LEXINGTON, Ky., Feb. 4, 2016 /PRNewswire/ -- Tempur Sealy International, Inc. (NYSE: TPX) today announced financial results for the fourth quarter and year ended December 31, 2015. The Company also announced a $200 million share repurchase program and issued financial guidance for the full year 2016.

FOURTH QUARTER 2015 FINANCIAL SUMMARY


    --  Total net sales increased 2.9% to $767.3 million from $745.5 million in
        the fourth quarter of 2014. On a constant currency basis((1)), total net
        sales increased 6.7%, with growth in both the North America and
        International business segments.
    --  Gross margin under U.S. generally accepted accounting principles
        ("GAAP") was 40.8% as compared to 39.5% in the fourth quarter of 2014.
        Adjusted gross margin((1)) was 41.1% as compared to 40.3% in the fourth
        quarter of 2014.
    --  Earnings before interest, tax, depreciation and amortization
        ("EBITDA")((1)) increased 2.8% to $115.1 million as compared to $112.0
        million for the fourth quarter of 2014. Adjusted EBITDA((1)) increased
        14.4% to $132.7 million as compared to $116.0 million for the fourth
        quarter of 2014.
    --  GAAP operating income was $91.8 million as compared to $76.5 million in
        the fourth quarter of 2014. Operating income was negatively impacted by
        $10.7 million of restructuring costs, $3.5 million of additional costs
        related to executive management transition and related retention
        compensation, $3.9 million of integration costs and $1.3 million of
        pension settlement costs. Operating income in the fourth quarter of 2014
        included $19.9 million of integration and financing costs. Adjusted
        operating income((1)) was $111.2 million, or 14.5% of net sales, as
        compared to $96.4 million, or 12.9% of net sales, in the fourth quarter
        of 2014.
    --  GAAP net loss was $(11.3) million as compared to net income of $46.6
        million in the fourth quarter of 2014. As a result of certain events
        that occurred during the fourth quarter of 2015, the Company recorded a
        change in estimate of its uncertain tax position regarding the
        previously disclosed Danish tax matter of approximately $60.7 million.
        Adjusted net income((1)) increased 17.9% to $62.7 million as compared to
        $53.2 million in the fourth quarter of 2014.
    --  GAAP (Loss) earnings per diluted share ("EPS") was $(0.18) as compared
        to $0.75 in the fourth quarter of 2014. Adjusted EPS((1)) increased
        15.1% to $0.99 as compared to adjusted EPS of $0.86 in the fourth
        quarter of 2014. On a constant currency basis, adjusted EPS increased
        25.6%.
    --  The Company ended the fourth quarter of 2015 with consolidated funded
        debt less qualified cash((1)) of $1.4 billion. In addition, leverage
        based on the ratio of consolidated funded debt less qualified cash to
        Adjusted EBITDA((1)) was 2.98 times, with no significant off balance
        sheet liability.

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, "Overall the worldwide markets for our products feel solid and the Team has made progress towards our goals. Fourth quarter adjusted EBITDA growth of 14% in a relatively low octane economic environment is more evidence of the positive attributes of the bedding industry in general and the strength of Company's business model specifically."

Key Highlights



                                                               Three Months Ended December 31,                                Year Ended December 31,
                                                               -------------------------------                                -----------------------

    (in millions, except percentages and per common
     share amounts)                                  2015              2014              % Change            % Change   2015                     2014        % Change     % Change
                                                                                                           Constant                                                   Constant
                                                                                                         Currency(1)                                                    Currency(1)
                                                                                                         ----------                                                     ----------

    Net sales                                             $767.3                                  $745.5                2.9%                      6.7%                      $3,151.2        $2,989.8        5.4%  9.4%

    Adjusted operating income(1)                    111.2                        96.4                            15.4%       22.7%                     373.8                    320.1 16.8%          23.8%

    Adjusted EBITDA(1)                              132.7                       116.0                            14.4%       21.3%                     455.8                    404.6 12.7%          19.8%

    Adjusted net income(1)                           62.7                        53.2                            17.9%       27.7%                     199.9                    164.6 21.4%          32.9%

    Adjusted EPS(1)                                        $0.99                                   $0.86               15.1%                     25.6%                         $3.19           $2.65       20.4% 31.7%

FULL YEAR 2015 FINANCIAL SUMMARY


    --  Total net sales increased 5.4% to $3,151.2 million from $2,989.8 million
        in 2014. On a constant currency basis((1)), total net sales increased
        9.4%, with growth in both the North America and International business
        segments.
    --  GAAP gross margin was 39.6% as compared to 38.5% in 2014. Adjusted gross
        margin((1)) was 40.1% as compared to 38.9% in 2014.
    --  EBITDA((1)) increased 9.4% to $388.9 million as compared to $355.4
        million in 2014. Adjusted EBITDA((1)) increased 12.7% to $455.8 million
        as compared to $404.6 million in 2014.
    --  GAAP operating income was $309.1 million as compared to $276.3 million
        in 2014. Adjusted operating income((1)) was $373.8 million, or 11.9% of
        net sales, as compared to $320.1 million, or 10.7% of net sales in 2014.
    --  GAAP EPS was $1.17 as compared to $1.75 in 2014. Adjusted EPS((1))
        increased 20.4% to $3.19 as compared to adjusted EPS of $2.65 in 2014.
        On a constant currency basis, adjusted EPS increased 31.7%.
    --  Operating cash flow for the full year 2015 was $234.2 million.

Business Segment Highlights

The Company's business segments include North America and International. Corporate operating expenses are not included in either of the business segments and are presented separately as a reconciling item to consolidated results.

North America net sales increased 3.8% to $611.6 million from $589.1 million in the fourth quarter of 2014. On a constant currency basis, North America net sales increased 5.3%. GAAP gross margin was 38.7% as compared to 35.6% in the fourth quarter of 2014. GAAP operating margin was 15.5% as compared to 11.3% in the fourth quarter of 2014.

North America adjusted operating margin((1)) was 16.8% as compared to 13.6% in the fourth quarter of 2014. The improvement in North America adjusted operating margin during the fourth quarter of 2015 was the result of an improvement in adjusted gross margin((1)) of 230 basis points as well as increased selling and marketing leverage as compared to the same period in 2014.

International net sales decreased 0.4% to $155.7 million from $156.4 million in the fourth quarter of 2014. On a constant currency basis, International net sales increased 12.1%. GAAP gross margin was 49.3% as compared to 53.8% in the fourth quarter of 2014. GAAP operating margin was 17.3% as compared to 22.3% in the fourth quarter 2014.

