We are a vertically integrated global bedding company that develops, manufactures and markets bedding products. Tempur Sealy’s stated purpose is “to improvecommitted to improving the sleep of more people, every night, all around the world.” This commitment manifests itself As a leading designer, manufacturer, distributor and retailer of bedding products, we know how crucial a good night of sleep is to overall health and wellness. Utilizing over a century of knowledge and industry-leading innovation, we deliver award-winning products that provide breakthrough sleep solutions to consumers in everything we do, includingover 100 countries.

Our highly recognized brands include Tempur-Pedic®, Sealy® and Stearns & Foster® and our non-branded offerings include private label and original equipment manufacturer ("OEM") products. Our distinct brands allow for complementary merchandising strategies at a company-wide decisionrange of price points.

Our powerful distribution model operates through an omni-channel strategy. Our products are sold through third-party retailers, our more than 650 company-owned stores and our e-commerce platforms. We have a global manufacturing footprint with approximately 12,000 employees around the world. Tempur Sealy has a strong competitive presence in the bedding marketplace with a leadership position that comes from product and service quality, culture, strategy and people, backed with financial strength and a disciplined approach to undertake global effortsreturning value to improve our communities and environment. To that end, we have enlisted the same innovative spirit that has guided our world-class bedding business to the top of the industry in our drive to achieve industry-leading sustainability and environmental initiatives.shareholders.

 

In order to achieve our goal to improve the sleep of more people, every night, all around the world, one of our strategic initiatives is to leverage and strengthen our comprehensive portfolio of iconic brands and products. Our portfolio of product brands includes many highly recognized brands, including Tempur®, Tempur-Pedic®, Sealy® featuring Posturepedic® Technology,and Stearns & Foster® and Comfort Revolution®, which are described below:

We expect to launch a complete refresh of our well-known branded products from Tempur-Pedic,North American Stearns & Foster, Sealy featuring Posturepedic TechnologyFoster® portfolio in 2022. The new line is designed to further distinguish our high-end traditional innerspring brand and Cocoon by Sealy.

We also plan to launch a Sealy-branded, eco-friendly mattress collection, as well as a new Stearns & Foster lineupSealy mattress with a best-in-class pressure-relieving gel grid layer at a consumer-appealing, mid-market price point, in North America. The new Breeze line includes ProBreeze^TM and LuxeBreeze^TM models offering the most innovative cooling system2022 in the market, re-designedU.S.

We expect to deliver all night cooling comfort. Thebegin the launch an all-new line of Tempur® products in Europe and Asia-Pacific in 2022 with the objective of reaching a new Breezesegment of international consumers. This new line of products completewill broaden Tempur®'s price range with the largest Tempur rollout in our history. The new Stearns & Foster design utilizessuper-premium average selling price ceiling maintained and the finest materials and legendary craftsmanship, featuring afloor expanded into the premium timeless look. Our all new IntelliCoil® HD innerspring incorporates 20% more coils, allowing sleepers to find their perfect level of support. This lineup, also features for the first time, the proprietary memory foam engineered exclusively for Stearns & Foster by Tempur-Pedic.category.

Our primary selling channels are Wholesale and Direct. These channels align to the operating margin characteristics of our business and our marketplace.

One of Tempur Sealy's long-term initiatives is to be wherever the consumer wants to shop, and our wholesale business strategy brings this key business initiative to life by growing our share with existing customers, gaining new business and expanding into new channels of distribution. In 2018,2020, we focused on growing our relationships with existing third-party retailers. The resulting growth has been broad-based, spanning multiple channels of bedding retail including furniture, big-box, specialty and online-only. Our Wholesale channel includes all third party retailers, including third party distribution, hospitality and healthcare, and represented 87.5% of net sales in 2019. We have also identified new business opportunities. In 2019, we announced three new or expanded third-party retail relationships in the U.S. and Europe. This resulted insuccessfully completed the largest expansion of stores in our history.

    

In addition, in 2020 weWe are expandingcontinuing to expand our Direct channel to strengthen our distribution footprint toand provide alternatives to allow the customer to shop on their preferred terms - whether online in company-owned stores or through our thousands of third-party retailers.in-store. Our Direct channel includes company-owned stores, e-commerceonline and call centers and represented 12.5%18.2% of net sales in 2019.2021. The Direct channel growth rate has surpassed the Wholesale growth rate over the last few years, and we anticipate the Direct channel towill continue to grow as a percentage of net sales in future years. Our expanded direct channel distribution complements our wholesale business, and we believe this balanced approach enhances the overall sales potential and profitability of Tempur Sealy.

For consumers that prefer to purchase directly from the manufacturer (our research indicates approximately 20%), and for thoseare seeking a more personalized and educational sales experience, we appeal to this consumerhave over 650 retail stores worldwide, including our retail stores owned through our Tempur-Pedic retail stores. international joint venture operations.

