As Profits Fall, Tempur-Pedic Cuts Dividend

October 16, 2008  by in UnCategorized   

By Home Furnishings Business in Bedding on October 2008 Tempur-Pedic International, Lexington, Ky., reported Thursday that its third-quarter profits fell to $24.1 million (from $38.8 million) as net sales dropped 14 percent to $252.8 million.

The company lowered its full-year expectations and has launched initiatives aimed as strengthening its “industry leading financial flexibility,” including repatriating foreign earnings and suspending its cash dividend, to reduce debt.

The company reduced total debt by $37.8 million during the quarter (to $518.8 million). It plans to repatriate approximately $140 million in foreign earnings, which involves a tax charge of approximately $13 million in the fourth quarter. It also will suspend its cash dividend and redirect those funds to reduce debt.

“During the third quarter we executed well,” said CEO Mark Sarvary. “The economic climate worsened and we responded quickly to improve earnings. We reduced our operating expenses and improved our balance sheet by substantially reducing debt. Having said that, we are facing the most challenging economic environment in memory, and we see no reason to assume the economic climate will recover in the short term. Therefore, we are taking actions now to further improve our financial flexibility and strengthen the business. I am confident that when the economic climate improves, this great company will be exceptionally well positioned.”

The company said it now believes fourth-quarter sales will fall below expectations, and it now forecasts that full-year sales will range from $930 million to $950 million, with earnings per share in the range of 90 cents to $1, which doesn’t take into account a potential tax charged tied to the repatriation of foreign earnings.