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Bedding Manufacturer Tempur-Pedic International Achieves Fourth Quarter 45% Net Sales Increase

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Tempur-Pedic International Inc., the manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced net sales and earnings for the fourth quarter and full year ended December 31, 2004. Fourth Quarter 2004 Highlights -Pro forma net income rose 85% to $25.7 million, or $0.25 per diluted share, from $13.9 million, or $0.14 per diluted share, in the fourth quarter of 2003. The Company reported net income under GAAP of $23.9 million, or $0.23 per diluted share, compared to $11.6 million, or $0.12 per diluted share, in the fourth quarter of 2003, an increase in net income of 106%. -Net sales rose 45% to $198.4 million from $136.8 million in the fourth quarter of 2003. -Operating margin increased to 22.5% from 18.2% in the fourth quarter of 2003. -Net sales increased in all channels, with particularly strong growth in the Company's retail channel, where net sales rose 52%. Sales in the U.S. retail channel were especially strong. -Worldwide, mattress net sales increased 59% on unit growth of 47%. In addition, pillow net sales increased 20% on unit growth of 22%. Chief Executive Officer Robert B. Trussell, Jr. commented, "The fourth quarter continued an outstanding year for Tempur-Pedic International. We achieved record growth in both sales and earnings, and reinforced our leadership position in the premium bedding category by offering products that provide greater overall comfort and sleep quality. We also successfully expanded our distribution, broadened our product offering and increased our global brand awareness worldwide, all key elements in our strategy to build Tempur-Pedic into the world's largest and most profitable mattress company." President H. Thomas Bryant added, "During 2004, we substantially exceeded even the ambitious milestones we set for our Company at the beginning of the year. On a global basis, retail store sales, which were an especially strong driver throughout the year, rose 52% in the fourth quarter, accounting for 73% of total net sales. In total, our products are now sold in approximately 4,100 furniture retail stores in the U.S. and approximately 3,300 internationally. While mattress sales jumped 59% as we continued to expand the number of retail stores that carry Tempur-Pedic products, pillow sales were also strong, driven by the new models we recently introduced in the U.S., resulting in a 28% U.S. net sales growth in pillows. Overall, net sales in the U.S. climbed an impressive 53% in the fourth quarter, while international net sales also increased sharply, rising 33%. "In addition to delivering outstanding financial results, the Company made progress in several other important areas. As planned, we completed the expansion of our Denmark manufacturing facility, doubling its mattress capacity. The construction of our new plant in Albuquerque, which will enable us to better service the fast-growing U.S. market, is moving ahead according to schedule. In January, we launched a new website, www.800pillows.com, designed to help customers find the best pillow for their individual needs. We also continued to receive recognition for the quality of our products. In December, 'The ComfortPillow by TempurPedic' was awarded 'Best Buy' status in the premium pillow category by Consumers Digest magazine. Also during the quarter, our new Scandinavian mattress was selected by Elle Interior, the Swedish Elle magazine, as first prize winner in the furniture category for the magazine's Swedish Design 2004 nominees. "We are continuing to manage Tempur-Pedic International's rapid growth smoothly, and this discipline will serve us well as we continue to execute on the Company's proven business model. In the fourth quarter we hired two key executives. Matt Clift, our new Executive Vice President of Operations, and Paul Coulis, President of our U.S. Medical Division, will contribute greatly to the Company's efforts. "In 2005, we plan to continue to expand our furniture retail base in both the U.S. and internationally. We will also continue the roll-out of our futon product, which began shipping to stores in the Japanese market in December, and plan to introduce at least one more new mattress model in both the U.S. and Europe in 2005. Additionally, we will continue to build global brand awareness by expanding our targeted marketing and advertising campaigns." 2005 Guidance Mr. Trussell concluded, "As a result of our strong performance in 2004 and very positive outlook for the coming year, we are raising the full-year guidance we previously provided for 2005. Based on the many initiatives we have underway to add new accounts, new stores and new products, we now expect the Company's net sales for 2005 to range from $830 million to $850 million, rather than the $810 million to $830 million referred to in our previous guidance. In addition, we expect pro forma diluted net income per share to range between $1.00 to $1.05 rather than the $0.95 to $1.00 referred to in our previous guidance. "We expect sales and earnings in 2005 to follow a quarterly pattern consistent with that of 2004. Our earnings guidance reflects the Company's traditional practice of incurring heavier marketing expenditures as a percentage of sales in the first quarter of each year." The Company notes that 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. Full-year 2004 Financial Summary For the full year ended December 31, 2004, net sales totaled $684.9 million, 43% higher than net sales for the year ended December 31, 2003. The Company also reported full year 2004 pro forma net income of $84.4 million, or $0.82 per diluted share, compared to $52.1 million, or $0.55 per diluted share, for 2003. This represents a 62% increase in pro forma net income and a 49% increase in pro forma net income per diluted share. The Company reported full year 2004 net income under Generally Accepted Accounting Principles ("GAAP") of $75.0 million, or $0.73 per diluted share, compared to $37.6 million, or $0.39 per diluted share, for 2003.

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