As of December 31, 20192021, we had 5688 Tempur-Pedic retail stores throughout the U.S. that provide a low-pressure environment to explore the comprehensive line up of our Tempur-Pedic products. Our retail boutiques are strategically located in high traffic, premium retail centers with customer demographics that closely align to the Tempur-Pedic customer profile. Each showroom features knowledgeable, non-commissioned Brand Ambassadors who educate potential customers on Tempur-Pedic products in a relaxed, comfortable environment.

In addition to our high-end Tempur-Pedic retail stores, we operate Sleep Outfitters, a regional bedding retailer that had 97104 stores across Kentucky, Tennessee, Ohio, West Virginia and Alabama in 2019.2021. Sleep Outfitters is a specialty mattress retailer that serves consumers across all price points with its extensive selection of Tempur-Pedic®, Sealy® and Stearns & Foster® products.

Our third-party retailers, Tempur-Pedic retail stores, Dreams and Sleep Outfitters, retail storesand our other company-owned store concepts reach the vast majority of consumers who still prefer to touch and feel a mattress and speak to a retail sales associate prior to making a purchase decision. However, our consumer insights also demonstrate that there is a growing segment of the population that prefers to purchase products online and, to a lesser degree, via a call center. As such, having an omni-channel presence is more important than ever, with most customers completing research and shopping both online and in-stores before making their purchase decision.

For customers that prefer the convenience of making purchases online and having their bedding products delivered right to their front door, we have evolved our distribution model to include multiple online options to reach those that want to purchase our products without the need to go into a brick-and-mortar store.

Our overall marketing strategy is to drive consumer demand through the use of effective marketing. We invest across multiple media platforms to build brand awareness and drive consumer interest in our products. The majority of our advertising programs are created on a centralized basis through our in-house advertising organization.marketing team. We plan to drive net sales through continued investments in new products, marketing and other initiatives.

We advertise nationally on television, digitally and through consumer and trade print. In addition, we participate in cooperative advertising on a shared basis with some of our retail customers. Throughout the year, we invested in a series of strategic marketing initiatives, which included new product introductions, advertising and in-store marketing investments.

We believe that sales of products to furniture and bedding stores are typically subject to modest seasonality inherent in the bedding industry, with sales expected to be generally lower in the second and fourth quarters. Sales in a particular quarter can also be impacted by competitive industry dynamics. Additionally, the U.S. bedding industry generally experiences increases in sales around holidays and promotional periods.

Our products are currently manufactured and distributed through our global network of facilities. For a list of our principal manufacturing and distribution facilities, please refer to ITEM 2, "Properties".

We obtain the raw materials used to produce our pressure-relieving Tempur® material and components used in the manufacture of Tempur products from outside sources. We currently acquire chemicals and proprietary additives for Tempur products as well as other components such as textiles from a number of suppliers with manufacturing locations around the world. These supplier relationships may be modified in order to maintain quality, cost, and delivery expectations. We do not consider ourselves dependent upon any single outside vendor as a source of raw materials for Tempur products and believe that sufficient alternate sources of supply for the same or similar raw materials are available. Additionally, we source our adjustable bed bases and foundations from third party manufacturers. These are purchased under supply agreements from a limited number of key suppliers. These products are dependent on components supply chains originating in China. We do not consider ourselves dependent upon any singlebelieve over time that sufficient alternate sources of supply for the same or similar products will be available outside manufacturer as a source of these products.China from our current or alternate suppliers.

Raw materials for Sealy, product raw materialsSherwood and Comfort Revolution products consist mainly of polyethylene foam, textiles and steel innerspring components that we purchase from various suppliers. In the U.S. and Canada, we source the majority of our requirements for polyurethane foam components and spring components for our Sealy and Stearns & Foster mattress units and adjustable bed bases from a key suppliersuppliers for each component. We also purchase a significant portion of our Sealy foundation parts from third party sources. All critical components are purchased under supply agreements. We do not consider ourselves to be dependent in the long term upon any single outside vendor as a source of supply to our bedding business, and we believe over time that sufficient alternate sources of supply for the same, similar or alternate components are available. However, if a key supplierOur adjustable base products are dependent on components supply chains originating in China. We believe over time that sufficient alternate courses of supply for an applicable component failed tothe same or similar products will be available outside of China from our current and alternate suppliers.

We compete in the global bedding industry. The bedding industry is comprised of mattresses and foundations, pillows and accessories. The mattress market category is comprised of traditional innerspring mattresses and non-innerspring mattresses, which includes visco-elastic and foam mattresses, innerspring/foam hybrid mattresses, airbeds and latex mattresses. The foundation category is comprised of traditional foundations and adjustable foundations. Additionally, the pillow market is comprised of traditional foam and feather pillows, as well as pillows made of visco-elastic, latex, foam, sponge,gel, rubber and down. The primary distribution channels for mattresses and foundationsbedding products are retail furniture and bedding stores, department stores, wholesale clubsbig-box retailers and the internet.

