What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-03 · 117 added, 375 removed, 400 unchanged (55% of the section changed)

4 unchanged sentences

($ in millions, except per common share amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Net sales $ 1,239.5 $ 1,043.8

8 unchanged sentences

Loss on extinguishment of debt — 5.0

Other expense (income), net 0.1 ( 0.5 ) ( 0.3 ) 0.3

Other income, net ( 1.3 ) ( 0.3 )

Total other expense, net 19.6 17.0

2 unchanged sentences

Income from continuing operations 130.9 130.9

(Loss) income from discontinued operations, net of tax ( 0.1 ) 2.4 ( 0.6 ) 1.3

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

Net income before non-controlling interests 130.9 130.7

Net income (loss) attributable to non-controlling interests — 0.4 ( 0.2 ) 0.7

Net income attributable to non-controlling interests 0.2 0.2

Net income attributable to Tempur Sealy International, Inc.

2 unchanged sentences

Earnings per share for continuing operations $ 0.72 $ 0.64

Earnings per share for discontinued operations — 0.01 — 0.01

Loss per share for discontinued operations — —

Earnings per share $ 0.72 $ 0.64

Earnings per share for continuing operations $ 0.69 $ 0.62

Earnings per share for discontinued operations — 0.01 — 0.01

Loss per share for discontinued operations — —

Earnings per share $ 0.69 $ 0.62

7 unchanged sentences

($ in millions)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Net income before non-controlling interests $ 130.9 $ 130.7

1 unchanged sentence

Foreign currency translation adjustments ( 17.5 ) ( 10.8 )

Other comprehensive (loss) income, net of tax ( 29.9 ) 12.1 ( 34.0 ) ( 0.2 )

Other comprehensive loss, net of tax ( 17.5 ) ( 10.8 )

Comprehensive income 113.4 119.9

Comprehensive income (loss) attributable to non-controlling interests — 0.4 ( 0.2 ) 0.7

Comprehensive income attributable to non-controlling interests 0.2 0.2

Comprehensive income attributable to Tempur Sealy International, Inc.

5 unchanged sentences

($ in millions)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

ASSETS (Unaudited)

12 unchanged sentences

Total Assets $ 4,321.9 $ 4,323.4

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

Current Liabilities:

10 unchanged sentences

Redeemable non-controlling interest 9.4 9.2

Total Stockholders' Equity 362.5 504.6

Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity $ 4,467.3 $ 3,308.6

Total Stockholders' (Deficit) Equity ( 100.7 ) 285.8

Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' (Deficit) Equity $ 4,321.9 $ 4,323.4

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

($ in millions)

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

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, 2021

Balance as of December 31, 2021

$ 9.2 283.8 $ 2.8 96.4 $ ( 2,844.7 ) $ 622.0 $ 2,604.9 $ ( 99.2 ) $ 285.8

Net income 130.7 130.7

Net loss attributable to non-controlling interest — —

Net income attributable to non-controlling interest 0.2 —

Foreign currency adjustments, net of tax ( 17.5 ) ( 17.5 )

8 unchanged sentences

Amortization of unearned stock-based compensation

Balance, September 30, 2021

$ 8.5 283.8 $ 2.8 91.0 $ ( 2,595.8 ) $ 608.0 $ 2,447.0 $ ( 99.5 ) $ 362.5

Three Months Ended September 30, 2020

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, 2020

$ 8.7 283.8 $ 2.8 77.4 $ ( 2,026.3 ) $ 584.2 $ 1,779.5 $ ( 100.0 ) $ 0.8 $ 241.0

Net income 121.4 121.4

Net income attributable to non-controlling interests 0.2 0.2 0.2

Foreign currency adjustments, net of tax 12.1 12.1

Exercise of stock options — 0.2 0.7 0.9

Issuances of PRSUs, RSUs, and DSUs

— 0.1 ( 0.1 ) —

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

Amortization of unearned stock-based compensation

Balance, September 30, 2020

$ 8.9 283.8 $ 2.8 77.4 $ ( 2,026.1 ) $ 656.6 $ 1,900.9 $ ( 87.9 ) $ 1.0 $ 447.3

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, 2021

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, 2020

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

Net income 448.7 448.7

Net (loss) income attributable to non-controlling interests ( 0.4 ) 0.2 0.2

Purchase of remaining interest in subsidiary ( 3.4 ) ( 1.2 ) ( 4.6 )

