What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 193 added, 82 removed, 402 unchanged (41% of the section changed)

4 unchanged sentences

($ in millions, except per common share amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net sales $ 1,269.7 $ 1,211.0 $ 2,477.8 $ 2,450.5

7 unchanged sentences

Interest expense, net 33.6 23.7 66.4 44.6

Other expense (income), net 0.1 ( 1.3 )

Other (income) expense, net ( 0.2 ) 0.7 ( 0.1 ) ( 0.6 )

Total other expense, net 33.4 24.4 66.3 44.0

16 unchanged sentences

($ in millions)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net income before non-controlling interest $ 93.2 $ 91.2 $ 179.1 $ 222.1

11 unchanged sentences

($ in millions)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

ASSETS (unaudited)

33 unchanged sentences

($ in millions)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Tempur Sealy International, Inc.

Stockholders' Equity (Deficit)

Stockholders' Equity

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

Equity (Deficit)

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

Balance, December 31, 2022

Balance, March 31, 2023

$ 8.9 283.8 $ 2.8 111.7 $ ( 3,386.3 ) $ 525.7 $ 3,054.5 $ ( 162.0 ) $ 34.7

6 unchanged sentences

( 19.4 ) ( 19.4 )

Issuances of PRSUs, RSUs, and DSUs

Issuances of PRSUs and RSUs

( 0.1 ) 2.4 ( 2.4 ) —

Treasury stock repurchased

0.1 ( 5.0 ) ( 5.0 )

Treasury stock repurchased - PRSU/RSU releases — ( 0.2 ) ( 0.2 )

Amortization of unearned stock-based compensation

Balance, June 30, 2023

$ 9.4 283.8 $ 2.8 111.6 $ ( 3,384.1 ) $ 536.7 $ 3,127.5 $ ( 144.8 ) $ 138.1

Three Months Ended June 30, 2022

Tempur Sealy International, Inc.

Stockholders' Deficit

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

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

Balance, March 31, 2022

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

Three Months Ended March 31, 2022

Net income 90.6 90.6

Net income attributable to non-controlling interest 0.6 —

Dividend paid to non-controlling interest in subsidiary ( 1.0 ) —

Foreign currency adjustments, net of tax ( 57.8 ) ( 57.8 )

Exercise of stock options — 0.2 ( 0.1 ) 0.1

Dividends declared on common stock ($ 0.10 per share)

( 17.9 ) ( 17.9 )

Issuances of PRSUs and RSUs

( 0.1 ) 2.9 ( 2.9 ) —

Treasury stock repurchased

4.4 ( 117.0 ) ( 117.0 )

Treasury stock repurchased - PRSU/RSU releases — ( 0.2 ) ( 0.2 )

Amortization of unearned stock-based compensation

Balance, June 30, 2022

$ 9.0 283.8 $ 2.8 111.4 $ ( 3,381.3 ) $ 573.6 $ 2,789.5 $ ( 174.5 ) $ ( 189.9 )

See accompanying Notes to Condensed Consolidated Financial Statements .

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)

($ in millions)

Six Months Ended June 30, 2023

Tempur Sealy International, Inc.

Stockholders' (Deficit) Equity

2 unchanged sentences

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

Balance, December 31, 2021

Balance as of December 31, 2022

$ 9.8 283.8 $ 2.8 113.4 $ ( 3,434.7 ) $ 598.2 $ 2,988.5 $ ( 176.9 ) $ ( 22.1 )

Net income 177.7 177.7

Net income attributable to non-controlling interest 0.2 —

Net income attributable to non-controlling interests 1.4 —

Dividend paid to non-controlling interest in subsidiary ( 1.8 ) —

Foreign currency adjustments, net of tax 32.1 32.1

2 unchanged sentences

( 38.7 ) ( 38.7 )

Issuances of PRSUs, RSUs, and DSUs

Issuances of PRSUs and RSUs

( 2.7 ) 85.0 ( 85.0 ) —

3 unchanged sentences

Amortization of unearned stock-based compensation

Balance, March 31, 2022

Balance, June 30, 2023

$ 9.4 283.8 $ 2.8 111.6 $ ( 3,384.1 ) $ 536.7 $ 3,127.5 $ ( 144.8 ) $ 138.1

Six Months Ended June 30, 2022

Tempur Sealy International, Inc.