    

We encounter competition from a number of bedding manufacturers in both the highly concentrated domestic and highly fragmented international markets. Participants in each of these markets compete primarily on price, quality, brand name recognition, product availability and product performance. Mattress and pillow manufacturers and retailers are seeking to increase their channels of distribution and are looking for new ways to reach the consumer, including the recent expansion in the number of U.S. and international companies pursuing online direct-to-consumer models for foam mattresses. In addition, retailers both in both the U.S. and internationally are increasingly seeking to integrate vertically in the furniture and bedding industries, including by offeringoffer their own brands of mattresses and pillows.

The international market is served by a large number of manufacturers, primarily operating on a regional and local basis. These manufacturers offer a broad range of mattress and pillow products.

We hold U.S. and foreign patents and patent applications regarding certain elements of the design and function of many of our mattress and pillow products.

 

As of December 31, 2019,2021, we held trademark registrations worldwide, which we believe have significant value and are important to the marketing of our products to retailers. Tempur®, Tempur-Pedic® and Tempur-Pedic®Dreams® are trademarks registered with the U.S. Patent and Trademark Office. In addition, we have U.S. applications pending for additional trademarks. Several of our trademarks have been registered, or are the subject of pending applications, in various foreign countries. Each U.S. trademark registration is renewable indefinitely as long as the trademark remains in use. We also own numerous trademarks, trade names, service marks, logos and design marks, including Sealy®, Stearns & Foster® and Sealy Posturepedic®. In addition, we license the Bassett® trade name in various territories under a long-term agreement.

    

We derive income from royalties by licensing Sealy®, Stearns & Foster® and Tempur® brands, technology and trademarks to other manufacturers. Under the license arrangements, licensees have the right to use certain trademarks and current proprietary and/or patented technology that we utilize.technology. We also provide our licensees with product specifications, research and development, statistical services and marketing programs. For the year ended December 31, 2019,2021, our licensing activities as a whole generated unaffiliated net royalties of approximately $22.6$29.1 million.

Our operations are subject to international, federal, state, and local consumer protection and other regulations, primarily relating to the mattress and pillow industry. These regulations vary among the states, countries, and localities in which we do business. The regulations generally impose requirements as to the proper labeling of bedding merchandise, restrictions regarding the identification of merchandise as “new”"new" or otherwise, controls as to hygiene and other aspects of product handling and sale and penalties for violations. The U.S. Consumer Product Safety Commission ("CPSC") has adopted rules relating to fire retardancy standards for the mattress industry. Many foreign jurisdictions also regulate fire retardancy standards. Future changes to these standards may require modifications to our products to comply with such changes. We are also subject to environmental and health and safety requirements with regard to the manufacture of our products and the conduct of our operations and facilities. We have made and will continue to make capital and other expenditures necessary to comply with these requirements. Currently these expenditures are immaterial to our financial results. For a discussion of the risks associated with our compliance programs in connection with these regulations, please refer to "Risk Factors" under Part I, Item 1A of this Report.

Our principal waste products are foam and fabric scraps, wood, cardboard and other non-hazardous materials derived from product component supplies and packaging. We also periodically dispose of small amounts of used machine lubricating oil and air compressor waste oil, primarily by recycling. In the U.S., we are subject to federal, state and local laws and regulations relating to environmental health and safety, including the Federal Water Pollution Control Act, the Clean Air Act and the Comprehensive Environmental Response, CompensationResource, Conservation and LiabilityRecovery Act. We believe that we are in compliance with all applicable international, federal, state and local environmental statutes and regulations. We do not expect that compliance with international, federal, state or local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, will have a material effect upon our capital expenditures, earnings or competitive position. We are not aware of any pending federal environmental legislation that would have a material impact on our operations, and have not been required to make, and do not expect to make, any material capital expenditures for environmental control facilities in the foreseeable future.

In connection with sales of our products and operation of our business, we often collect and process personal data from our customers.customers and employees. As such, we are subject to certain laws and regulations relating to information technology security and personal data protection and privacy. For example, in 2018, the European Union adopted the General Data Protection Regulation (“GDPR”("GDPR"), which took effect in May 2018. The GDPR imposed a new and expanded set of ongoing compliance requirements on companies, including us, that process personal data from citizens living in the European Union ("EU").Union. In addition, there are country-specific data privacy laws in Europe which tend to follow the principles laid out in the GDPR, but in some cases, impose additional requirements on data controllers. In addition, severalSeveral U.S. states have also recently introduced legislation that mirror some of the protections provided by the GDPR. California’sGDPR, such as the California Consumer Privacy Act (“CCPA”("CCPA"), the Virginia Consumer Data Protection Act ("VCDPA") and the Colorado Privacy Act ("CPA"). The CCPA came into effect on January 1, 2020, the VCDPA on March 2, 2021 and grantedthe CPA on July 7, 2021 (together the "U.S. state privacy laws"). These U.S. state privacy laws grant consumers in California certain rights related to thetheir personal information, such as access to deletion of, and sharingdeletion of their personal information, that is collected byplacing strict data collection requirements on businesses, including us.