Foreign currency adjustments, net of tax ( 34.0 ) ( 34.0 )

Exercise of stock options ( 0.9 ) 25.0 ( 10.6 ) 14.4

Dividends declared on common stock ( 47.3 ) ( 47.3 )

Issuances of RSUs

( 1.6 ) 41.8 ( 41.8 ) —

Treasury stock repurchased

14.1 ( 551.4 ) ( 551.4 )

Treasury stock repurchased - PRSU/RSU/DSU releases 0.5 ( 14.4 ) ( 14.4 )

Amortization of unearned stock-based compensation

Balance, September 30, 2021

Balance, March 31, 2022

$ 9.4 283.8 $ 2.8 107.1 $ ( 3,267.2 ) $ 563.6 $ 2,716.8 $ ( 116.7 ) $ ( 100.7 )

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Tempur Sealy International, Inc.

4 unchanged sentences

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

Adoption of accounting standard effective January 1, 2020

( 6.5 ) ( 6.5 )

Net income 130.5 130.5

Net income attributable to non-controlling interests 0.2 0.2

Acquisition of non-controlling interest in subsidiary 8.4 —

Dividend paid to noncontrolling interest in subsidiary ( 0.1 ) —

Foreign currency adjustments, net of tax ( 10.8 ) ( 10.8 )

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

Dividends declared on common stock ($ 0.07 per share)

( 14.8 ) ( 14.8 )

Issuances of PRSUs, RSUs, and DSUs

2 unchanged sentences

8.4 ( 299.8 ) ( 299.8 )

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

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

Amortization of unearned stock-based compensation

Balance, September 30, 2020

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

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 $ 130.9 $ 130.7

Loss (income) from discontinued operations, net of tax 0.6 ( 1.3 )

Loss from discontinued operations, net of tax — 0.2

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

23 unchanged sentences

Repayments of finance lease obligations and other ( 3.5 ) ( 2.4 )

Net cash provided by (used in) financing activities from continuing operations 356.4 ( 228.5 )

Net cash provided by continuing operations 445.9 158.0

Net operating cash flows (used in) provided by discontinued operations ( 0.8 ) 1.5

Net cash (used in) provided by financing activities from continuing operations ( 204.8 ) 168.9

Net cash (used in) provided by continuing operations ( 178.5 ) 230.8

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

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

Increase in cash and cash equivalents 438.3 164.3

(Decrease) increase in cash and cash equivalents ( 184.4 ) 225.5

CASH AND CASH EQUIVALENTS, beginning of period 300.7 65.0

19 unchanged sentences

Wholesale and Direct.

The Company has ownership interests in United Kingdom and Asia-Pacific joint ventures to develop markets for Sealy® branded products in those regions.

The Company's ownership interest in each of these joint ventures is 50.0 %.

The Company has ownership interests in Asia-Pacific joint ventures to develop markets for Sealy® branded products and ownership in a United Kingdom joint venture to manufacture, market, and distribute Sealy® and Stearns & Foster® branded products.

The Company's ownership interests in each of these joint ventures is 50.0 %.

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.

6 unchanged sentences

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) 2022 2021

3 unchanged sentences

$ 581.3 $ 463.9

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

Estimated sales returns are provided at the time of sale based on historical sales channel return rates.

Estimated future obligations related to these products are provided by a reduction of sales in the period in which the revenue is recognized.

The Company considers the impact of recoverable salvage value on sales returns by segment in determining its estimate of future sales returns.

