SOMNIGROUP INTERNATIONAL INC. (SGI) Business

ITEM 1. BUSINESS

General

Somnigroup is the world's largest bedding company, dedicated to enriching people's lives through the power of a good night's sleep and transforming how the world sleeps. With superior capabilities in design, manufacturing, distribution and retail, we deliver breakthrough sleep solutions and serve the evolving needs of consumers in over 100 countries worldwide through our fully-owned businesses, Tempur Sealy, Mattress Firm and Dreams. Our portfolio includes the most highly recognized brands in the industry, including Tempur-Pedic®, Sealy® and Stearns & Foster®, and our global omni-channel platform enables us to meet consumers wherever they shop, offering a personal connection and innovation to provide a unique retail experience and tailored solutions.

Somnigroup 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 returning value to shareholders.

On February 5, 2025, we completed the previously announced acquisition of Mattress Firm, the nation's largest mattress specialty retailer. The total purchase price was approximately $5.1 billion, net of cash acquired of $0.3 billion. The aggregate purchase price consisted of $3.1 billion in cash and approximately 34.2 million shares of common stock valued at $65.65 per share, which represents the simple average of the opening and closing price per share of our common stock on the NYSE on the trading day immediately prior to the date of acquisition, with the value of any fractional shares paid in cash.

In connection with the closing of the Mattress Firm Acquisition, we amended our Certificate of Incorporation to change our name to "Somnigroup International Inc." effective February 18, 2025. The name Somnigroup reflects our position as a global holding company and provider of sleep solutions with a portfolio of bedding businesses. Somnigroup's purpose is to drive long-term shareholder returns through sustainable competitive advantages and disciplined capital allocation as we oversee our investments in the $120 billion global sleep industry.

To comply with commitments made in securing approval for our acquisition of Mattress Firm, we set our merchandising plan to provide 43% of horizontal premium ($1,500+) floor slots, on average across all our open Mattress Firm stores, for the placement of third-party premium mattresses as assessed at calendar year end. To monitor the Company's fulfillment of the merchandising plan, the Company has designed and instituted certain protocols in conjunction with an independent consulting firm. Based on these protocols, management determined that the Company was in compliance with the floor slot commitment as assessed on December 31, 2025.

Our powerful distribution and retail model operates through an omni-channel strategy. As of December 31, 2025, Somnigroup's combined global footprint included over 2,800 retail stores, approximately 30 e-commerce platforms, over 70 manufacturing facilities and four state-of-the-art research and development facilities worldwide. Our combined operations are supported by more than 20,000 employees with a collective focus on providing breakthrough sleep solutions to consumers.

Our long-term strategy is to drive earnings growth with high return on invested capital and strong free cash flow, which is a non-GAAP financial measure. In order to achieve our long-term strategy, we focus on developing the most innovative bedding products in all the markets we serve, making significant investments in our iconic global brands and optimizing our worldwide omni-channel distribution. We also intend to generate earnings growth through ongoing investments in research and development and productivity initiatives, which will improve our profitability and create long-term stockholder value.

We have a balanced approach to capital allocation that includes investments in our operations to facilitate long-term growth and returning capital to shareholders via quarterly cash dividends and share repurchases. From time to time, we also look at acquisition opportunities that could complement and strengthen our core business. When doing so, we seek to balance our assessment of the industry environment, our business outlook and the potential for further strategic expansion, while also prudently managing our business.

Following the completion of the Mattress Firm Acquisition in the first quarter of 2025, we have operated in three segments: Mattress Firm, Tempur Sealy North America and Tempur Sealy International. These segments are strategic business units that are managed separately. Our Mattress Firm segment consists of retail stores and distribution centers located in the

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U.S. Our Tempur Sealy North America segment consists of manufacturing, distribution and retail subsidiaries and licensees located in the U.S., Canada and Mexico (other than Mattress Firm retail and distribution locations). Our Tempur Sealy International segment consists of manufacturing, distribution and retail subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America (other than Mexico). Corporate operating expenses are not included in any of the segments and are presented separately as a reconciling item to consolidated results.