As a global organization, our workforce is important to us. We believe a key driver of December 31, 2019,long-term success is the strength of our workforce and we had approximately 7,400are committed to investing in our workforce. As part of our commitment to our workforce, we focus on the following key areas noted below:

As part of ongoing efforts to support our understanding, tracking and transparency of inclusion and diversity within our employee population, we disclosed additional metrics in our 2022 Corporate Social Values Report located on the Tempur Sealy employees, approximately 5,400 of whichInvestor website at http://investor.tempursealy.com. Our website and the 2022 Corporate Social Values Report are located in North Americanot incorporated by reference into this Report.

We are committed to a safe and healthy work environment and are committed to our global safety policy. With sleep and wellness at the rest of the world. We increased headcount in 2019 to handle our unit volume increases. Approximately 28.0%core of our business, we recognize the connection between sleeping and living well and overall health. We offer a number of initiatives to help our employees maintain or improve their health and wellness.

In 2021, we continued to implement numerous health and safety measures across our global operations in an effort to minimize the risk of COVID-19 infections, following all local government directives and CDC recommendations. While working in a Tempur Sealy building, unvaccinated employees are representedrequired to wear a mask, and all employees are encouraged to maintain physical distancing. Additionally, each employee is subject to a temperature and wellness check each time they enter the building. Hand sanitizer and other sanitizing products are available throughout each building for employee use.

Our goal is to design and offer development opportunities that improve Company performance by various labor unionsmeeting individual learning and development needs and strengthen our culture by reinforcing Company values. We use the 70/20/10 learning and development model. This approach gives employees the opportunity to develop their skills through a combination of job experience (70%), mentoring (20%), and formal training (10%). Training at Tempur Sealy includes, but is not limited to, formal training programs, leadership development mentorships, professional and industry conferences, and education assistance. During 2021, we rolled out our new learning management system, the Learning Zone, where employees can take courses on a variety of individual and leadership development topics. All our professional employees have access to this system, and there are thousands of individual modules offered through our partnership with separate collective bargaining agreements. Due to the large number of collective bargaining agreements, we are periodically in negotiations with certain of the unions representing our employees. We consider our overall relations with our workforce to be satisfactory. Our current collective bargaining agreements, which are typically one to three years in length, expire at various times beginning in 2020 through 2022. As of December 31, 2019, our North America segment employed approximately 400 individuals covered under collective bargaining agreements expiring in 2020 and our International segment employed approximately 400 individuals covered under collective bargaining agreements expiring in 2020.Skillsoft.

The novel strain of which wecoronavirus (COVID-19) first identified in Wuhan, China in December 2019 has now spread across the world. The outbreak, and measures taken to contain or mitigate it, have already experienced,had dramatic adverse consequences for the economy, including reduced consumeron demand, for products; liquidity problems among our customersoperations, supply chains and financial markets. The nature and scope of the consequences to date are difficult to evaluate precisely, and their future course is impossible to predict with confidence.

The COVID-19 pandemic and related market participants; insolvencyresponses are continuing to evolve and, therefore, continue to present potential new risks to our business, particularly in light of new variants of the virus. We have seen and bankruptcy filings byexpect to continue to see effects of the COVID-19 crisis on our customersbusiness operations including impacts such as the following: increased raw material prices, a decline in consumer confidence and related market participants resultingspending, further increase in increased provisions for credit losses and/or write downs of existing assets; liquidity problems and/or insolvencyunemployment which could impact consumers' disposable income and, in turn, decrease sales of our key suppliers resultingproducts, required isolation in product delays; inabilitycertain markets, disruptions in our supply chain, as the outbreak has disrupted travel, manufacturing and distribution throughout the world, increases in operating costs due to disruptions, the cost of retailerscomplying with public health vaccine and consumerstesting mandates and personal protective equipment requirements and other increased employment-related costs. The rapid development and uncertainty of the pandemic precludes any prediction as to obtain credit to finance purchasesthe ultimate impact of COVID-19. The full extent of the impact and effects of COVID-19 on our products; decreased consumer confidence; decreased retail demand, including order delays or cancellations; counterparty failures negatively impactingbusiness,

Participants in the mattress and pillow industries compete primarily on price, quality, brand name recognition, product availability and product performance across a range of distribution channels.

A number of our significant competitors offer mattress and pillow products that compete directly with our products. The effectiveness of our competition relative to our performance, including by established manufacturers or new entrants into the market, could have a material adverse effect on our business, financial condition and/or operating results. For example, market participants continue to improve their channels of distribution to optimize their reach to the consumer, including by pursuing online direct-to-consumer models for foam mattresses and offering their own lines of mattresses.models. In addition, retailers in the U.S. and internationally have integrated vertically in the furniture and bedding industries, and it is possible that such vertical integration may provide conditions that would negatively impact our net sales and results of operations. The pillow industry in particular is characterized by a large number of competitors, none of which is dominant. As such, conditions that substantially increase a single participant's market share would likelycould be detrimental to our financial performance. The highly competitive nature of the mattress and pillow industries means we are continually subject to the risk of loss of market share, loss of significant customers, reductions in margins, and the inability to acquire new customers.

No customer represented 10.0% or moreOur top five customers, collectively, accounted for approximately 33% of our net sales for 2019.