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, 2020 to September 30, 2021:

(in millions)

Balance as of December 31, 2020 $ 44.9

Amounts accrued 105.2

Returns charged to accrual ( 101.8 )

Balance as of September 30, 2021 $ 48.3

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

As of September 30, 2021 and December 31, 2020, $ 32.8 million and $ 31.6 million of accrued sales returns are included as a component of accrued expenses and other current liabilities and $ 15.5 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, 2020 to September 30, 2021:

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

The Company had the following activity for its accrued warranty expense from December 31, 2021 to March 31, 2022:

(in millions)

2 unchanged sentences

Warranties charged to accrual ( 5.2 )

Balance as of September 30, 2021 $ 47.1

As of September 30, 2021 and December 31, 2020, $ 22.6 million and $ 20.3 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 24.5 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 .

Balance as of March 31, 2022 $ 44.3

As of March 31, 2022 and December 31, 2021, $ 19.9 million and $ 20.2 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 24.4 million and $ 23.7 million of accrued warranty expense is included in other non-current liabilities on the Company's accompanying Condensed Consolidated Balance Sheets, respectively.

(d) 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.

1 unchanged sentence

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 September 30, 2021, the Company's accounts receivable were substantially current.

As of March 31, 2022, 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.

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.

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, 2020 to September 30, 2021:

The Company had the following activity for its allowance for credit losses from December 31, 2021 to March 31, 2022:

(in millions)

2 unchanged sentences

Write-offs charged against the allowance ( 1.7 )

Balance as of September 30, 2021

Balance as of March 31, 2022

(e) Fair Value.

Financial instruments, although not recorded at fair value on a recurring basis, include cash and cash equivalents, accounts receivable, accounts payable and the Company's debt obligations.

The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of those instruments.

Borrowings under the 2019 Credit Agreement and the securitized debt are at variable interest rates and accordingly their carrying amounts approximate fair value.

The fair value of the following material financial instruments were based on observable inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of debt instruments.

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

(in millions) March 31, 2022 December 31, 2021

2029 Senior Notes $ 730.3 $ 816.9

2031 Senior Notes $ 686.7 $ 803.7

TEMPUR SEALY INTERNATIONAL, INC.

2 unchanged sentences

(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 months ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020

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

Wholesale $ 991.2 $ 108.0 $ 1,099.2 $ 887.1 $ 100.1 $ 987.2

Direct 128.8 130.3 259.1 107.6 37.5 145.1

Net sales $ 1,120.0 $ 238.3 $ 1,358.3 $ 994.7 $ 137.6 $ 1,132.3

North America International Consolidated North America International Consolidated

Bedding $ 1,047.1 $ 197.4 $ 1,244.5 $ 929.2 $ 106.0 $ 1,035.2

Other 72.9 40.9 113.8 65.5 31.6 97.1

Net sales $ 1,120.0 $ 238.3 $ 1,358.3 $ 994.7 $ 137.6 $ 1,132.3

North America International Consolidated North America International Consolidated

Geographical region

United States $ 1,018.8 $ — $ 1,018.8 $ 904.3 $ — $ 904.3

All Other 101.2 238.3 339.5 90.4 137.6 228.0

Net sales $ 1,120.0 $ 238.3 $ 1,358.3 $ 994.7 $ 137.6 $ 1,132.3

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

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

11 unchanged sentences

Net sales $ 931.4 $ 308.1 $ 1,239.5 $ 883.3 $ 160.5 $ 1,043.8

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

(3) Acquisitions

Acquisition of Dreams Topco Limited

On August 2, 2021, the Company completed the acquisition of Dreams Topco Limited and its direct and indirect subsidiaries ("Dreams"), for a cash purchase price of $ 476.7 million, which includes $ 49.7 million of cash acquired and a working capital adjustment payable of $ 6.6 million.

The transaction was funded using cash on hand and bank financing.

Dreams has developed a successful multi-channel sales strategy, with over 200 brick and mortar retail locations in the United Kingdom, an industry-leading online channel, as well as manufacturing and delivery assets.

The financial results of Dreams subsequent to the date of acquisition are included in the condensed consolidated financial statements of the Company.

The financial results of Dreams subsequent to the date of acquisition are included in the consolidated financial statements of the Company.

The Company accounted for this transaction as a business combination.

The preliminary allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of August 2, 2021.

The Company continues to obtain information to complete its valuation of intangible assets, as well as to determine the acquired assets and liabilities, including tax assets, liabilities and other attributes.