International adjusted operating margin((1) )was 20.0% as compared to 24.0% in the fourth quarter of 2014. The decline in International adjusted operating margin was primarily the result of a decline in adjusted gross margin((1)) of 410 basis points, driven by incremental costs incurred in connection with distributing Sealy products in international markets.

Corporate GAAP operating expense increased 18.7% to $29.8 million from $25.1 million in the fourth quarter of 2014. The increase in operating expense was primarily driven by $3.2 million of restructuring costs as well as $2.3 million of costs related to executive management transition and related retention compensation.

Corporate adjusted operating expense((1)) increased 6.0% to $22.9 million from $21.6 million in the fourth quarter of 2014. The increase in Corporate adjusted operating expense was primarily related to an increase in legal and professional fees.

Income Tax Adjustment

As a result of certain events that occurred during the fourth quarter of 2015, the Company recorded a change in estimate of its uncertain tax position regarding the previously disclosed Danish tax matter of approximately $60.7 million. The Company will continue discussions with both U.S. and Danish tax authorities in an attempt to resolve this matter.

Thompson further commented, "The Danish Tax issue has been disclosed for seven years and, although painful, we believe it is the right thing to do to take actions to put the issue behind us."

Balance Sheet

As of December 31, 2015, the Company reported $153.9 million in cash and cash equivalents and $1.5 billion in total debt, as compared to $62.5 million in cash and cash equivalents and $1.6 billion in total debt as of December 31, 2014. During 2015, the Company reduced total debt by $122.7 million and, through growth of adjusted EBITDA, reduced leverage to 3.0 times in 2015 as compared to 3.9 times in 2014.

Share Repurchase Program and Target Leverage Update

During the fourth quarter of 2015, the Company completed an evaluation of its capital allocation strategy and established a target leverage of 3.5 times net debt to EBITDA. The Company announced that the Board of Directors has authorized a new share repurchase program of up to $200 million. Stock repurchases under this program may be made through open market transactions, negotiated purchases or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, financing and regulatory requirements and other market conditions. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice. Repurchases may be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under federal securities laws.

Thompson continued, "The Company's business model, which generates both high and stable free cash flow, leans itself to a continuing program of stock repurchase. We see the current authorization as simply the initial step of implementing our long term strategy to maintain both a healthy and efficient capital structure. At the current stock price, it appears to be a compelling use of excess capital."

Financial Guidance

For the full year 2016, the Company currently expects Adjusted EBITDA to range from $500 million to $550 million, which includes approximately $10 million of unfavorable foreign currency impact based on forecasted exchange rates.

The Company noted its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company's control.

Conference Call Information

Tempur Sealy International, Inc. will host a live conference call to discuss financial results today, February 4, 2016 at 8:00 a.m. Eastern Time. The dial-in number for the conference call is 800-850-2903. The dial-in number for international callers is 224-357-2399. The call is also being webcast and can be accessed on the investor relations section of the Company's website, http://www.tempursealy.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.

Non-GAAP Financial Measures and Constant Currency Information.

For additional information regarding adjusted net income, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, EBITDA, adjusted EBITDA, EBITDA calculated in accordance with the Company's senior secured credit facility, consolidated funded debt, and consolidated funded debt less qualified cash (all of which are non-GAAP financial measures), please refer to the reconciliations and other information included in the attached schedules. For information on the methodology used to present information on a constant currency basis, please refer to "Constant Currency Information" included in the attached schedules.

Forward-looking Statements

This press release contains "forward-looking statements," within the meaning of the federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "estimates," "expects," "guidance," "anticipates," "projects," "plans," "proposed," "intends," "believes," and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's expectations regarding adjusted EBITDA for 2016 and performance generally for 2016 and subsequent years, expectations regarding a resolution of the Danish tax issue and expectations regarding the share repurchase program and the capital allocation strategy. All forward looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct.

Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from those expressed as forward-looking statements. These risk factors include risks associated with the Company's capital structure and debt level; the ability to successfully integrate Sealy Corporation into the Company's operations and realize cost and revenue synergies and other benefits from the transaction; whether the Company will realize the anticipated benefits from its asset dispositions in 2014 and the acquisition of brand rights in certain international markets in 2014; general economic, financial and industry conditions, particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; changes in product and channel mix and the impact on the Company's gross margin; changes in interest rates; the impact of the macroeconomic environment in both the U.S. and internationally on the Company's business segments; uncertainties arising from global events; the effects of changes in foreign exchange rates on the Company's reported earnings; consumer acceptance of the Company's products; industry competition; the efficiency and effectiveness of the Company's advertising campaigns and other marketing programs; the Company's ability to increase sales productivity within existing retail accounts and to further penetrate the Company's retail channel, including the timing of opening or expanding within large retail accounts and the timing and success of product launches; the effects of consolidation of retailers on revenues and costs; the Company's ability to expand brand awareness, distribution and new products; the Company's ability to continuously improve and expand its product line, maintain efficient, timely and cost-effective production and delivery of its products, and manage its growth; the effects of strategic investments on the Company's operations; changes in foreign tax rates and changes in tax laws generally, including the ability to utilize tax loss carry forwards; the outcome of various pending tax audits or other tax, regulatory or investigation proceedings; changing commodity costs; the effect of future legislative or regulatory changes; and disruptions to the implementation of the Company's strategic priorities and business plan caused by abrupt changes in the Company's senior management team and Board of Directors.

There are a number of risks, uncertainties and other important factors, many of which are beyond the Company's control, that could cause its actual results to differ materially from those expressed as forward-looking statements in this press release, including the risk factors discussed under the heading "Risk Factors" under ITEM 1A of Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2014 and under ITEM 1A of Part 2 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015. There may be other factors that may cause the Company's actual results to differ materially from the forward-looking statements. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

About Tempur Sealy International, Inc.

Tempur Sealy International, Inc. (NYSE: TPX) is the world's largest bedding provider. Tempur Sealy International, Inc. develops, manufactures and markets mattresses, foundations, pillows and other products. The Company's brand portfolio includes many highly recognized brands, including TEMPUR®, Tempur-Pedic®, Sealy®, Sealy Posturepedic® and Stearns & Foster®. World headquarters for Tempur Sealy International, Inc. is in Lexington, KY. For more information, visit http://www.tempursealy.com or call 800-805-3635.