Stockholders' Equity (Deficit)

Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit)

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

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 221.3 221.3

Net income attributable to non-controlling interests 0.8 —

Dividend paid to non-controlling interest in subsidiary ( 1.0 ) —

Foreign currency adjustments, net of tax ( 75.3 ) ( 75.3 )

Exercise of stock options — 0.4 ( 0.2 ) 0.2

Dividends declared on common stock ($ 0.20 per share)

( 36.7 ) ( 36.7 )

Issuances of PRSUs and RSUs

( 2.6 ) 75.0 ( 75.0 ) —

Treasury stock repurchased

16.6 ( 566.2 ) ( 566.2 )

Treasury stock repurchased - PRSU/RSU releases 1.0 ( 45.8 ) ( 45.8 )

Amortization of unearned stock-based compensation

Balance, June 30, 2022

$ 9.0 283.8 $ 2.8 111.4 $ ( 3,381.3 ) $ 573.6 $ 2,789.5 $ ( 174.5 ) $ ( 189.9 )

See accompanying Notes to Condensed Consolidated Financial Statements .

3 unchanged sentences

($ in millions)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

54 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) Inventories .

(b) Adoption of New Accounting Standards

Reference Rate Reform.

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides guidance on the accounting impacts due to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR").

The FASB continued to refine its guidance with the January 2021 ASU 2021-01 issued update, "Reference Rate Reform (Topic 848):

Scope" and the December 2022 ASU 2022-06 issued update, "Reference Rate Reform ("Topic 848"):

Deferral of the Sunset Date of Topic 848", of which all were effective upon issuance.

These updates provide entities with certain optional relief expedients and exceptions for applying GAAP to contract modifications, hedge accounting, and other transactions affected by reference rate reform if certain criteria are met.

An entity that makes this election would present and account for a modified contract as a continuation of the existing contract.

Entities are afforded these relief options until December 31, 2024, after which time they will no longer be permitted.

In May 2023, the Company amended its 2019 Credit Agreement to transition the applicable reference rate from LIBOR to SOFR.

See "Note 4 - Debt" for additional details.

The results of this guidance did not have a material impact on the condensed consolidated financial statements.

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

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

March 31, December 31,

June 30, December 31,

(in millions) 2023 2022

3 unchanged sentences

$ 529.3 $ 555.0

(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.

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, 2022 to March 31, 2023:

The Company had the following activity for its accrued warranty expense from December 31, 2022 to June 30, 2023:

(in millions)

2 unchanged sentences

Warranties charged to accrual ( 9.0 )

Balance as of March 31, 2023 $ 42.9

As of March 31, 2023 and December 31, 2022, $ 18.8 million and $ 17.8 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 24.1 million and $ 23.8 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 .

Balance as of June 30, 2023 $ 44.0

As of June 30, 2023 and December 31, 2022, $ 19.9 million and $ 17.8 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 24.1 million and $ 23.8 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.

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.

As of March 31, 2023, the Company's accounts receivable were substantially current.

As of June 30, 2023, 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.

1 unchanged sentence

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, 2022 to March 31, 2023:

The Company had the following activity for its allowance for credit losses from December 31, 2022 to June 30, 2023:

(in millions)

2 unchanged sentences

Write-offs charged against the allowance ( 1.2 )

Balance as of March 31, 2023

(e) Fair Value.

Balance as of June 30, 2023

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

(f) 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.

3 unchanged sentences

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

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

2029 Senior Notes $ 693.6 $ 672.7

2031 Senior Notes $ 651.0 $ 627.1

(f) Definitive Agreement with Mattress Firm.

(g) Definitive Agreement with Mattress Firm.

On May 9, 2023, Tempur Sealy International and Mattress Firm entered into a definitive agreement and plan of merger (the "Merger Agreement") for a proposed business acquisition in which Tempur Sealy International, through a wholly-owned subsidiary, will acquire Mattress Firm in a transaction valued at approximately $ 4.0 billion.

The transaction is expected to be funded by approximately $ 2.7 billion of cash consideration and the issuance of

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

34.2 million shares of common stock resulting in a total stock consideration value of $ 1.3 billion based on a closing share price of $ 37.62 as of May 8, 2023.

The transaction is expected to be funded by approximately $ 2.7 billion of cash consideration and the issuance of 34.2 million shares of common stock resulting in a total stock consideration value of $ 1.3 billion based on a closing share price of $ 37.62 as of May 8, 2023.

The Company expects the transaction to close in the second half of 2024, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals.