The Company continues to obtain information to determine the fair value of acquired assets and liabilities.

The components of the preliminary purchase price allocation are as follows:

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

(in millions)

19 unchanged sentences

Balance as of December 31, 2021 $ 611.5 $ 495.9 $ 1,107.4

Goodwill resulting from acquisitions — 331.3 331.3

Foreign currency translation and other 0.9 ( 11.5 ) ( 10.6 )

Balance as of September 30, 2021 $ 611.3 $ 470.8 $ 1,082.1

Balance as of March 31, 2022 $ 612.4 $ 484.4 $ 1,096.8

TEMPUR SEALY INTERNATIONAL, INC.

2 unchanged sentences

Debt for the Company consists of the following:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

2 unchanged sentences

Revolver 163.3 (1) — (2) October 16, 2024

2031 Senior Notes 800.0 3.875 % — N/A October 15, 2031

2029 Senior Notes 800.0 4.000 % — N/A April 15, 2029

2026 Senior Notes — N/A 600.0 5.500 % June 15, 2026

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

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

2031 Senior Notes 800.0 3.875 % 800.0 3.875 % October 15, 2031

2029 Senior Notes 800.0 4.000 % 800.0 4.000 % April 15, 2029

Securitized debt 153.4 (3) — N/A April 6, 2023

Finance lease obligations (4)

6 unchanged sentences

Total long-term debt, net $ 2,588.9 $ 2,278.5

(1) Interest at LIBOR plus applicable margin of 1.250 % as of September 30, 2021.

(1) Interest at LIBOR plus applicable margin of 1.250 % as of March 31, 2022.

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

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

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

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

Refer to Note 6, "Leases".

As of September 30, 2021, the Company was in compliance with all applicable debt covenants.

As of March 31, 2022, the Company was in compliance with all applicable debt covenants.

2019 Credit Agreement

4 unchanged sentences

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

As of September 30, 2021, total availability under the revolving credit facility was $ 724.9 million after a $ 0.1 million reduction for outstanding letters of credit.

On May 26, 2021, the Company entered into an additional amendment to the 2019 Credit Agreement.

The amendment provides for a $ 300.0 million delayed draw term loan.

The amendment provided for a $ 300.0 million delayed draw term loan.

On July 30, 2021 the Company drew down the full $ 300.0 million available under the delayed draw term loan to fund, in part, the Dreams acquisition.

1 unchanged sentence

On September 21, 2021, the Company entered into an additional amendment to the 2019 Credit Agreement to remove the limit to the amount of netted cash that may be deducted from indebtedness for purposes of calculating certain leverage ratios.

The Company had $ 163.3 million in outstanding borrowings under its revolving credit facility as of March 31, 2022.

Total availability under the revolving credit facility was $ 561.0 million after a $ 0.7 million reduction for outstanding letters of credit as of March 31, 2022.

Securitized Debt

3 unchanged sentences

While subject to a $ 200.0 million overall limit, the availability of revolving loans varies over the course of the year based on the seasonality of the Company's accounts receivable.

As of September 30, 2021, total availability under the Accounts Receivable Securitization was $ 169.1 million.

2031 Senior Notes

On September 24, 2021, Tempur Sealy International issued $ 800.0 million in aggregate principal amount of 3.875 % senior notes due 2031 (the "2031 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 2031 Senior Notes were issued pursuant to an indenture, dated as of September 24, 2021 (the "2031 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 2031 Senior Notes are general unsecured senior obligations of Tempur Sealy International and are guaranteed on a senior unsecured basis by the Guarantors.

The 2031 Senior Notes mature on October 15, 2031, and interest is payable semi-annually in arrears on each April 15 and October 15, beginning on April 15, 2022.

Tempur Sealy International has the option to redeem all or a portion of the 2031 Senior Notes at any time on or after October 15, 2026.

The initial redemption price is 101.938 % of the principal amount, plus accrued and unpaid interest, if any.

The redemption price will decline each year after 2026 until it becomes 100.0 % of the principal amount beginning on October 15, 2029.

