at September 30, 2020 and December 31, 2019 is included within the Company’s Condensed Consolidated Balance Sheet (translated at the exchange rate on September 30, 2020 and December 31, 2019) as per below:

September 30, 2020 December 31, 2019

DKK USD DKK USD

Accrued expenses and other current liabilities 847.3 $ 133.5 847.3 $ 127.2

Other non-current liabilities 279.0 43.9 263.3 39.5

The uncertain income tax liabilities for the Danish Tax Matter for the years 2001 through 2011 (the "Settlement Years") and for the years 2012 through 2021 (the "2012 to Current Period") are reflected in the Company’s Condensed Consolidated Balance Sheet as per below:

March 31, 2021 December 31, 2020

Period Balance Sheet Presentation DKK USD DKK USD

Settlement Years Accrued expenses and other current liabilities 847.3 $ 133.5 847.3 $ 139.1

2012 to Current Period Other non-current liabilities 297.3 46.9 295.0 48.4

Total 1,144.6 $ 180.4 1,142.3 $ 187.5

During the three months ended September 30, 2020, the Company made a tax deposit with SKAT of DKK 76.8 million applicable to a tax assessment by SKAT for the year 2014.

Also, during the three months ended March 31, 2020 the Company made a tax deposit with SKAT of DKK 134.0 million applicable to a tax assessment by SKAT for the years 2012 and 2013.

The Company is contesting both assessments.

At September 30, 2020 and December 31, 2019, respectively, the Company held on deposit with SKAT DKK 1,180.9 million and DKK 970.1 million (approximately $ 186.0 million and $ 145.6 million using the applicable exchange rates at September 30, 2020 and December 31, 2019, respectively).

The deposit is for the satisfaction of the anticipated liability for both tax and interest once these matters are concluded.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The deposit at September 30, 2020 and December 31, 2019 is included within the Company’s Condensed Consolidated Balance Sheet (translated at the exchange rates on September 30, 2020 and December 31, 2019) as per below:

September 30, 2020 December 31, 2019

The deferred tax asset for the U.S.

correlative benefit associated with the accrual of Danish tax for the 2012 to Current Period at March 31, 2021 and December 31, 2020 is approximately $ 10.4 million and $ 12.0 million, respectively.

At March 31, 2021 and December 31, 2020, respectively, the Company held cash on deposit with SKAT.

The deposit at March 31, 2021 and December 31, 2020 is included within the Company’s Condensed Consolidated Balance Sheet (translated at the exchange rates on March 31, 2021 and December 31, 2020, respectively) as per below:

March 31, 2021 December 31, 2020

DKK USD DKK USD

2 unchanged sentences

Total 1,180.9 $ 186.1 1,180.9 $ 193.9

There were no significant changes in the Danish Tax Matter or other uncertain tax positions during the three or nine months ended September 30, 2020.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

If the Company is not successful in resolving the Danish Tax Matter for the 2012 to Current Period or there is a change in facts and circumstances, the Company may be required to further increase its uncertain income tax position associated with this matter, or decrease its deferred tax asset, also related to this matter, which could have a material impact on the Company's reported earnings.

There were no other significant changes in the Danish Tax Matter or other uncertain tax positions during the three months ended March 31, 2021.

(12) Earnings Per Common Share

The following table sets forth the components of the numerator and denominator for the computation of basic and diluted earnings per share for net income attributable to Tempur Sealy International.

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions, except per common share amounts) 2021 2020

2 unchanged sentences

Effect of dilutive securities 6.4 2.4

Employee stock-based compensation 1.3 1.2 0.7 1.3

Denominator for diluted earnings per common share-adjusted weighted average shares 210.1 216.0

1 unchanged sentence

Diluted earnings per common share for continuing operations $ 0.62 $ 0.28

The Company excluded an insignificant number of shares for the three months ended September 30, 2020, from the diluted earnings per common share computation because their exercise price was greater than the average market price of Tempur Sealy International's common stock or they were otherwise anti-dilutive.

The Company did no t exclude any shares for the three months ended September 30, 2019.

The Company excluded 0.5 million and 1.1 million shares issuable upon exercise of outstanding stock options for the nine months ended September 30, 2020 and 2019, respectively, from the diluted earnings per common share computation because their exercise price was greater than the average market price of Tempur Sealy International's common stock or they were otherwise anti-dilutive.