                                                                                                     TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES

                                                                                                             Consolidated Statements of Income

                                                                                                      (in millions, except per common share amounts)

                                                                                                                        (unaudited)


                                                                                 Three Months Ended                                                                        Year Ended
                                                                               ------------------                                                                 ----------

                                                                                  December 31,                                      Chg %                       December 31,                        Chg %
                                                                                  ------------                                       ----                        ------------                         ----

                                                                               2015                 2014                                                           2015                      2014
                                                                               ----                 ----                                                           ----                      ----

    Net sales                                                                           $767.3                                            $745.5                                  2.9%            $3,151.2                     $2,989.8     5.4%

    Cost of sales                                                             454.2                              451.4                                                                   1,902.3              1,839.4

    Gross profit                                                              313.1                              294.1                                     6.5%                1,248.9              1,150.4               8.6%

    Selling and marketing expenses                                            150.0                              154.9                                                                     648.0                619.9

    General, administrative and other expenses                                 79.4                               70.0                                                                     322.0                280.6

    Equity income in earnings of unconsolidated affiliates                    (3.5)                             (2.7)                                                                   (11.9)               (8.3)

    Royalty income, net of royalty expense                                    (4.6)                             (4.6)                                                                   (18.3)              (18.1)

    Operating income                                                           91.8                               76.5                                    20.0%                  309.1                276.3              11.9%


    Other expense, net:

    Interest expense, net                                                      22.0                               21.4                                                                      96.1                 91.9

    Loss on disposal, net                                                         -                                 -                                                                        -                23.2

    Other expense (income), net                                                 0.2                             (13.3)                                                                     12.9               (13.7)

    Total other expense                                                        22.2                                8.1                                                                     109.0                101.4


    Income before income taxes                                                 69.6                               68.4                                     1.8%                  200.1                174.9              14.4%

    Income tax provision                                                     (81.8)                            (21.2)                                                                  (125.4)              (64.9)

    Net (loss) income before non-controlling interest                        (12.2)                              47.2                                 (125.8)%                   74.7                110.0            (32.1)%

    Less: Net (loss) income attributable to non-controlling interest (1),(2)  (0.9)                               0.6                                                                       1.2                  1.1
                                                                               ----

    Net (loss) income attributable to Tempur Sealy International, Inc.                 $(11.3)                                            $46.6                              (124.2)%               $73.5                       $108.9  (32.5)%
                                                                                        ======                                             =====                                                     =====                       ======


    (Loss) earnings per common share:

    Basic                                                                              $(0.18)                                            $0.77                                                     $1.19                        $1.79
                                                                                        ======                                             =====                                                     =====                        =====

    Diluted                                                                            $(0.18)                                            $0.75                              (124.0)%               $1.17                        $1.75  (33.1)%
                                                                                        ======                                             =====                                                     =====                        =====

    Weighted average common shares outstanding:

    Basic                                                                      62.3                               60.9                                                                      61.7                 60.8
                                                                               ====                               ====                                                                      ====                 ====

    Diluted                                                                    62.3                               62.1                                                                      62.6                 62.1
                                                                               ====                               ====                                                                      ====                 ====


    (1)              Income attributable to the Company's
                     redeemable non-controlling interest in
                     Comfort Revolution, LLC for the three
                     months ended December 31, 2015 and 2014
                     represented $0.2 million and $0.6
                     million, respectively. Income
                     attributable to the Company's
                     redeemable non-controlling interest in
                     Comfort Revolution, LLC for the year
                     ended December 31, 2015 and 2014
                     represented $1.2 million and $1.1
                     million, respectively.

    (2)              As of December 31, 2015, the accumulated
                     earnings exceeded the redemption value
                     of the Company's redeemable non-
                     controlling interest in Comfort
                     Revolution, LLC. Accordingly, for the
                     three months ended December 31, 2015,
                     the Company recorded a $1.1 million
                     adjustment, net of tax, to decrease the
                     carrying value of redeemable non-
                     controlling interest. As of December
                     31, 2014, the accumulated earnings
                     exceeded the redemption value and,
                     accordingly, a redemption value
                     adjustment was not necessary for the
                     three and twelve months ended December
                     31, 2014.




                                        TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES

                                                    Consolidated Balance Sheet

                                                          (in millions)


                                                   December 31, 2015               December 31, 2014
                                                   -----------------               -----------------

    ASSETS                                            (unaudited)


    Current Assets:

       Cash and cash equivalents                                          $153.9                                   $62.5

       Accounts receivable, net                                379.4                                      385.8

       Inventories, net                                        199.2                                      217.2

       Prepaid expenses and other
        current assets                                          76.6                                       56.5
                                                                ----                                       ----

    Total Current Assets                                       809.1                                      722.0

       Property, plant and
        equipment, net                                         361.7                                      355.6

       Goodwill                                                709.4                                      736.5

       Other intangible assets, net                            695.4                                      727.1

       Deferred income taxes                                    12.2                                       10.7

       Other non-current assets                                 67.7                                       30.8

    Total Assets                                                        $2,655.5                                $2,582.7
                                                                        ========                                ========


    LIABILITIES AND STOCKHOLDERS' EQUITY


    Current Liabilities:

       Accounts payable                                                   $266.3                                  $226.4

       Accrued expenses and other
        current liabilities                                    254.0                                      233.3

       Income taxes payable                                     11.2                                       12.0

       Current portion of long-
        term debt                                              181.5                                       66.4
                                                               -----                                       ----

    Total Current Liabilities                                  713.0                                      538.1

       Long-term debt, net                                   1,273.3                                    1,498.3

       Deferred income taxes                                   195.4                                      216.7

       Other non-current
        liabilities                                            171.2                                      114.3
                                                               -----                                      -----

    Total Liabilities                                        2,352.9                                    2,367.4


    Redeemable Non-Controlling
     Interest                                                   12.4                                       12.6


    Common stock, $0.01 par
     value; 300.0 million shares
     authorized; 99.2 million
     shares issued as of
     December 31, 2015 and 2014                                  1.0                                        1.0

    Additional paid in capital                                 463.4                                      411.9

    Retained earnings                                        1,110.3                                    1,036.8

    Accumulated other
     comprehensive loss                                      (110.1)                                    (55.7)

    Treasury stock at cost; 36.8
     million and 38.3 million
     shares as of December 31,
     2015 and 2014, respectively                           (1,174.4)                                 (1,191.3)

    Total Stockholders' Equity                                 290.2                                      202.7
                                                               -----                                      -----

    Total Liabilities,
     Redeemable Non-Controlling
     Interest and Stockholders'
     Equity                                                             $2,655.5                                $2,582.7
                                                                        ========                                ========