In addition, Tempur Sealy International has the option at any time prior to October 15, 2026 to redeem some or all of the 2031 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 2031 Senior Notes prior to October 15, 2024, under certain circumstances with the net cash proceeds from certain equity offerings, at 103.875 % 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 2031 Senior Notes issued remains outstanding.

The 2031 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 2031 Senior Notes, $ 11.4 million of deferred financing costs were capitalized in the third quarter of 2021 and will be amortized as interest expense over the respective debt instrument period, 10 years, using the effective interest method.

2029 Senior Notes

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, 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, 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 102.00 % of the principal amount, plus accrued and unpaid interest, if any.

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 104.00 % of the principal amount plus accrued and unpaid interest, if any.

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;

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 June 15, 2021, the Company redeemed its $ 600.0 million issued and outstanding 2026 Senior Notes, in full, at 102.75 % of their principal amount, plus the accrued and unpaid interest.

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

As a result of the Company's redemption of the 2026 Senior Notes, the Company incurred $ 18.0 million of loss on extinguishment of debt which includes a prepayment premium of $ 16.5 million and the write-off of $ 1.5 million of unamortized deferred financing costs.

Additionally, the Company incurred $ 5.2 million of overlapping interest expense for the final 83 day period between the issuance of the 2029 Senior Notes and redemption of the 2026 Senior Notes.

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 unamortized deferred financing costs, associated with the redemption of the remaining amount outstanding of the 2023 Senior Notes.

Fair Value of Financial Instruments

Financial instruments, although not recorded at fair value on a recurring basis, include cash and cash equivalents, accounts receivable, accounts payable and the Company's debt obligations.

The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of those instruments.

Borrowings under the 2019 Credit Agreement and the securitized debt are at variable interest rates and accordingly their carrying amounts approximate fair value.

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

(in millions) September 30, 2021 December 31, 2020

2023 Senior Notes $ — $ 255.1

2026 Senior Notes — 625.4

2029 Senior Notes 825.4 —

2031 Senior Notes 803.0 —

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, 2021 and December 31, 2020:

(in millions) September 30, 2021 December 31, 2020

Operating lease assets Operating lease right-of-use assets $ 464.5 $ 304.3

Finance lease assets Property, plant and equipment, net 64.2 61.2

Total leased assets $ 528.7 $ 365.5

Operating lease obligations Accrued expenses and other current liabilities $ 98.2 $ 61.0

Finance lease obligations Current portion of long-term debt 13.6 11.4

Operating lease obligations Long-term operating lease obligations 413.5 275.1

Finance lease obligations Long-term debt, net 60.9 60.0

Total lease obligations $ 586.2 $ 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, 2021 and 2020:

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2021 2020 2021 2020

Operating lease expense:

Operating lease expense $ 27.6 $ 19.1 $ 68.4 $ 55.8

Short-term lease expense 3.2 2.6 9.9 8.3

Variable lease expense 7.3 6.0 20.0 15.7

Finance lease expense:

Amortization of right-of-use assets 3.3 2.5 9.2 6.9

Interest on lease obligations 1.1 1.2 3.3 3.5

Total lease expense $ 42.5 $ 31.4 $ 110.8 $ 90.2

The following table sets forth the scheduled maturities of lease obligations as of September 30, 2021:

(in millions) Operating Leases Finance Leases Total

Year Ended December 31,

2021 (excluding the nine months ended September 30, 2021)

$ 29.1 $ 4.6 $ 33.7

2022 112.9 16.6 129.5

2023 99.2 13.4 112.6

2024 82.2 10.7 92.9

2025 66.9 8.9 75.8

Thereafter 193.9 36.6 230.5

Total lease payments 584.2 90.8 675.0

Interest 72.5 16.3 88.8

Present value of lease obligations $ 511.7 $ 74.5 $ 586.2

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, 2021:

September 30, 2021

Weighted average remaining lease term (years):

Operating leases 6.44

Finance leases 7.15

Weighted average discount rate:

Operating leases 4.09 %

Finance leases 5.35 %

The following table provides supplemental information related to the Company's Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020:

Nine Months Ended

(in millions) September 30, 2021 September 30, 2020

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

Operating cash flows paid for operating leases (a)

$ 59.4 $ 51.0

Operating cash flows paid for finance leases $ 3.4 $ 3.6

Financing cash flows paid for finance leases $ 9.5 $ 7.5

Right-of-use assets obtained in exchange for new operating lease obligations $ 65.5 $ 95.1

Right-of-use assets obtained in exchange for new finance lease obligations $ 6.6 $ 16.5

(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.

As of March 31, 2022, the Company had fully drawn down the Accounts Receivable Securitization with borrowings of $ 153.4 million.

(6) Stockholders' Equity

(a) Treasury Stock.

The Board of Directors authorized increases to the Company's share repurchase authorization of $ 211.4 million and $ 325.3 million during February and April 2021, respectively.

The Company repurchased 4.1 million, under the program, for approximately $ 190.0 million during the three months ended September 30, 2021.

The Company did no t repurchase shares under the program during the three months ended September 30, 2020.

The Company repurchased 14.1 million and 2.6 million shares, under the program, for approximately $ 551.4 million and $ 187.5 million during the nine months ended September 30, 2021 and 2020, respectively.

These amounts may differ from the repurchases of common stock amounts in the Condensed Consolidated Statements of Cash Flows due to unsettled share repurchases at the end of a period.

As of September 30, 2021, the Company had approximately $ 186.9 million remaining under its share repurchase authorization.

On October 28, 2021, the Company announced that its Board of Directors authorized an increase to the share repurchase authorization bringing the total authorization to $ 600.0 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 and nine months ended September 30, 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 $ 0.3 million and $ 0.1 million in treasury stock acquired during the three months ended September 30, 2021 and 2020, respectively.

The Company acquired approximately $ 14.4 million and $ 12.1 million in treasury stock to satisfy tax withholding obligations during the nine months ended September 30, 2021 and 2020, respectively.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

As of March 31, 2022, the Company had approximately $ 951.5 million remaining under its share repurchase authorization.

The Company repurchased 12.2 million and 8.4 million shares, under the program, for approximately $ 449.2 million and $ 299.8 million during the three months ended March 31, 2022 and 2021, respectively.

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 $ 45.6 million and $ 13.3 million in treasury stock acquired during the three months ended March 31, 2022 and 2021, respectively.

AOCL consisted of the following:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2022 2021

8 unchanged sentences

Net change from period revaluations — —

Tax expense (2)

— — — ( 0.1 )

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

Net amount reclassified to earnings (1)

Tax benefit (2)

Total amount reclassified from accumulated other comprehensive loss, net of tax $ — $ — $ — $ —

Total other comprehensive loss — — — —

Balance at end of period $ ( 4.0 ) $ ( 6.9 )

(1) In 2022 and 2021, there were no tax impacts related to foreign currency translation adjustments and no amounts were reclassified to earnings.

(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)

(7) Other Items

1 unchanged sentence

Accrued expenses and other current liabilities consisted of the following:

(in millions) September 30, 2021 December 31, 2020

Wages and benefits $ 101.1 $ 102.5

(in millions) March 31, 2022 December 31, 2021

Operating lease obligations $ 105.1 $ 101.7

Wages and benefits 74.5 112.2

Unearned revenue 59.8 51.5

Advertising 55.7 72.3

2 unchanged sentences

$ 544.4 $ 558.5

The decrease in taxes was due to the release of certain uncertain income tax liabilities.

Refer to Note 11, "Income Taxes," for additional information.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

(8) Stock-Based Compensation

The Company's stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 included PRSUs, non-qualified stock options, RSUs and deferred stock units ("DSUs").

The Company's stock-based compensation expense for the three months ended March 31, 2022 and 2021 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) 2022 2021

6 unchanged sentences

During the first quarter of 2022, the Company granted PRSUs as a component of the long-term incentive plan ("2022 PRSUs").

The Company has recorded stock-based compensation expense related to the 2021 PRSUs during the three and nine months ended September 30, 2021, as it was probable that the Company would achieve the specified performance target for the performance period.

