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Tempur-Pedic Reports 16 Percent Domestic Sales Increase

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Tempur-Pedic International Inc. (NYSE:TPX) , the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced earnings for the first quarter ended March 31, 2007. In addition, the Company increased full year 2007 earnings per share guidance. FIRST QUARTER 2007 FINANCIAL SUMMARY - Earnings per share (EPS) increased 21% to $0.35 per diluted share in the first quarter of 2007 as compared to $0.29 per diluted share in the first quarter of 2006. - Net sales rose 16% to $266.0 million in the first quarter of 2007 from $228.6 million in the first quarter of 2006. Retail sales increased 19% worldwide. Domestic retail sales increased 20% and international retail sales increased 19%. Sales in the U.S. furniture and bedding retail channel, a component of Domestic retail, were especially strong, up 25%. - The Company achieved growth across all products and geographic segments. Worldwide mattress revenue increased 16%. Domestic mattress revenue increased 16% driven by 13% unit volume growth. Pillow sales rose 23% worldwide driven by unit volume growth of 20%. For the first quarter of 2007, the Company reported net income of $29.8 million as compared to $26.9 million in the first quarter of 2006. Net income results include stock-based compensation expense, which increased 127% to $1.8 million in the first quarter of 2007. First quarter results also include non- recurring charges of $1.8 million for payroll taxes associated with the exercise of certain executive stock options. In addition, subsequent to quarter end, the Company was notified of a bankruptcy filing by a U.S. customer and has recorded bad debt expense of $1.3 million in the first quarter related to this matter. President and Chief Executive Officer H. Thomas Bryant commented, "Tempur- Pedic International delivered a very solid quarter during what continues to be a challenging environment for the bedding industry. "Our new manufacturing facility in Albuquerque experienced a smooth start- up and production ramped up ahead of our expectations. However, we believe our first quarter results were somewhat moderated by limitations on U.S. capacity and certain non-recurring charges. Throughout much of the first quarter, our U.S. business experienced mattress shortages resulting from strong consumer demand, low levels of inventory at the beginning of the year and capacity constraints. In addition, in order to minimize backorders for our existing retail partners, we limited the opening of new accounts such that our total U.S. door count is unchanged from the prior quarter. "By late March, the Albuquerque plant had considerably expanded its throughput which allowed us to build inventory and eliminate backorders. As a result, we believe we have ample levels of mattress inventory and capacity to meet U.S. demand going forward. "Despite incurring expenses related to shortages, our manufacturing operations demonstrated outstanding performance. We continue to identify and execute on productivity initiatives driving cost savings and improved efficiencies. "In the first quarter, our U.S. sales and marketing organization delivered excellent performance, which resulted in improved sales and account productivity. Retail floor space expanded as we gained incremental slots during the quarter. However, we delayed the launch of our new SymphonyBed due to capacity constraints and strong demand for our existing product line. The SymphonyBed will roll-out broadly in the second quarter. Now that we have replenished our inventory, we will return to selectively opening new accounts. "Internationally, we experienced solid retail and third party growth. Importantly, we believe our performance in Japan over the last two quarters suggests we are on track to turn that market around. If that market returns to consistent growth, it would be an important milestone for our international business. "Turning to pillows, we are pleased that our renewed focus is generating strong results. Our investment in pillow R&D and marketing is clearly paying off. Pillow unit volumes were up 20% in our domestic segment and 19% in our international segment. We believe we have identified key opportunities for additional pillow sales improvements." Share Repurchase Program During the first quarter of 2007, the Company purchased 1.5 million shares of its common stock at an average price of $25.61 for a total cost of $39.2 million. As of March 31, 2007, the Company had $60.8 million remaining on its existing share repurchase authorization. Tax Rate As a result of recent reductions in statutory tax rates and updated expectations for geographic mix, the Company anticipates its on-going effective tax rate for 2007 will be 36% as compared to prior guidance of 37%. Chief Financial Officer Dale Williams stated, "We are pleased with the improvement in our corporate tax rate. We are monitoring developments in several foreign markets, which, if adopted, could result in a further improvement. Over the long term, we anticipate the tax rate will gradually decline." 2007 Guidance The Company reiterated guidance for net sales and increased guidance for diluted earnings per share for the full year 2007. The Company continues to expect full year 2007 net sales to range from $1.04 billion to $1.07 billion, an increase of 10% to 13% over 2006. The Company increased its full year 2007 guidance for diluted earnings per share only to reflect shares repurchased in the first quarter of 2007, interest expense on associated borrowings and a slightly lower tax rate as compared to prior expectations. Compared to the Company's previous guidance of $1.50 to $1.54, the Company currently expects diluted earnings per share for 2007 to range from $1.54 to $1.58. This guidance reflects an increase of 20% to 23% compared to 2006 EPS of $1.28. 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. Bryant concluded, "The expanding specialty bedding category, led by Tempur-Pedic, is becoming widely accepted as an innovative alternative to the traditional innerspring mattress category. Over the long term, we expect to continue to gain market share and improve productivity as we scale our business into a billion dollar company on our path to become the worldwide bedding leader." About the Company: 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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