                                  TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES

                                        Consolidated Statements of Cash Flows

                                                    (in millions)

                                                     (unaudited)


                                                             Year Ended

                                                          December 31,
                                                          ------------

                                                        2015                   2014
                                                        ----                   ----

    CASH FLOWS FROM OPERATING
     ACTIVITIES:

    Net income
     before non-
     controlling
     interest                                                    $74.7                       $110.0

    Adjustments to reconcile net
     income to net cash provided by
     operating activities:

    Depreciation and
     amortization                                       71.4                            76.3

    Amortization of
     stock-based
     compensation                                       22.5                            13.4

    Amortization of
     deferred
     financing costs                                    20.3                            12.5

    Bad debt expense                                     6.9                             4.9

    Deferred income
     taxes                                            (21.3)                         (27.2)

    Dividends
     received from
     unconsolidated
     affiliates                                          9.1                             2.0

    Equity income in
     earnings of
     unconsolidated
     affiliates                                       (11.9)                          (8.3)

    Non-cash
     interest
     expense on 8.0%
     Sealy Notes                                         6.3                             5.1

    Loss on sale of
     assets                                              1.5                             3.9

    Foreign currency
     adjustments and
     other                                               5.5                             1.8

    Loss on disposal
     of business                                           -                           23.2

    Changes in operating assets and
     liabilities

    Accounts
     receivable                                       (35.3)                         (58.8)

    Inventories                                         10.7                          (34.0)

    Prepaid expenses
     and other
     current assets                                   (58.7)                         (14.9)

    Accounts payable                                    46.1                            47.8

    Accrued expenses
     and other                                          90.3                            56.7

    Income taxes                                       (3.9)                           10.8

    Net cash
     provided by
     operating
     activities                                        234.2                           225.2


    CASH FLOWS FROM INVESTING
     ACTIVITIES:

    Acquisition of
     business, net
     of cash
     acquired                                              -                          (8.5)

    Proceeds from
     disposition of
     business and
     other                                               7.2                            43.5

    Purchases of
     property, plant
     and equipment                                    (65.9)                         (47.5)

    Other                                              (1.0)                            2.1
                                                        ----                             ---

    Net cash used in
     investing
     activities                                       (59.7)                         (10.4)


    CASH FLOWS FROM FINANCING
     ACTIVITIES:

    Proceeds from
     issuance of
     senior notes                                      450.0                               -

    Proceeds from
     borrowings
     under long-
     term debt
     obligations                                       413.5                           271.5

    Repayments of
     borrowings
     under long-
     term debt
     obligations                                     (988.3)                        (510.9)

    Proceeds from
     exercise of
     stock options                                      20.4                             4.3

    Excess tax
     benefit from
     stock-based
     compensation                                       21.8                             1.7

    Proceeds from
     purchase of
     treasury shares
     by CEO                                              5.0                               -

    Treasury shares
     repurchased                                       (1.3)                          (2.2)

    Payments of
     deferred
     financing costs                                   (8.0)                          (3.1)

    Other                                              (3.8)                            0.6
                                                        ----                             ---

    Net cash used in
     financing
     activities                                       (90.7)                        (238.1)

    NET EFFECT OF
     EXCHANGE RATE
     CHANGES ON CASH
     AND CASH
     EQUIVALENTS                                         7.6                             4.8
                                                         ---                             ---

    Increase
     (decrease) in
     cash and cash
     equivalents                                        91.4                          (18.5)

    CASH AND CASH
     EQUIVALENTS,
     beginning of
     period                                             62.5                            81.0

    CASH AND CASH
     EQUIVALENTS,
     end of period                                              $153.9                        $62.5
                                                                ======                        =====

Summary of Channel Sales

The following table highlights net sales information, by channel and by segment, for the three months ended December 31, 2015 and 2014:



                                             Three Months Ended December 31,
                                             -------------------------------

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

                  2015             2014             2015                 2014  2015          2014
                  ----             ----             ----                 ----  ----          ----

    Retail(1)             $694.4                           $686.4                    $580.1            $567.8      $114.3 $118.6

    Other(2)      72.9                  59.1                            31.5            21.3      41.4        37.8

                          $767.3                           $745.5                    $611.6            $589.1      $155.7 $156.4
                          ======                           ======                    ======            ======      ====== ======


    (1)              The Retail channel includes
                     furniture and bedding
                     retailers, department stores,
                     specialty retailers and
                     warehouse clubs.

                    The Other channel includes
                     direct-to-consumer, third
                     party distributors,
                     hospitality and healthcare
    (2)              customers.

Summary of Product Sales

The following table highlights net sales information, by product and by segment, for the three months ended December 31, 2015 and 2014:



                                             Three Months Ended December 31,
                                             -------------------------------

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

                  2015             2014             2015                 2014  2015          2014
                  ----             ----             ----                 ----  ----          ----

    Bedding(1)            $699.1                           $677.8                    $574.7            $551.1      $124.4 $126.7

    Other(2)      68.2                  67.7                            36.9            38.0      31.3        29.7

                          $767.3                           $745.5                    $611.6            $589.1      $155.7 $156.4
                          ======                           ======                    ======            ======      ====== ======


    (1)              Bedding products include
                     mattresses, foundations, and
                     adjustable foundations.

    (2)              Other products include pillows
                     and various other comfort
                     products.

TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures
(in millions, except percentages, ratios and per common share amounts)

The Company provides information regarding adjusted net income, adjusted EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, EBITDA, EBITDA in accordance with the Company's senior secured credit facility, adjusted EBITDA, consolidated funded debt and consolidated funded debt less qualified cash, which are not recognized terms under GAAP and do not purport to be alternatives to net income and earnings per share as a measure of operating performance or total debt. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. For more information about these non-GAAP measures and a reconciliation to the nearest GAAP measure, please refer to the reconciliations on the following pages.

Constant Currency Information

In this press release the Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales or earnings or other historical financial information on a "constant currency basis", which is a non-GAAP financial measure. These references to constant currency basis do not include operational impacts that could result from fluctuations in foreign currency rates. To provide information on a constant currency basis, the applicable financial results are adjusted based on a simple mathematical model that translates current period results in local currency using the comparable prior year period's currency conversion rate. This approach is used for countries where the functional currency is the local country currency. This information is provided so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating period-to-period comparisons of business performance.

Adjusted Net Income and Adjusted EPS

A reconciliation of GAAP net (loss) income to adjusted net income and GAAP EPS to adjusted EPS is provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.