The Company has recorded stock-based compensation expense related to the 2022 PRSUs during the three months ended March 31, 2022, as it was probable that the Company would achieve the specified performance target for the performance period.

(9) Commitments and Contingencies

2 unchanged sentences

(10) Income Taxes

The Company's effective tax rate for the three months ended September 30, 2021 and 2020 was 24.9 % and 25.2 %, respectively.

The Company's effective tax rate for the nine months ended September 30, 2021 and 2020 was 24.3 % and 26.5 %.

The Company's effective tax rate for the three and nine months ended September 30, 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.

As discussed in Note 3, "Acquisitions," the goodwill and indefinite-lived intangible asset recognized as part of the Dreams acquisition is not deductible for income tax purposes.

The Company's effective tax rate for the three months ended March 31, 2022 and 2021 was 22.5 % and 23.6 %, respectively.

The Company's effective tax rate for the three months ended March 31, 2022 and 2021 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 benefit related to stock-based compensation and certain other permanent items.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

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.

During the quarter ended June 30, 2021, the Company and SKAT resolved in all material respects the calculation of interest payable to SKAT related to the settlement of the Danish Tax Matters for the years 2001 through 2011 (the "Settlement Years").

This resolution resulted in SKAT refunding substantially all of the excess tax deposits it was holding for the Settlement Years (all other aspects of the settlement of the Settlement Years had previously been agreed upon).

As such, the Danish Tax Matter for the Settlement Years is considered in all material respects, closed.

Consequently, the tax deposits previously with SKAT were offset against the uncertain income tax liability for the Settlement Years.

The uncertain income tax liabilities for the Danish Tax Matter for 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:

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

September 30, 2021 December 31, 2020

Period Balance Sheet Presentation DKK USD DKK USD

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

2012 to Current Period Other non-current liabilities 312.4 48.6 295.0 48.4

Total 312.4 $ 48.6 1,142.3 $ 187.5

The uncertain income tax liability for the Danish Tax Matter for the years 2012 through 2022 (the "2012 to Current Period") at March 31, 2022 and December 31, 2021 is approximately $ 49.3 million and $ 50.1 million, respectively, and is reflected in the Company's Condensed Consolidated Balance Sheet in other non-current liabilities.

The deferred tax asset for the U.S.

correlative benefit associated with the accrual of Danish tax for the 2012 to Current Period at September 30, 2021 and December 31, 2020 is approximately $ 12.7 million and $ 12.0 million, respectively.

During the three months ended September 30, 2021, the Company made a tax deposit with SKAT of DKK 97.2 million (approximately $ 15.1 million) applicable to a tax assessment by SKAT for the year 2015.

The Company is contesting this assessment (as well as assessments made by SKAT in 2020 for the years 2012 through 2014 for which the Company made deposits totaling approximately DKK 210.8 million (approximately $ 32.9 million) to SKAT).

The Company has other taxes on deposit with SKAT of approximately DKK 9.8 million (approximately $ 1.5 million).

At September 30, 2021 and December 31, 2020, respectively, the Company held cash on deposit with SKAT.

The deposit at September 30, 2021 and December 31, 2020 is included within the Company's Condensed Consolidated Balance Sheet as per below:

September 30, 2021 December 31, 2020

DKK USD DKK USD

Prepaid expenses and other current assets — $ — 847.3 $ 139.1

Other non-current assets 317.8 49.5 333.6 54.8

Total 317.8 $ 49.5 1,180.9 $ 193.9

correlative benefit associated with the accrual of Danish tax for the 2012 to Current Period at March 31, 2022 and December 31, 2021 is approximately $ 16.0 million and $ 15.5 million, respectively.

As of March 31, 2022, the Company made the following tax deposits with SKAT related to the Danish Tax Matter for the years 2012 through 2015, which are reflected in the Company's Condensed Consolidated Balance Sheet in other non-current assets:

(in millions) USD

VAT deposits remaining with SKAT $ 1.5

Deposit payments made through December 31, 2021 45.8

No deposit payments were made in the three month-period ended March 31, 2022.