The Company excluded an insignificant number of shares for the three months ended March 31, 2021, from the diluted earnings per common share computation because their exercise price was greater than the average market price of Tempur Sealy International's common stock or they were otherwise anti-dilutive.

The Company excluded 0.8 million shares for the three months ended March 31, 2020.

Holders of non-vested stock-based compensation awards do not have voting rights.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

(13) Business Segment Information

1 unchanged sentence

North America and International.

Corporate operating expenses are not included in either of the segments and are presented separately as a reconciling item to consolidated results.

These segments are strategic business units that are managed separately based on geography.

The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S.

The International segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America.

The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S., Canada and Mexico.

The International segment consists of Tempur manufacturing and distribution subsidiaries, Sealy distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America (other than Mexico).

Corporate operating expenses are not included in either of the segments and are presented separately as a reconciling item to consolidated results.

The Company evaluates segment performance based on net sales, gross profit and operating income.

1 unchanged sentence

The remaining inter-segment eliminations are comprised of intercompany accounts receivable and payable.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table summarizes total assets by segment:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

North America $ 3,757.6 $ 3,740.3

4 unchanged sentences

The following table summarizes property, plant and equipment, net, by segment:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

North America $ 418.6 $ 415.3

3 unchanged sentences

The following table summarizes operating lease right-of-use assets by segment:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

North America $ 252.9 $ 256.6

2 unchanged sentences

Total operating lease right-of-use assets $ 294.1 $ 304.3

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table summarizes segment information for the three months ended September 30, 2020:

(in millions) North America International Corporate Eliminations Consolidated

Net sales $ 976.5 $ 155.8 $ — $ — $ 1,132.3

Inter-segment sales $ 0.2 $ 0.3 $ — $ ( 0.5 ) $ —

Inter-segment royalty expense (income) 2.5 ( 2.5 ) — — —

Gross profit 438.6 91.6 — — 530.2

Operating income (loss) 231.5 44.8 ( 96.1 ) — 180.2

Income (loss) from continuing operations before income taxes 229.9 44.1 ( 114.3 ) — 159.7

Depreciation and amortization (1)

$ 19.6 $ 3.6 $ 73.6 $ — $ 96.8

Capital expenditures 20.2 2.0 2.0 — 24.2

(1) Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes segment information for the three months ended September 30, 2019:

(in millions) North America International Corporate Eliminations Consolidated

Net sales $ 682.0 $ 139.0 $ — $ — $ 821.0

Inter-segment sales $ 0.6 $ — $ — $ ( 0.6 ) $ —

Inter-segment royalty expense (income) 1.2 ( 1.2 ) — — —

Gross profit 286.8 73.8 — — 360.6

Operating income (loss) 119.8 27.3 ( 26.5 ) — 120.6

Income (loss) from continuing operations before income taxes 117.8 24.0 ( 43.3 ) — 98.5

Depreciation and amortization (1)

$ 17.1 $ 3.4 $ 9.5 $ — $ 30.0

Capital expenditures 15.0 2.0 5.0 — 22.0

(1) Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes segment information for the nine months ended September 30, 2020:

The following table summarizes segment information for the three months ended March 31, 2021:

(in millions) North America International Corporate Eliminations Consolidated

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued)

The following table summarizes segment information for the nine months ended September 30, 2019:

The following table summarizes segment information for the three months ended March 31, 2020:

(in millions) North America International Corporate Eliminations Consolidated

11 unchanged sentences

(in millions)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

United States

$ 440.6 $ 436.2

Other International

All Other 68.4 71.7

Total property, plant and equipment, net

$ 509.0 $ 507.9

Total International

$ 67.8 $ 69.4

The following table summarizes operating lease right-of-use assets by geographic region:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

United States $ 250.9 $ 255.0

Canada 3.7 4.9

Other International 41.9 42.2

All Other 43.2 49.3

Total operating lease right-of-use assets $ 294.1 $ 304.3

Total International $ 45.6 $ 47.1

The following table summarizes net sales by geographic region:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2021 2020

United States $ 818.5 $ 632.5

Canada 72.2 60.6 145.4 161.8

Other International 155.8 139.0 395.7 420.6

All Other 225.3 189.9

Total net sales $ 1,043.8 $ 822.4

Total International $ 228.0 $ 199.6 $ 541.1 $ 582.4

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements