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Tempur-Pedic Reports 17% Sales Increase For Third Quarter

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Tempur-Pedic International Inc. (NYSE:TPX) , the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced record earnings per share and net sales for the third quarter ended September 30, 2006. - Earnings per share (EPS) doubled to $0.34 per diluted share in the third quarter of 2006 from $0.17 per diluted share in the third quarter of 2005. Net income in the third quarter of 2006 increased 66% to $28.9 million from $17.4 million in the third quarter of 2005. - Net sales rose 17% to $240.9 million in the third quarter of 2006 from $206.1 million in the third quarter of 2005. Retail sales increased 25% worldwide. Domestic retail sales increased 31% and international retail sales increased 12%. Sales in the U.S. furniture and bedding retail channel were especially strong, with an increase of 43%. - Worldwide, mattress unit growth increased 14%. Domestic mattress unit growth was particularly strong, increasing 26%. - Cash flow provided by operations increased 56% to $46.6 million in the third quarter of 2006 from $30.0 million in the third quarter of 2005. The increase was principally driven by improved net income and working capital. For the nine months ended September 30, 2006, cash flow provided by operations increased 68% to $133.1 million from $79.1 million for the nine months ended September 30, 2005. - Within the quarter, total debt declined by $43.7 million to $373.5 million reflecting net principal payments of $25.4 million on its U.S. facilities, $17.7 million on its European term loan and the impact of favorable foreign exchange rates on its international borrowings. President and Chief Executive Officer H. Thomas Bryant commented, "Tempur- Pedic International turned in another solid quarter of net sales and earnings representing quarterly records for net sales, EPS and mattress units. We believe the initiatives put in place to accelerate growth are continuing to gain momentum, new products are being well received and efforts to control costs and further increase productivity are succeeding. In addition, our business continues to show its strong cash flow dynamics with operating cash flow up 56% to nearly $47 million." Bryant continued, "Our U.S. operations delivered strong performance, resulting in significantly improved mattress unit growth, account productivity and operating leverage. Recent new product introductions and the refreshing of the Classic model helped to increase our retail floor space and improve market share. In addition, domestic pillow sales improved based primarily on sales of existing models. The new Symphony pillow line started shipping at the end of the quarter and is expected to be more widely distributed in the fourth quarter. "Internationally, many of our key European markets experienced strong growth and achieved record sales levels. Excluding Japan and certain third party distributors, our international business continues to perform generally as expected and capture additional market share. However, we experienced modest growth in total as Japan continues to under-perform and we are in the process of replacing certain third party distributors." Chief Financial Officer Dale Williams noted, "While our strategy to grow the retail channel and gain share in mattresses has accelerated growth, gross margins continue to be adversely affected by channel and product mix. However, initiatives to generate productivity improvements and cost reductions continue to yield significant benefits. In addition, the geographic earnings mix varied from our expectations, which resulted in a higher effective tax rate for the Company." Bryant concluded, "The specialty bedding category led by Tempur-Pedic continues to expand and take market share from traditional innerspring mattress manufacturers. We are pleased with our performance in the quarter and believe we are taking the necessary steps to continue growth and improve productivity going forward." About Tempur-Pedic: Tempur-Pedic International Inc. (NYSE:TPX) manufactures and distributes premium mattresses and pillows made from its proprietary TEMPUR(R) pressure- relieving material. It is the worldwide leader in specialty sleep, the fastest growing segment of the estimated $12 billion global mattress market. The Company is focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world. The Company's products are currently sold in over 70 countries under the TEMPUR(R) and Tempur-Pedic(R) brand names. World headquarters for Tempur-Pedic International is in Lexington, KY. For more information, visit http://www.tempurpedic.com/ or call 800-805-3635.

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