Consistent with other manufacturing and retail operations, we are increasingly dependent on information technology, including the Internet, for the storage, processing, and transmission of our electronic, business-related information assets. We leverage our internal information technology, infrastructures, and those of our service providers, to enable, sustain and support our global business interests. As such, our ability to effectively manage our business depends significantly on our information systems. The failure of our current systems, or future upgrades, to operate effectively or to integrate with other systems, or a breach in security of these systems could cause reduced efficiency of our operations, and remediation of any such failure, problem or breach could reduce our liquidity and profitability. Any disruptions caused by the failure of these systems could adversely impact our day-to-day business and decision making and could have a material adverse effect on our performance.

We are subject to laws and regulations relating to information technology security and personal data protection and privacy.privacy and this legislative landscape is forever evolving. For example, the GDPR, which took effect in May 2018, and the CCPA, which took effect in January 2020 and the PIPL, which took effect in November 2021, have imposed new and expanded compliance requirements on companies, including us, that process personal data from citizens living in the EUEuropean Union, California and California.China. In addition, there are country-specific data privacy laws in Europe and elsewhere in the world, such as those in Japan, Korea, Australia, New Zealand, Canada and Mexico, and state-specific data privacy laws forthcoming in the U.S., such as those in Virginia and Colorado, which broadly follow thekey principles laid out in the GDPR and the CCPA, but in some cases, impose different and additional requirements on businesses like ours. We are actively working to ensure ongoing compliance with all data privacy and information technology security laws and regulations worldwide to which we are subject, which involves substantial resource and costs. Despite our ongoing efforts to bring our practices intomaintain compliance, with the GDPR and the CCPA, we may not be successful due to various factors within or outside of our control. Failure to comply with GDPR, CCPA, country-specific or U.S. state-specificapplicable laws and regulations could result in costly investigations from regulators and litigation, expose us to potentially significant penalties, and result in negative publicity that could damage our reputation and credibility.

Historically,Prior to 2020, we have successfully implemented a new enterprise resource planning, or “ERP,”"ERP," system across several of our global subsidiaries. We are currently implementing thesuccessfully implemented new ERP systems in certain significant U.S. subsidiaries in 2020 and January 2021 and are continuing to implement this ERP system in other significant U.S. subsidiaries with key go-live dates in 2020 and 2021.2022. This new system replaces a substantial portion of our legacy systems that have historically supported our operations in the past.operations. If we are unable to successfully continue the implementation of the replacement system it couldor if errors or failures in the implementation process lead to a disruption inproduction shutdowns, our business may be materially impacted and disrupted and we may be required to engage in unanticipated additional use of capital and other resources, which may adversely impact our results of operations. In addition, if the cost of implementing this ERP system increases above our estimates, this could have a significant adverse effect on our profitability.

We rely on third party technology service providers in the ordinary course of our Direct channel. The services provided include website infrastructure and hosting services, digital advertising platforms, private label credit card financing program and credit card payment authorization and capture services in support of our business, all of which are customarily provided by third party technology service providers for similarly-situated retail business operations. Like others in the industry, we experience cyber-based attacks and incidents from time to time. In the event that we or our service providers are unable to prevent or detect and remediate cyber-based attacks or other security incidents in a timely manner, our operations could be disrupted or we may incur financial or reputational losses arising from the theft, misuse, unauthorized disclosure or destruction of our information assets.

As of December 31, 2021, we had approximately 12,000 full-time employees. Our joint ventures also employ approximately 1,350 full-time employees. Approximately 19% of our employees are represented by various labor unions with separate collective bargaining agreements or a changegovernment labor union contracts for certain international locations. Our North American collective bargaining agreements, which are typically three years in factors or circumstances could adversely impact our income tax expense, effective tax rate and cash flows.

We face an inherent business risk of exposure to product raw materials consist mainlyliability claims if the use of polyurethane foam, polyester, polyethylene foam and steel innerspring components that we purchase from various suppliers. In the U.S. and Canada, we source the majority of our requirements for polyurethane foam components and spring components for our Sealy and Stearns & Foster mattress units from a key supplier for each component. All critical components are purchased under supply agreements. We also purchase a significant portion of our Sealy foundation parts from third party sources under supply agreements. We do not consider ourselves to be dependent in the long term upon any single outside vendor as a source of supply to our bedding business, and we believe over time that sufficient alternative sources of supply for the same, similar or alternative components are available. However, if a key supplier for an applicable component failed to supply components in the amount we require this could significantly interrupt production of our products and increaseresults in personal injury or property damage. In the event that any of our production costsproducts prove to be defective or otherwise fail to meet safety standards, we may be required to recall, redesign or even discontinue those products. We maintain insurance against product liability claims, but such coverage may not continue to be available on terms acceptable to us or be adequate for liabilities actually incurred. A successful claim brought against us in the near term. Such a disruption could occur for a varietyexcess of reasons, including changes in international trade duties and other aspects of international trade policy, natural disasters, pandemics and political events. For further information relating to this risk in particular, please refer to the discussion under the heading “We are subject to risks from our international operations, such as complying with U.S. and foreign laws, foreign exchange exposure, tariffs, increased costs, political risks and our ability to expand in certain international markets, whichavailable insurance coverage could impair our abilityliquidity and profitability, and any claim or product recall that results in significant adverse publicity against us could result in consumers purchasing fewer of our products, which would also impair our liquidity and profitability.