The following table sets forth the reconciliation of the Company's GAAP net (loss) income and EPS for the three months ended December 31, 2015 and 2014 to the calculation of adjusted net income and adjusted EPS for the three months ended December 31, 2015 and 2014:



                            Three Months Ended
                            ------------------

    (in millions,   December 31,              December 31,
     except per          2015                      2014
     share
     amounts)
                   -------------             -------------

    GAAP net
     (loss) income                 $(11.3)                          $46.6

    Restructuring
     costs, net of
     tax (1)                 7.7                                  -

    Integration
     costs, net of
     tax (2)                 3.0                               14.4

    Executive
     management
     transition
     and retention
     compensation,
     net of  tax
     (3)                    2.4                                  -

    Pension
     settlement,
     net of tax
     (4)                    0.9                                  -

    Financing
     costs, net of
     tax (5)                   -                               0.7

    Other income,
     net of tax
     (6)                      -                            (11.3)

    Redemption
     value
     adjustment on
     redeemable
     non-
     controlling
     interest, net
     of tax(7)             (1.1)                                 -

    Tax adjustment
     (8)                   61.1                                2.8

    Adjusted net
     income                          $62.7                           $53.2
                                     =====                           =====


    GAAP earnings
     per share,
     diluted                       $(0.18)                          $0.75

    Restructuring
     costs, net of
     tax (1)                0.12                                  -

    Integration
     costs, net of
     tax (2)                0.05                               0.23

    Executive
     management
     transition
     and retention
     compensation,
     net of  tax
     (3)                   0.04                                  -

    Pension
     settlement,
     net of tax
     (4)                   0.01                                  -

    Financing
     costs, net of
     tax (5)                   -                              0.01

    Other income,
     net of tax
     (6)                      -                            (0.18)

    Redemption
     value
     adjustment on
     redeemable
     non-
     controlling
     interest, net
     of tax(7)            (0.02)                                 -

    Tax adjustment
     (8)                   0.97                               0.05
                            ----                               ----

    Adjusted
     earnings per
     share,
     diluted                         $0.99                           $0.86
                                     =====                           =====


    Diluted shares
     outstanding            63.1                               62.1
                            ====                               ====

The following table sets forth the reconciliation of the Company's GAAP net income and EPS for the year ended December 31, 2015 and 2014 to the calculation of adjusted net income and adjusted EPS for the year ended December 31, 2015 and 2014:



                                  Year Ended
                                  ----------

    (in millions,     December 31,            December 31,
     except per            2015                    2014
     share amounts)
                     -------------           -------------

    GAAP net income                    $73.5                       $108.9

    Integration
     costs, net of
     tax (9)                  20.2                            30.6

    German legal
     settlement (10)          17.6                               -

    Executive
     management
     transition and
     retention
     compensation,
     net of  tax
     (11)                    11.5                               -

    Restructuring
     costs, net of
     tax (12)                  9.4                               -

    Interest expense
     and financing
     costs, net of
     tax (13)                  8.3                             3.4

    Other income,
     net of tax (14)         (6.6)                         (11.3)

    2015 Annual
     Meeting costs,
     net of tax (15)           4.4                               -

    Pension
     settlement, net
     of tax (4)                0.9                               -

    Loss on disposal
     of business,
     net of tax (16)             -                           16.7

    Tax adjustment
     (8)                     60.7                            16.3

    Adjusted net
     income                           $199.9                       $164.6
                                      ======                       ======


    GAAP earnings
     per share,
     diluted                           $1.17                        $1.75

    Integration
     costs, net of
     tax (9)                  0.33                            0.49

    German legal
     settlement (10)          0.28                               -

    Executive
     management
     transition and
     retention
     compensation,
     net of  tax
     (11)                    0.18                               -

    Restructuring
     costs, net of
     tax (12)                 0.15                               -

    Interest expense
     and financing
     costs, net of
     tax (13)                 0.13                            0.05

    Other income,
     net of tax (14)        (0.11)                         (0.18)

    2015 Annual
     Meeting costs,
     net of tax (15)          0.07                               -

    Pension
     settlement, net
     of tax (4)               0.01                               -

    Loss on disposal
     of business,
     net of tax (16)             -                           0.27

    Tax adjustment
     (8)                     0.98                            0.27
                              ----                            ----

    Adjusted
     earnings per
     share, diluted                    $3.19                        $2.65
                                       =====                        =====


    Diluted shares
     outstanding              62.6                            62.1
                              ====                            ====

Adjusted Gross Profit and Gross Margin and Adjusted Operating Income (Expense) and Operating Margin

A reconciliation of GAAP gross profit and gross margin to adjusted gross profit and gross margin, respectively, and GAAP operating income (expense) and operating margin to adjusted operating income (expense) and operating margin, respectively, is provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.

The following table sets forth the reconciliation of the Company's reported GAAP gross profit and operating income (expense) to the calculation of adjusted gross profit and operating income (expense) for the three months ended December 31, 2015:



                                                                            4Q 2015
                                                                            -------

    (in millions, except percentages)   Consolidated        Margin  North               Margin        International  Margin          Corporate
                                                                   America
                                                                                                               (18)                        (19)
                                                                      (17)
                                                                       ---

    Net sales                                        $767.3                                    $611.6                                           $155.7            $ -


    Gross profit                                     $313.1           40.8%                                   $236.4           38.7%                   $76.7  49.3%   $       -

    Adjustments                                  2.1                                1.3                                    0.8                              -
                                                 ---                                ---                                    ---                            ---

    Adjusted gross profit                            $315.2           41.1%                                   $237.7           38.9%                   $77.5  49.8%   $       -


    Operating income (expense)                        $91.8           12.0%                                    $94.7           15.5%                   $26.9  17.3%     $(29.8)

    Adjustments                                 19.4                                8.3                                    4.2                            6.9
                                                ----                                ---                                    ---                            ---

    Adjusted operating income (expense)              $111.2           14.5%                                   $103.0           16.8%                   $31.1  20.0%     $(22.9)

The following table sets forth the reconciliation of the Company's reported GAAP gross profit and operating income (expense) to the calculation of adjusted gross profit and operating income (expense) for the three months ended December 31, 2014:



                                                                            4Q 2014
                                                                            -------

    (in millions, except percentages)   Consolidated        Margin  North                Margin        International  Margin          Corporate
                                                                   America
                                                                                                                (21)                        (22)
                                                                      (20)
                                                                       ---