1 unchanged sentence

(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 March 31, 2023 and 2022:

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

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

11 unchanged sentences

Net sales $ 1,016.8 $ 252.9 $ 1,269.7 $ 964.7 $ 246.3 $ 1,211.0

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

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

Wholesale $ 1,700.3 $ 201.5 $ 1,901.8 $ 1,659.1 $ 204.1 $ 1,863.2

Direct 236.1 339.9 576.0 237.0 350.3 587.3

Net sales $ 1,936.4 $ 541.4 $ 2,477.8 $ 1,896.1 $ 554.4 $ 2,450.5

North America International Consolidated North America International Consolidated

Bedding $ 1,809.9 $ 444.4 $ 2,254.3 $ 1,774.0 $ 461.6 $ 2,235.6

Other 126.5 97.0 223.5 122.1 92.8 214.9

Net sales $ 1,936.4 $ 541.4 $ 2,477.8 $ 1,896.1 $ 554.4 $ 2,450.5

North America International Consolidated North America International Consolidated

Geographical region

United States $ 1,801.1 $ — $ 1,801.1 $ 1,754.6 $ — $ 1,754.6

All Other 135.3 541.4 676.7 141.5 554.4 695.9

Net sales $ 1,936.4 $ 541.4 $ 2,477.8 $ 1,896.1 $ 554.4 $ 2,450.5

The following summarizes changes to the Company's goodwill, by segment:

2 unchanged sentences

Foreign currency translation and other 2.3 16.3 18.6

Balance as of March 31, 2023 $ 608.0 $ 461.8 $ 1,069.8

Balance as of June 30, 2023 $ 609.6 $ 471.3 $ 1,080.9

TEMPUR SEALY INTERNATIONAL, INC.

2 unchanged sentences

Debt for the Company consists of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

13 unchanged sentences

Total long-term debt, net $ 2,707.5 $ 2,739.9

(1) Interest at LIBOR plus applicable margin of 1.375 % as of March 31, 2023.

(1) Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.375 % as of June 30, 2023.

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

2 unchanged sentences

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

As of March 31, 2023, the Company was in compliance with all applicable debt covenants.

As of June 30, 2023, the Company was in compliance with all applicable debt covenants.

2019 Credit Agreement

1 unchanged sentence

The 2019 Credit Agreement, as amended, provides for a $ 725.0 million revolving credit facility and a $ 725.0 million term loan facility.

Borrowings under the 2019 Credit Agreement will generally bear interest at either Base Rate or LIBOR plus the applicable margin.

On May 19, 2023, the Company entered into an amendment to the 2019 Credit Agreement that replaced LIBOR with SOFR as the reference rate for U.S.

dollar-denominated loans.

Borrowings under the amended Credit Agreement will bear interest at a base rate or a rate equal to SOFR plus an applicable margin.

For the revolving credit facility and the term loan facility such applicable margins are determined by a pricing grid based on the consolidated total net leverage ratio of the Company.

The Company had $ 350.0 million in outstanding borrowings under its revolving credit facility as of March 31, 2023.

Total remaining availability under the revolving credit facility was $ 374.4 million after a $ 0.6 million reduction for outstanding letters of credit as of March 31, 2023.

The Company had $ 282.0 million in outstanding borrowings under its revolving credit facility as of June 30, 2023.

Total remaining availability under the revolving credit facility was $ 442.4 million after a $ 0.6 million reduction for outstanding letters of credit as of June 30, 2023.

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 March 31, 2023, total availability under the Accounts Receivable Securitization was $ 1.0 million.

On April 6, 2023, the Company and certain of its subsidiaries entered into a second amendment to the Accounts Receivable Securitization.

1 unchanged sentence

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 June 30, 2023, the Company had completely drawn on the outstanding availability of the Accounts Receivable Securitization with borrowings of $ 175.3 million.

TEMPUR SEALY INTERNATIONAL, INC.

3 unchanged sentences

(a) Treasury Stock.

As of March 31, 2023, the Company had approximately $ 774.5 million remaining under its share repurchase authorization.

The Company repurchased 0.1 million and 12.2 million shares, under the program, for approximately $ 5.0 million and $ 449.2 million during the three months ended March 31, 2023 and 2022, respectively.

In addition, the Company acquired 0.9 million and 1.0 million 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, 2023 and 2022, 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 $ 30.7 million and $ 45.6 million in treasury stock acquired during the three months ended March 31, 2023 and 2022, respectively.