We also face inherent business risks by operating physical stores that are open to compete and our profitability.”

We rely on patents and trade secrets to protect the design, technology and function of our products. To date, we have not sought U.S. or international patent protection for our principal product formula for Tempur® material and certain of our manufacturing processes. Accordingly, we may not be able to prevent others from developing certain visco-elastic material and products that are similar to or competitive with our products. Our ability to compete effectively with other companies also depends, to a significant extent, on our ability to maintain the proprietary nature of our owned and licensed intellectual property. We own a significant number of patents or have patent applications pending on some aspects of our products and certain manufacturing processes. However, the principal product formula and manufacturing processes for our Tempur® material are not patented and we must maintain these as trade secrets in order to protect this intellectual property. We own U.S. and foreign registered trademarks and service marks and have applications for the registration of trademarks and service marks pending domestically and abroad. We also license certain intellectual property rights from third parties.

Certain of our trademarks are currently registered in the U.S. and are registered or pending in foreign jurisdictions. Certain other trademarks are the subject of protection under common law. However, those rights could be circumvented, or violate the proprietary rights of others, or we could be prevented from using them if challenged. A challenge to our use of our trademarks could result in a negative ruling regarding our use of our trademarks, their validity or their enforceability, or could prove expensive and time consuming in terms of legal costs and time spent defending against such a challenge. Any loss of trademark protection could result in a decrease in sales or cause us to spend additional amounts on marketing, either of which could decrease our liquidity and profitability. In addition, if we incur significant costs defending our trademarks, that could also decrease our liquidity and profitability. In addition, we may not have the financial resources necessary to enforce or defend our trademarks. Furthermore, our patents may not provide meaningful protection and patents may never issue from pending applications. It is also possible that others could bring claims of infringement against us, as our principal product formula and

In addition, the laws of certain foreign countries may not protect our intellectual property rights and confidential information to the same extent as the laws of the U.S. or the EU. Third parties, including competitors, may assert intellectual property infringement or invalidity claims against us that could be upheld. Intellectual property litigation, which could result in substantial cost to and diversion of effort by us, may be necessary to protect our trade secrets or proprietary technology, or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all.

We depend on the continued services of our executive management team. The loss of key personnel could have a material adverse effect on our ability to execute our business strategy and on our financial condition and results of operations. We do not maintain key-person insurance for members of our executive management team.

We are a participant in the Advance Pricing Agreement Program (the "APA Program") for the tax years 2012 through 2022, under which the U.S. Internal Revenue Service ("IRS"), on our costs, which could decrease our liquidity and profitability.

Approximately 23.9% of our net sales were generated outside of the U.S. in 2021. We conduct our business in a wide variety of currencies and are therefore subject to market risk relating to changes in foreign exchange rates. If the U.S. dollar strengthens relative to the Euro or other foreign currencies where we have operations, for example, there will be a negative impact on our operating results upon translation of those products. foreign operating results into the U.S. dollar. In 2021, foreign currency exchange rate changes positively impacted our net income by approximately 1.8% and positively impacted adjusted EBITDA, which is a non-GAAP financial measure, by approximately 1.4%. Changes in foreign currency exchange rates could have an adverse impact on our financial condition, results of operations and cash flows. Except for the use of foreign exchange forwards contracts described immediately below, we do not hedge the translation of foreign currency operating results into the U.S. dollar.

We maintain insurance against product liability claims, but such coverageuse foreign exchange forward contracts to manage a portion of the exposure to the risk of the eventual net cash inflows and outflows resulting from foreign currency denominated transactions among certain subsidiaries. These hedging transactions may not continuesucceed or may be only partially successful in managing our foreign currency exchange rate risk.

Our variable rate debt agreements, including our 2019 Credit Agreement, use LIBOR, which is subject to uncertainty. In March 2021, the United Kingdom’s Financial Conduct Authority (the "FCA"), which regulates LIBOR, confirmed that all of the LIBOR settings for liabilities actually incurred. A successful claim brought against usEuro and Swiss Franc and some of the LIBOR settings for Japanese Yen, Sterling and US dollars will cease in excessDecember 2021 and the remainder of available insurance coveragethe LIBOR settings for U.S. dollars will cease in June 2023. When LIBOR ceases to exist or is no longer representative of the underlying market, our variable rate debt agreements with interest rates that are indexed to LIBOR will use various alternative methods to calculate the applicable interest rate, which could result in increases in interest rates on such debt and adversely impact our interest expense, results of operations and cash flows. Further, we may need to amend our variable rate debt agreements to replace LIBOR with a new reference rate. As of December 31, 2021, we do not utilize any derivatives or hedging strategies that have a LIBOR component. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, may replace U.S. Dollar LIBOR with a new index calculated by short term repurchase agreements, backed by Treasury securities called the Secured Overnight Financing Rate ("SOFR"). Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR and any successor rates for LIBOR is uncertain.