    Net sales                                        $745.5                                     $589.1                                           $156.4            $ -


    Gross profit                                     $294.1           39.5%                                    $210.0           35.6%                   $84.1  53.8%   $       -

    Adjustments                                  6.0                                 5.8                                    0.2                              -
                                                 ---                                 ---                                    ---                            ---

    Adjusted gross profit                            $300.1           40.3%                                    $215.8           36.6%                   $84.3  53.9%   $       -


    Operating income (expense)                        $76.5           10.3%                                     $66.7           11.3%                   $34.9  22.3%     $(25.1)

    Adjustments                                 19.9                                13.7                                    2.7                            3.5
                                                ----                                ----                                    ---                            ---

    Adjusted operating income (expense)               $96.4           12.9%                                     $80.4           13.6%                   $37.6  24.0%     $(21.6)

The following table sets forth the reconciliation of the Company's reported GAAP gross profit and operating income (expense) to the calculation of adjusted gross profit and operating income (expense) for the year ended December 31, 2015:



                                                                                 FULL YEAR 2015
                                                                                 --------------

    (in millions, except percentages)   Consolidated          Margin        North                 Margin            International        Margin          Corporate
                                                                           America
                                                                                                                             (24)                              (25)
                                                                              (23)
                                                                               ---

    Net sales                                        $3,151.2                                              $2,577.2                                                   $574.0               -


    Gross profit                             1,248.9                 39.6%                           954.6                         37.0%                        294.3          51.3%       -

    Adjustments                                 15.4                                         12.6                                              2.8                                 -
                                                ----                                         ----                                              ---                               ---

    Adjusted gross profit                    1,264.3                 40.1%                           967.2                         37.5%                        297.1          51.8%       -


    Operating income (expense)                 309.1                  9.8%                           335.6                         13.0%                         98.9          17.2% (125.4)

    Adjustments                                 64.7                                         25.5                                              8.8                              30.4
                                                ----                                         ----                                              ---                              ----

    Adjusted operating income (expense)                $373.8                 11.9%                                         $361.1                 14.0%                     $107.7    18.8% $(95.0)

The following table sets forth the reconciliation of the Company's reported GAAP gross profit and operating income (expense) to the calculation of adjusted gross profit and operating income (expense) for the year ended December 31, 2014:



                                                                           FULL YEAR 2014
                                                                           --------------

    (in millions, except percentages)   Consolidated          Margin  North                 Margin          International  Margin          Corporate
                                                                     America
                                                                                                                     (21)                        (22)
                                                                        (20)
                                                                         ---

    Net sales                                        $2,989.8                                      $2,404.9                                           $584.9             $ -


    Gross profit                                     $1,150.4           38.5%                                       $834.8           34.7%                   $315.6  54.0%   $       -

    Adjustments                                 11.2                                   10.9                                      0.3                               -
                                                ----                                   ----                                      ---                             ---

    Adjusted gross profit                            $1,161.6           38.9%                                       $845.7           35.2%                   $315.9  54.0%   $       -


    Operating income (expense)                         $276.3            9.2%                                       $255.0           10.6%                   $118.8  20.3%     $(97.5)

    Adjustments                                 43.8                                   30.0                                      5.2                             8.6
                                                ----                                   ----                                      ---                             ---

    Adjusted operating income (expense)                $320.1           10.7%                                       $285.0           11.9%                   $124.0  21.2%     $(88.9)

EBITDA, Adjusted EBITDA, EBITDA in accordance with the Company's senior secured credit facility, Funded debt and Funded debt less qualified cash

A reconciliation of the Company's GAAP net income to EBITDA in accordance with the Company's senior secured credit facility (which the Company may refer to as "EBITDA for covenant compliance purposes") and a reconciliation of total debt to consolidated funded debt and consolidated funded debt less qualified cash are provided below. In addition, a calculation of the ratio of consolidated funded debt less qualified cash to EBITDA determined in accordance with the Company's senior secured credit facility is provided below. Management believes that presenting these non-GAAP measures provides investors with useful information with respect to the terms of the Company's senior secured credit facility and the Company's compliance with key financial covenants.

In addition to providing the ratio calculation in accordance with the Company's senior secured credit facility as described above, the Company also provides below a calculation of the ratio of consolidated funded debt less qualified cash to Adjusted EBITDA. Although not relevant for purposes of assessing compliance with the Company's current financial covenants, the Company provides this as supplemental information to investors to provide more general information about the Company's progress in reducing its leverage.

The following table sets forth the reconciliation of the Company's reported GAAP net (loss) income to the calculation of EBITDA, EBITDA in accordance with the Company's senior secured credit facility and adjusted EBITDA for the three months ended December 31, 2015 and 2014:



                                       Three Months Ended
                                       ------------------

    (in                        December 31,              December 31,
     millions)                      2015                      2014
                              -------------              -------------

    GAAP net
     (loss)
     income                                   $(11.3)                           $46.6

    Interest
     expense                           22.0                                21.4

    Income
     taxes                             81.8                                21.2

     Depreciation
     and
     amortization                      22.6                                22.8

    EBITDA                                     $115.1                           $112.0

    Adjustments for financial
     covenant purposes:

     Restructuring
     costs
     (26)                              9.7                                   -

     Integration
     costs
     (27)                              4.3                                18.6

    Pension
     settlement
     (28)                              1.3                                   -

    Other
     income
     (29)                                -                             (15.6)

    Financing
     costs
     (30)                                -                                1.0

    Redemption
     value
     adjustment
     on
     redeemable
     non-
     controlling
     interest,
     net of
     tax (31)                         (1.1)                                  -

    EBITDA in
     accordance
     with the
     Company's
     senior
     secured
     credit
     facility                                  $129.3                           $116.0

    Additional adjustments:

    Executive
     transition
     and
     retention
     compensation
     (32)                              3.4                                   -

    Adjusted
     EBITDA                                    $132.7                           $116.0
                                               ======                           ======

The following table sets forth the reconciliation of the Company's net income to the calculations of EBITDA, EBITDA in accordance with the Company's senior secured credit facility and adjusted EBITDA for the year ended December 31, 2015 and 2014:



                                   Year Ended
                                   ----------

    (in millions)      December 31,           December 31,
                            2015                   2014
                      -------------           -------------

    Net income                          $73.5                       $108.9

    Interest expense           96.1                            91.9

    Income taxes              125.4                            64.9

    Depreciation and
     amortization              93.9                            89.7

    EBITDA                             $388.9                       $355.4

    Adjustments for
     financial
     covenant
     purposes:

