1206264--3/14/2006--TEMPUR_PEDIC_INTERNATIONAL

related topics

{stock, price, operating}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{product, market, service}

{property, intellectual, protect}

{stock, price, share}

{customer, product, revenue}

{cost, operation, labor}

{operation, international, foreign}

{operation, natural, condition}

{provision, law, control}

{loss, insurance, financial}

{personnel, key, retain}

{product, liability, claim}

We operate in the highly competitive mattress and pillow industries, and if we are unable to compete successfully, we may lose customers and our sales may decline. We may be unable to sustain our profitability, which could impair our ability to service our indebtedness and make investments in our business. Our operating results are increasingly subject to fluctuations, which could adversely affect the market price of our common stock. Our advertising expenditures may not result in increased sales or generate the levels of product and brand name awareness we desire and we may not be able to manage our advertising expenditures on a cost-effective basis. We are subject to fluctuations in the cost of raw materials, and increases in these costs would reduce our liquidity and profitability. Loss of suppliers and disruptions in the supply of our raw materials could increase our costs of production and reduce our ability to compete effectively. We may face exposure to product liability, which could reduce our liquidity and profitability and reduce consumer confidence in our products. We may be adversely affected by fluctuations in exchange rates, which could affect our results of operations, the costs of our products and our ability to sell our products in foreign markets. Regulatory requirements may require costly expenditures and expose us to liability. An increase in our product return rates or an inadequacy in our warranty reserves could reduce our liquidity and profitability. We are subject to risks from our international operations, such as increased costs and the potential absence of intellectual property protection, which could impair our ability to compete and our profitability. If we are not able to protect our trade secrets or maintain our trademarks, patents and other intellectual property, we may not be able to prevent competitors from developing similar products or from marketing in a manner that capitalizes on our trademarks, and this loss of a competitive advantage could decrease our profitability and liquidity. Because we depend on our significant customers, a decrease or interruption in their business with us would reduce our sales and profitability. We produce all of our products in two manufacturing facilities and have commenced construction on a third manufacturing facility, and unexpected equipment failures, delays in deliveries, catastrophic loss or construction delays may lead to production curtailments or shutdowns. A deterioration in labor relations could disrupt our business operations and increase our costs, which could decrease our liquidity and profitability. The loss of the services of any members of our senior management team could impair our ability to execute our business strategy and as a result, reduce our sales and profitability. Our leverage limits our flexibility and increases our risk of default. We are vulnerable to interest rate risk with respect to our debt, which could lead to an increase in interest expense. Allegations of the possibility of price fixing in the mattress industry could increase our costs or otherwise adversely affect our operations. Our stock price is likely to continue to be volatile, your investment could decline in value, and we may incur significant costs from class action litigation. Future sales of our common stock may depress our stock price. Our current principal stockholder owns a large percentage of our common stock and could limit you from influencing corporate decisions. Provisions of Delaware law and our charter documents could delay or prevent an acquisition of us, even if the acquisition would be beneficial to you. We do not anticipate paying dividends on our capital stock in the foreseeable future.

Full 10-K form ▸

1206264--3/14/2006--TEMPUR_PEDIC_INTERNATIONAL_INC