We are a global company, selling our products in significant adverse publicity against us could result in consumers purchasing fewerapproximately 100 countries worldwide. We generated approximately 23.9% of our products, which wouldnet sales outside of the U.S. in the year ended December 31, 2021. We operate through multiple wholly owned subsidiaries and we also impair our liquidityparticipate in international license and profitability.joint venture arrangements with independent third parties.

We also face inherent business risks by operating physical stores thatOur international operations are opensubject to the public. By opening retail stores,customary risks of operating in an international environment, including complying with U.S. laws affecting operations outside of the U.S. such as the Foreign Corrupt Practices Act; complying with foreign laws and regulations, including disparate anti-corruption laws and regulations; and the potential imposition of trade or foreign exchange restrictions, tariffs and other tax increases, inflation and unstable political situations and labor issues. We are also limited in our ability to independently expand in certain international markets where we have increased our exposuregranted licenses to premises liability claims. We maintain insurance against premises liability claims, but such coverage

Our products and our marketing and advertising programs are subject to regulation in the U.S. by various federal, state and local regulatory authorities, including the Federal Trade Commission, the Consumer Product Safety Commission and the U.S. Food and Drug Administration. In addition, other governments and agencies in other jurisdictions regulate the sale and distribution of our products. These rules and regulations may change from time to time, or may conflict. There may be continuing costs of regulatory compliance including continuous testing, additional quality control processes and appropriate auditing of design and process compliance. For example, the CPSC and many foreign jurisdictions have adopted rules relating to fire retardancy standards for the mattress industry. Further, some cities, states and the U.S. Congress continue to consider fire retardancy regulations that may be different or more stringent than the CPSC standard. Adoption of multi-layered regulatory regimes, particularly if they conflict with each other, could increase our costs, alter our manufacturing processes and impair the performance of our products which may have an adverse effect on our business. We are also subject to various health and environmental provisions, such as California Proposition 65 (the Safe Drinking Water and Toxic Enforcement Act of 1986) and 16 CFR Part 1633 (Standard for the Flammability (Open Flame) of Mattress Sets). and in our international jurisdictions we are subject to the medical devices regulatory authorities such as the Medicines and Healthcare products Regulatory Agency (MHRA) in the UK and the International Chamber of Commerce Advertising and Marketing Communications Code.

Our marketing and advertising practices could also become the subject of proceedings before regulatory authorities or the subject of claims by other parties and could require us to alter or end these practices or adopt new practices that are not as effective or are more expensive.

In addition, we are subject to federal, state and local laws and regulations both in the U.S. and internationally, relating to pollution, environmental protection and occupational health and safety. We may not be in complete compliance with all such requirements at all times. We have made and will continue to make capital and other expenditures to comply with environmental and health and safety requirements. If a release of hazardous substances occurs on or from our properties or any associated offsite disposal location, or if contamination from prior activities is discovered at any of our properties, we may be held liable and the amount of such liability could be material. As a manufacturer of bedding and related products, we use and dispose of a number of substances, such as glue, lubricating oil solvents and other petroleum products,solvents, as well as certain foam ingredients, that may subject us to regulation under numerous foreign, federal and state laws and regulations governing the environment. Among other laws and regulations, we are subject in the U.S. to the Federal Water Pollution Control Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act and related state and local statutes and regulations.regulations in our international jurisdictions we are subject to the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), the Waste from Electrical and Electronic Equipment Directive (WEEE) and the General Product Safety Directive amongst others.

Our operations could also be impacted by a number of pending legislative and regulatory proposals to address greenhouse gas emissions in the U.S. and other countries. Certain countries have adopted the Kyoto Protocol. New greenhouse gas reduction targets have been established under the Kyoto Protocol, as amended, and certain countries, including Denmark, have adopted the new reduction targets. This and other international initiatives under consideration could affect our International operations. These actions could increase costs associated with our operations, including costs for raw materials, pollution control equipment and transportation. Because it is uncertain what laws will be enacted, we cannot predict the potential impact of such laws on our future consolidated financial condition, results of operations, or cash flows.

We have made and will continue to make capital and other expenditures to comply with environmental and health and safety requirements. In the event contamination is discovered with respect to one or more of our current or former properties, government authorities or third parties may bring claims related to these properties, which could have a material effect on our profitability.

We maintain certain single employer defined benefit pension plans. In addition, hourly employees workingplans at certain of Sealy’s domesticour manufacturing facilities are covered by union sponsored retirement and health and welfare plans.facilities. These plans cover both active employees and retirees. The plans are currently underfunded, and under certain circumstances, including the decision to close or sell a facility, we could be required to pay amounts with respect to this underfunding. Such events may significantly impair our profitability and liquidity and the possibility of having to make these payments could affect our decision on whether to close or sell a particular facility.

For more information, refer to Note 10, “Retirement8, "Retirement Plans,”" in our Consolidated Financial Statements included in Part II, ITEM 8 of this Report.