    Integration costs
     (27)                     28.6                            40.3

    Restructuring
     (26)                     11.9                               -

    Other income (29)         (9.5)                         (15.6)

    2015 Annual
     Meeting costs
     (33)                      2.1                               -

    Pension
     settlement (28)            1.3                               -

    Loss on disposal
     of business (16)             -                           23.2

    Financing costs
     (30)                        -                            1.3

    EBITDA in
     accordance with
     the Company's
     senior secured
     credit facility                   $423.3                       $404.6

    Additional
     adjustments:

    German legal
     settlement (10)           17.6                               -

    Executive
     transition and
     retention
     compensation
     (32)                     10.7                               -

    2015 Annual
     Meeting costs
     (33)                      4.2                               -

    Adjusted EBITDA                    $455.8                       $404.6
                                       ======                       ======

Reconciliation of total debt to consolidated funded debt less qualified cash

The following table sets forth the reconciliation of the Company's reported total debt to the calculation funded debt less qualified cash as of December 31, 2015 and 2014. "Consolidated funded debt" and "qualified cash" are terms used in the Company's senior secured credit facility for purposes of certain financial covenants.



                                          As of December 31,
                                          ------------------

    (in millions)                    2015                     2014
                                     ----                     ----

    Total debt, net                         $1,454.8                 $1,564.7

    Plus: Deferred financing
     costs(34)                       24.8                       37.6

    Total debt                    1,479.6                    1,602.3

    Plus: Letters of credit
     outstanding                     19.8                       18.2

    Consolidated funded debt                $1,499.4                 $1,620.5

    Less:

    Domestic qualified cash (35)    121.8                       25.9

    Foreign qualified cash (35)      19.3                       21.9

    Consolidated funded debt less
     qualified cash                         $1,358.3                 $1,572.7
                                            ========                 ========

Calculation of consolidated funded debt less qualified cash to EBITDA in accordance with the Company's senior secured credit facility



                                 As of December 31,
                                 ------------------

    ($ in millions)                 2015                  2014
                                    ----                  ----

    Consolidated funded
     debt less qualified
     cash                         $1,358.3                       $1,572.7

    EBITDA in accordance
     with the Company's
     senior secured credit
     facility              423.3                    404.6

    Ratio (36)              3.21   times             3.89  times
                            ====  =====              ==== =====

Calculation of consolidated funded debt less qualified cash to Adjusted EBITDA



                                   As of December 31,
                                   ------------------

    ($ in millions)                   2015                  2014
                                      ----                  ----

    Consolidated funded debt
     less qualified cash            $1,358.3                       $1,572.7

    Adjusted EBITDA          455.8                    404.6
                             -----                    -----

    Ratio                     2.98   times             3.89  times
                              ====  =====              ==== =====

Footnotes:



    (1)                 Restructuring costs represents costs
                        associated with headcount reduction
                        and store closures. Excluding the
                        tax effect, the restructuring costs
                        are $11.1 million, which includes
                        $9.9 million of costs associated
                        with severance benefits and $1.2
                        million of costs associated with
                        international store closures.

    (2)                 Integration costs represents costs,
                        including legal fees, professional
                        fees, compensation costs and other
                        charges related to the transition of
                        manufacturing facilities, and other
                        costs related to the continued
                        alignment of the North America
                        business segment related to the
                        acquisition of Sealy Corporation in
                        2013 ("Sealy Acquisition").
                        Excluding the tax effect, the
                        integration costs are $4.3 million
                        and $19.0 million for the fourth
                        quarter of 2015 and 2014,
                        respectively.

    (3)                 Executive management transition and
                        retention compensation represents
                        certain costs associated with the
                        transition of certain of the
                        Company's executive officers.
                        Excluding the tax effect, the
                        executive management transition and
                        retention compensation cost is $3.5
                        million.

    (4)                 Pension settlement represents pension
                        expense recorded in conjunction with
                        a settlement offered to terminated,
                        vested participants in a defined
                        benefit pension plan. Excluding the
                        tax effect, the pension settlement
                        is $1.3 million.

    (5)                 Financing costs represent costs
                        incurred in connection with the
                        amendment of the Company's senior
                        secured credit facility in the
                        fourth quarter of 2014. Excluding
                        the tax effect, the financing costs
                        are $1.0 million.

    (6)                 Other income includes income from a
                        partial settlement of a legal
                        dispute in the fourth quarter of
                        2014. Excluding the tax effect,
                        other income is $15.6 million.

    (7)                 As of December 31, 2015, the
                        accumulated earnings exceeded the
                        redemption value of the Company's
                        redeemable non-controlling interest
                        in Comfort Revolution, LLC. The
                        redemption value adjustment on
                        redeemable non-controlling interest
                        represents a $1.1 million
                        adjustment, net of tax, to decrease
                        the carrying value of the Company's
                        redeemable non-controlling interest
                        in Comfort Revolution LLC.
                        Excluding the tax effect, the
                        Redemption value adjustment on
                        redeemable non-controlling interest
                        in the three months ended December
                        31, 2015 is $1.8 million.

    (8)                 The Company's 2015 Income tax
                        provision includes approximately
                        $60.7 million related to changes in
                        estimates related to uncertain tax
                        position regarding the previously
                        disclosed Danish tax matter.
                        Additionally, the tax adjustment
                        represents adjustments associated
                        with the aforementioned items and
                        other discrete income tax events.

    (9)                 Integration costs represents costs,
                        including legal fees, professional
                        fees, compensation costs and other
                        charges related to the transition of
                        manufacturing facilities, and other
                        costs related to the continued
                        alignment of the North America
                        business segment related to the
                        Sealy Acquisition. Excluding the tax
                        effect, the integration costs are
                        $28.7 million and $42.5 million for
                        2015 and 2014, respectively.

    (10)                German legal settlement represents
                        the previously announced EUR15.5
                        million settlement the Company
                        reached with the German Foreign
                        Cartel Office ("FCO") to fully
                        resolve the FCO's antitrust
                        investigation and related legal
                        fees.

    (11)                Executive management transition and
                        retention compensation represents
                        certain costs associated with the
                        transition of certain of the
                        Company's executive officers.
                        Excluding the tax effect, the
                        executive management transition and
                        retention compensation cost is $16.2
                        million.

    (12)                Restructuring costs represents costs
                        associated with headcount reduction
                        and store closures. Excluding the
                        tax effect, the restructuring costs
                        are $13.5 million, which includes
                        $11.2 million of costs associated
                        with severance benefits and $2.3
                        million of costs associated with
                        international store closures.