As of June 30, 2023, the Company had approximately $ 774.5 million remaining under its share repurchase authorization.

The Company did not repurchase shares, under the program, during the three months ended June 30, 2023.

The Company repurchased 4.4 million shares, under the program, for approximately $ 117.0 million during the three months ended June 30, 2022.

The Company repurchased 0.1 million and 16.6 million shares, under the program, for approximately $ 5.0 million and $ 566.2 million during the six months ended June 30, 2023 and 2022, respectively.

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 six months ended June 30, 2023 and 2022, 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 $ 0.3 million and $ 0.2 million in treasury stock acquired during the three months ended June 30, 2023 and 2022, respectively.

The Company acquired approximately $ 31.0 million and $ 45.8 million in treasury stock during the six months ended June 30, 2023 and 2022, respectively.

AOCL consisted of the following:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2023 2022 2023 2022

13 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Wages and benefits $ 91.3 $ 78.0

Unearned revenue 58.8 48.5

Taxes 61.9 52.1

Advertising 57.7 64.9

Taxes 55.7 52.1

Other 189.3 189.2

4 unchanged sentences

(7) Stock-Based Compensation

The Company's stock-based compensation expense for the three months ended March 31, 2023 and 2022 included PRSUs, non-qualified stock options, RSUs and deferred stock units ("DSUs").

The Company's stock-based compensation expense for the three and six months ended June 30, 2023 and 2022 included PRSUs, non-qualified stock options and RSUs.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2023 2022 2023 2022

1 unchanged sentence

Option expense 0.5 — 1.1 —

RSU/DSU expense 5.1 5.5

RSU expense 5.1 5.1 10.2 10.7

Total stock-based compensation expense $ 13.4 $ 13.0 $ 24.2 $ 26.9

2 unchanged sentences

During the first quarter of 2023, the Company granted PRSUs as a component of the long-term incentive plan ("2023 PRSUs").

The Company has recorded stock-based compensation expense related to the 2023 PRSUs during the three months ended March 31, 2023, 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 2023 PRSUs during the three and six months ended June 30, 2023, as it was probable that the Company would achieve the specified performance targets for the performance period.

(8) Commitments and Contingencies

2 unchanged sentences

(9) Income Taxes

The Company's effective tax rate for the three months ended March 31, 2023 and 2022 was 22.2 % and 22.5 %, respectively.

The Company's effective tax rate for the three months ended March 31, 2023 and 2022 differed from the U.S.

The Company's effective tax rates for the three months ended June 30, 2023 and 2022 were 25.7 % and 23.7 %, respectively.

The Company's effective tax rates for the six months ended June 30, 2023 and 2022 were 24.1 % and 23.0 %, respectively.

The Company's effective tax rates for the three and six months ended June 30, 2023 and 2022 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.

6 unchanged sentences

Internal Revenue Service ("IRS") to directly negotiate a mutually acceptable agreement on the Danish Tax Matter.

During the quarter ended December 31, 2022, pursuant to the negotiations described above with respect to the APA Program, SKAT and the IRS preliminarily concluded on a mutually acceptable framework ("Preliminary Framework") to resolve the Danish Tax Matter for the 2012 to 2022 tax years.

During December 2022, pursuant to the negotiations described above with respect to the APA Program, SKAT and the IRS preliminarily concluded on a mutually acceptable framework ("Preliminary Framework") to resolve the Danish Tax Matter for the 2012 to 2022 tax years.

If ultimately agreed upon by the two tax authorities, the terms of the Preliminary Framework would extend to the years 2023 and 2024, as well.

1 unchanged sentence

correlative benefit for such periods.

During the quarter ended March 31, 2023, the Company began discussions individually with both SKAT and the IRS regarding the implementation of the Preliminary Framework.

Subsequent to December 31, 2022, the Company began discussions individually with both SKAT and the IRS regarding the implementation of the Preliminary Framework.

In this regard, it is expected that the Preliminary Framework will be finalized into a definitive agreement in 2023.

4 unchanged sentences

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

The uncertain income tax liability for the Danish Tax Matter for the years 2012 through 2022 (the "2012 to Current Period") at March 31, 2023 and December 31, 2022 is approximately $ 38.3 million and $ 37.8 million, respectively, and is reflected in the Company's Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities.

The uncertain income tax liability for the Danish Tax Matter for the years 2012 through 2022 was approximately $ 38.5 million and $ 37.8 million at June 30, 2023 and December 31, 2022, respectively, and is reflected in the Company's Condensed Consolidated Balance Sheet in accrued expenses and other 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 March 31, 2023 and December 31, 2022 is approximately $ 21.6 million for both periods.