Certain of our retail pricing and promotional allowance policies or practices are subject to antitrust and consumer protection regulations in the U.S. and abroad. If antitrust regulators or private parties in any jurisdiction in which we do business initiate investigations or claims that challenge our pricing or promotional allowance policies or practices, our efforts to respond could force us to divert management resources and we could incur significant unanticipated costs. If such an investigation or claim were to result in a charge that our practices or policies were in violation of applicable antitrust, consumer protection or other laws or regulations, we could be subject to significant additional costs of defending such charges in a variety of venues and, ultimately, if there were a finding that we were in violation of antitrust, consumer protection or other laws or regulations, there could be an imposition of fines, and damages for persons injured, as well as injunctive or other relief. Any requirement that we pay fines or damages (which, under the laws of certain jurisdictions, may be trebled) could decrease our liquidity and profitability, and any investigation or claim that requires significant management attention or causes us to change our business practices could disrupt our operations or increase our costs, also resulting in a decrease in our liquidity and profitability. An antitrust or consumer protection class action or individual suit against us could result in potential liabilities, substantial costs, treble damages, and the diversion of our management’s attention and resources, regardless of the outcome.

Our Board of Directors authorized a share repurchase program in 2016 pursuant to continuewhich we are authorized to repurchase shares of our common stock. From 2016 through December 31, 2021, we had repurchased an aggregate of 36.6 million shares for approximately $1,762.7 million under our share repurchase program. As of December 31, 2021, we had approximately $1,400.7 million remaining under the share repurchase authorization. The share repurchase program may be volatile, your investment could declinesuspended or terminated at any time. Shares may be repurchased from time to time, in value,the open market or through private transactions, subject to market conditions, in compliance with applicable state and we may incur significant costs from class action litigation.

Provisions of Delaware law and our certificate of incorporation and by-laws could hamper a third party’sparty's acquisition of us, or discourage a third party from attempting to acquire control of us. You may not have the opportunity to participate in these transactions. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions include:

Our Board of Directors could determine in the future that adoption of a stockholder rights agreement is in the best interest of our stockholders and any such stockholder rights agreement, if adopted, could render more difficult, or discourage, a merger, tender offer, or assumption of control of the Company that is not approved by our Board of Directors.

None.

The following table sets forth certain information regarding our principal facilities by segment, which have been aggregated by principal manufacturing and distribution entity, at December 31, 2019.

In addition to the properties listed above, we have other facilities in the U.S. and other countries, the majority under leases with one to ten year terms. TheWe lease the land that our manufacturing facility in Albuquerque, New Mexico is leasedlocated, as part of the related industrial revenue bond financing. We have an option to repurchase the propertyland for one dollar upon termination of the lease.

We believe that our existing properties are suitable for the conduct of our business, are adequate for our present needs and will be adequate to meet our future needs.

Information regarding legal proceedings can be found in Note 14, “Commitments12, "Commitments and Contingencies,”" of the Notes to the Consolidated Financial Statements, included in Part II, ITEM 8 of this Report, “Financial"Financial Statements and Supplementary Data,”" and is incorporated herein by reference.

None.

Our sole class of common equity is our $0.01 par value common stock, which trades on the New York Stock Exchange ("NYSE") under the symbol “TPX.”"TPX." Trading of our common stock commenced on the NYSE on December 18, 2003. Prior to that time, there was no public trading market for our common stock.

 

Our Board of Directors authorized a share repurchase program in 2016 pursuant to which we were authorized to repurchase shares of our common stock for a total repurchase price of not more than $800.0 million. We did not repurchase any shares under our share repurchase program during the year ended December 31, 2018. As of December 31, 2019, we had repurchased under the share repurchase program an aggregate of 1.3 million shares for approximately $102.3 million and had approximately $124.6 million remaining under the program. In February 2020,stock. During 2021, the Board of Directors authorized an increase, of over $190.0 million,increases to our share repurchase authorization of Tempur Sealy International's common stock$211.4 million, $325.3 million, $431.5 million and $1,032.3 million during February, April, October and December 2021, respectively. During the year ended December 31, 2021, we had repurchased 19.5 million shares, under the share repurchase program, for approximately $801.4 million and had approximately $1,400.7 million remaining under the program. Subsequent to $300.0year-end, the Company repurchased an additional 7.7 million shares for approximately $305.0 million.

Share 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, regulatory requirements and other market conditions. The program does not require the repurchase 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 we might otherwise be precluded from doing so under federal securities laws.

Equity compensation plan information required by this Item is incorporated by reference from Part III, ITEM 12 of this Report.

The following table compares cumulative stockholder returns for us over the last five years to the Standard & Poor’s ("S&P") 500 Stock Composite Index and a peer group. The S&P 500 Composite Index is a capitalization weighted index of 500 stocks intended to be a representative sample of leading companies in leading industries within the U.S. economy. We selected these stocks based on market size, liquidity and industry group representation. We believe the peer group discussed below closely reflects our business and, as a result, provides a meaningful comparison of stock performance.