    (13)                Interest expense and financing costs
                        in 2015 represents non-cash
                        interest costs related to the
                        accelerated amortization of deferred
                        financing costs associated with the
                        $493.8 million voluntary prepayment
                        of the Company's term loans,
                        subsequent to the issuance by the
                        Company of $450 million aggregate
                        principal amount of 5.625% senior
                        notes due 2023. Interest expense and
                        financing costs in 2014 represents
                        costs related to the accelerated
                        amortization of deferred financing
                        costs associated with a voluntary
                        prepayment of the Company's term
                        loans. Excluding the tax effect, the
                        interest expense and financing costs
                        are $12.0 million and $4.6 million
                        for 2015 and 2014, respectively.

    (14)                Other income includes income from a
                        partial settlement of a legal
                        dispute. Excluding the tax effect,
                        other income is $9.5 million and
                        $15.6 million for 2015 and 2014,
                        respectively.

    (15)                2015 Annual Meeting costs represent
                        additional costs related to the
                        Company's 2015 Annual Meeting and
                        related issues. Excluding the tax
                        effect, 2015 Annual Meeting costs
                        are $6.3 million.

    (16)                Loss on disposal of business
                        represents costs associated with the
                        disposition in 2014 of the three
                        Sealy U.S. innerspring component
                        production facilities and related
                        equipment. Excluding the tax effect,
                        the loss on disposal of business is
                        $23.2 million.

    (17)                Adjustments for the North America
                        business segment represent
                        integration costs, which include
                        compensation costs, professional
                        fees and other charges related to
                        the transition of manufacturing
                        facilities and distribution network,
                        and other costs to support the
                        continued alignment of the North
                        America business segment related to
                        the Sealy Acquisition, certain
                        restructuring costs, pension
                        settlement costs as well as
                        executive management retention
                        compensation incurred in connection
                        with executive management
                        transition.

    (18)                Adjustments for the International
                        business segment represent certain
                        restructuring costs as well as
                        executive management retention
                        compensation incurred in connection
                        with executive management
                        transition.

    (19)                Adjustments for Corporate represent
                        integration costs which include
                        legal fees, professional fees and
                        other charges to align the business
                        related to the Sealy Acquisition,
                        certain restructuring costs as well
                        as executive management transition
                        expense and related retention
                        compensation.

    (20)                Adjustments for the North America
                        business segment represent
                        integration costs, which include
                        professional fees, compensation
                        costs and other charges related to
                        the transition of manufacturing
                        facilities, and other costs to
                        support the continued alignment of
                        the North America business related
                        to the Sealy Acquisition.

    (21)                Adjustments for the International
                        business segment represent
                        integration costs incurred in
                        connection with the introduction of
                        Sealy products in certain
                        international markets.

    (22)                Adjustments for Corporate represent
                        integration and transaction costs
                        which include legal fees,
                        professional fees, compensation
                        costs and other charges to align the
                        business related to the Sealy
                        Acquisition, as well as financing
                        costs incurred in connection with
                        the amendment of the Company's
                        senior secured credit facility.

    (23)                Adjustments for the North America
                        business segment represent
                        integration costs, which include
                        compensation costs, professional
                        fees and other charges related to
                        the transition of manufacturing
                        facilities and distribution network,
                        and other costs to support the
                        continued alignment of the North
                        America business segment related to
                        the Sealy Acquisition, certain
                        restructuring costs, pension
                        settlement costs as well as
                        executive management retention
                        compensation incurred in connection
                        with executive management
                        transition.

    (24)                Adjustments for the International
                        business segment represent
                        integration costs incurred in
                        connection with the introduction of
                        Sealy products in certain
                        international markets, certain
                        restructuring costs as well as
                        executive management retention
                        compensation incurred in connection
                        with executive management
                        transition.

    (25)                Adjustments for Corporate represent
                        integration costs which include
                        legal fees, professional fees and
                        other charges to align the business
                        related to the Sealy Acquisition,
                        certain restructuring costs as well
                        as executive management transition
                        expense and related retention
                        compensation.

    (26)                Restructuring costs represents costs
                        associated with headcount reduction
                        and store closures.

    (27)                Integration costs represents costs,
                        including legal fees, professional
                        fees, compensation costs and other
                        charges related to the transition of
                        manufacturing facilities, and other
                        costs related to the continued
                        alignment of the North America
                        business segment related to the
                        Sealy Acquisition.

    (28)                Pension settlement represents pension
                        expense recorded in conjunction with
                        a settlement offered to terminated,
                        vested participants in a defined
                        benefit pension plan.

    (29)                Other income includes income from a
                        partial settlement of a legal
                        dispute.

    (30)                Financing costs represent costs
                        incurred in connection with the
                        amendment of the Company's senior
                        secured credit facility in 2014.

    (31)                As of December 31, 2015, the
                        accumulated earnings exceeded the
                        redemption value of the Company's
                        redeemable non-controlling interest
                        in Comfort Revolution, LLC. The
                        redemption value adjustment on
                        redeemable non-controlling interest
                        represents a $1.1 million
                        adjustment, net of tax, to decrease
                        the carrying value of the Company's
                        redeemable non-controlling interest
                        in Comfort Revolution LLC.

    (32)                Executive management transition and
                        retention compensation represents
                        certain costs associated with the
                        transition of certain of the
                        Company's executive officers.

    (33)                2015 Annual Meeting costs represent
                        additional costs related to the
                        Company's 2015 Annual Meeting and
                        related issues.

    (34)                The Company presents deferred
                        financing costs as a direct
                        reduction from the carrying amount
                        of the related debt in the
                        Consolidated Balance Sheets. For
                        purposes of determining total debt
                        for financial covenants, the Company
                        has added these costs back to total
                        debt, net as calculated per the
                        Consolidated Balance Sheets.

    (35)                Qualified cash as defined in the
                        credit agreement equals 100.0% of
                        unrestricted domestic cash plus
                        60.0% of unrestricted foreign cash.
                        For purposes of calculating leverage
                        ratios, qualified cash is capped at
                        $150.0 million.

    (36)                The ratio of consolidated debt less
                        qualified cash to EBITDA in
                        accordance with the Company's senior
                        secured credit facility was 3.21
                        times, within the Company's
                        financial covenant under its senior
                        secured credit facility, which
                        requires this ratio to be less than
                        4.50 times at December 31, 2015.

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SOURCE Tempur Sealy International, Inc.