As of March 31, 2023, the Company had made the following tax deposits related to assessments received by SKAT for the Danish Tax Matter for the years 2012 through 2016, which are reflected in the Company's Condensed Consolidated Balance Sheet in other current assets:

correlative benefit associated with the accrual of Danish Tax Matter for the 2012 to 2022 tax years was approximately $ 21.6 million for both periods ended June 30, 2023 and December 31, 2022.

As of June 30, 2023, the Company had made the following tax deposits related to assessments received by SKAT for the Danish Tax Matter for the years 2012 through 2016, which are reflected in the Company's Condensed Consolidated Balance Sheet in other current assets:

(in millions) USD

1 unchanged sentence

Deposit payments 58.3

If the Company is not successful in concluding the Preliminary Framework for 2012 to Current Period or if there is a change in facts and circumstances as it relates to the Danish Tax Matter, 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, 2023.

If the Company is not successful in concluding the Preliminary Framework for the 2012 to 2022 tax years or if there is a change in facts and circumstances as it relates to the Danish Tax Matter, 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 six months ended June 30, 2023.

(10) 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

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except per common share amounts) 2023 2022 2023 2022

6 unchanged sentences

Diluted earnings per common share $ 0.52 $ 0.51 $ 1.01 $ 1.20

The Company excluded 0.6 million and 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, 2023 and 2022, respectively.

The Company excluded 0.6 million and 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 and six months ended June 30, 2023 and 2022, respectively.

Holders of non-vested stock-based compensation awards do not have voting rights but do participate in dividend equivalents distributed upon the award vesting.

12 unchanged sentences

The following table summarizes total assets by segment:

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

North America $ 5,166.5 $ 5,161.7

4 unchanged sentences

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

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

North America $ 727.2 $ 672.1

3 unchanged sentences

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

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

North America $ 408.1 $ 349.0

2 unchanged sentences

Total operating lease right-of-use assets $ 568.0 $ 506.8

The following table summarizes segment information for the three months ended March 31, 2023:

The following table summarizes segment information for the three months ended June 30, 2023:

(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 three months ended March 31, 2022:

The following table summarizes segment information for the three months ended June 30, 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 six months ended June 30, 2023:

(in millions) North America International Corporate Eliminations Consolidated

Net sales $ 1,936.4 $ 541.4 $ — $ — $ 2,477.8

Inter-segment sales $ 0.6 $ 0.4 $ — $ ( 1.0 ) $ —

Inter-segment royalty expense (income) 16.7 ( 16.7 ) — — —

Gross profit 747.4 294.8 — — 1,042.2

Operating income (loss) 310.1 78.1 ( 86.1 ) — 302.1

Income (loss) from continuing operations before income taxes 306.6 75.7 ( 146.5 ) — 235.8

Depreciation and amortization (1)

$ 49.8 $ 12.9 $ 27.9 $ — $ 90.6

Capital expenditures 98.1 11.5 3.1 — 112.7

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

The following table summarizes segment information for the six months ended June 30, 2022:

(in millions) North America International Corporate Eliminations Consolidated

Net sales $ 1,896.1 $ 554.4 $ — $ — $ 2,450.5

Inter-segment sales $ 0.9 $ 0.7 $ — $ ( 1.6 ) $ —

Inter-segment royalty expense (income) 9.4 ( 9.4 ) — — —

Gross profit 718.2 301.1 — — 1,019.3

Operating income (loss) 301.5 102.6 ( 71.6 ) — 332.5

Income (loss) from continuing operations before income taxes 300.6 101.1 ( 113.2 ) — 288.5

Depreciation and amortization (1)

$ 46.2 $ 11.9 $ 30.1 $ — $ 88.2

Capital expenditures 112.9 14.6 2.7 — 130.2

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

TEMPUR SEALY INTERNATIONAL, INC.

AND SUBSIDIARIES

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

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

(in millions)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

United States

4 unchanged sentences

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

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

United States $ 398.7 $ 339.6

2 unchanged sentences

Total operating lease right-of-use assets $ 568.0 $ 506.8

The following table summarizes net sales by geographic region:

Three Months Ended

(in millions) 2023 2022

United States $ 854.9 $ 864.3

All other 353.2 375.2

Total net sales $ 1,208.1 $ 1,239.5

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