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 or nine months ended September 30, 2021.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

There were no other significant changes in the Danish Tax Matter or other uncertain tax positions during the three months ended March 31, 2022.

(11) 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) 2022 2021

Income from continuing operations, net of income (loss) attributable to non-controlling interests $ 177.5 $ 119.0 $ 449.3 $ 202.8

Income from continuing operations, net of income attributable to non-controlling interests $ 130.7 $ 130.7

Denominator for basic earnings per common share-weighted average shares 182.6 203.7

3 unchanged sentences

Diluted earnings per common share for continuing operations $ 0.69 $ 0.62

The Company excluded an immaterial number of shares 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 for the three and nine months ended September 30, 2021.

The Company excluded an immaterial number of shares and 0.5 million shares for the three and nine months ended September 30, 2020, because their exercise price was greater than the average market price of Tempur Sealy International's common stock or they were otherwise anti-dilutive.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

The Company excluded 0.4 million shares 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 for the three months ended March 31, 2022.

The Company excluded an immaterial number of shares for the three months ended March 31, 2021.

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

3 unchanged sentences

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., 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).

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

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

On August 2, 2021, the Company acquired Dreams, which is included in the International segment.

4 unchanged sentences

The following table summarizes total assets by segment:

(in millions) September 30, 2021 December 31, 2020

(in millions) March 31, 2022 December 31, 2021

North America $ 4,572.7 $ 4,360.6

3 unchanged sentences

Total assets $ 4,321.9 $ 4,323.4

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

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

(in millions) September 30, 2021 December 31, 2020

(in millions) March 31, 2022 December 31, 2021

North America $ 491.7 $ 449.9

3 unchanged sentences

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

(in millions) September 30, 2021 December 31, 2020

(in millions) March 31, 2022 December 31, 2021

North America $ 327.0 $ 280.6

2 unchanged sentences

Total operating lease right-of-use assets $ 511.9 $ 480.6

The following table summarizes segment information for the three months ended September 30, 2021:

(in millions) North America International Corporate Eliminations Consolidated

Net sales $ 1,120.0 $ 238.3 $ — $ — $ 1,358.3

Inter-segment sales $ 0.3 $ 0.6 $ — $ ( 0.9 ) $ —

Inter-segment royalty expense (income) 2.1 ( 2.1 ) — — —

Gross profit 447.1 130.0 — — 577.1

Operating income (loss) 237.0 50.3 ( 37.5 ) — 249.8

Income (loss) from continuing operations before income taxes 235.7 50.0 ( 49.5 ) — 236.2

Depreciation and amortization (1)

$ 22.2 $ 4.9 $ 18.0 $ — $ 45.1

Capital expenditures 21.3 4.1 4.1 — 29.5

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

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

(in millions) North America International Corporate Eliminations Consolidated

Net sales $ 994.7 $ 137.6 $ — $ — $ 1,132.3

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

Inter-segment royalty expense (income) 3.3 ( 3.3 ) — — —

Gross profit 445.0 85.2 — — 530.2

Operating income (loss) 235.1 41.2 ( 96.1 ) — 180.2

Income (loss) from continuing operations before income taxes 233.7 40.3 ( 114.3 ) — 159.7

Depreciation and amortization (1)

$ 19.7 $ 3.5 $ 73.6 $ — $ 96.8

Capital expenditures 20.4 1.8 2.0 — 24.2

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

TEMPUR SEALY INTERNATIONAL, INC.

1 unchanged sentence

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

The following table summarizes segment information for the nine months ended September 30, 2021:

The following table summarizes segment information for the three months ended March 31, 2022:

(in millions) North America International Corporate Eliminations Consolidated

9 unchanged sentences

(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

11 unchanged sentences

(in millions)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

United States

4 unchanged sentences

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

(in millions) September 30, 2021 December 31, 2020

(in millions) March 31, 2022 December 31, 2021

United States $ 318.1 $ 278.3

United Kingdom 149.5 162.8

All Other 44.3 39.5

4 unchanged sentences

The following table summarizes net sales by geographic region:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2022 2021

3 unchanged sentences

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