Our principal executive office is located at 100 Crescent Ct. Suite 700, Dallas, Texas 75201 and our telephone number is (800) 878-8889. Somnigroup International Inc. was incorporated under the laws of the State of Delaware in September 2002. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the Securities and Exchange Commission ("SEC") pursuant to Section 13(a) of the Exchange Act, are available free of charge on our website at www.somnigroup.com as soon as reasonably practicable after such reports are electronically filed with the SEC. Our website and its contents are not incorporated by reference into this Report.

The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The website of the SEC is www.sec.gov.

Our Products and Brands

We have a comprehensive offering of products that appeal to a broad range of consumers, some of which are covered by one or more patents and/or patent applications. We also routinely introduce new bedding products and update our existing bedding products in each of our segments.

In order to deliver on our mission to be every consumer's choice for better sleep by advancing innovation and expertise in the bedding industry, 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-Pedic®, Sealy® and Stearns & Foster®, which are described below:

•Tempur-Pedic® - Founded in 1991, the Tempur brand is our specialty innovation category leader designed to provide life changing sleep for our wellness-seeking consumers. Our proprietary Tempur material precisely adapts to the shape, weight and temperature of the consumer and creates fewer pressure points, reduces motion transfer and provides personalized comfort and support.

•Stearns & Foster® - The Stearns & Foster brand offers our consumers high quality mattresses built by certified craftsmen who have been specially trained. Founded in 1846, the brand is designed and built with precise engineering and relentless attention to detail and fuses new innovative technologies with time-honored techniques, creating supremely comfortable beds.

•Sealy® - The Sealy brand originated in 1881 in Sealy, Texas, and for over a century has focused on offering trusted comfort, durability and excellent value while maintaining contemporary styles and great support. The Sealy Posturepedic® brand, introduced in 1950, was engineered to provide all-over support and body alignment to allow full relaxation and deliver a comfortable night's sleep.

•Sleepy's® - The Sleepy's brand is our private label brand offering at our Mattress Firm stores and online at www.mattressfirm.com. Sleepy's is well-positioned to compete in a space where consumers prioritize quality and value.

•Non-Branded - We offer non-branded products through our OEM business, including mattresses, pillows and other bedding products and components at a wide range of price points. The addition of non-branded offerings expands our capabilities to service third-party retailers to capture manufacturing profits from bedding brands outside our own.

In 2026, we plan to launch an all-new collection of Stearns & Foster products in North America. This new line is designed to further elevate our high‑end traditional innerspring brand by introducing incremental technologies, expanding our range of hybrid offerings, and providing a refreshed aesthetic.

Our portfolio of retail brands includes Mattress Firm®, Dreams®, Tempur-Pedic® retail stores, SOVA retail stores in Sweden and a variety of other retail brands internationally, which operate in various countries. The retail brands named above are described below:

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•Mattress Firm® - Mattress Firm is the largest multi-branded mattress specialty retailer in the U.S., helping to make better sleep a reality by matching consumers to their perfect mattress through its highly trained team of Sleep Experts® across its over 2,100 stores and robust online operations. Mattress Firm is a leading retailer of brands such as Tempur-Pedic®, Sealy®, Stearns & Foster®, Purple®, Sleepy's®, Beautyrest®, Nectar®, Serta®, Simmons®, Tuft & Needle® and tulo®.

•Dreams® - Dreams is the leading specialty bedding retailer in the United Kingdom ("U.K."). As a multi-branded retailer, Dreams sells a variety of products across a range of price points. In addition to operating over 200 brick-and-mortar stores and an e-commerce channel throughout the U.K., Dreams also manufacturers the majority of the bedding products it sells in-house.

•Tempur-Pedic® retail stores - Tempur-Pedic® retail stores are designed for the consumers that prefer to purchase directly from the manufacturer, and for those seeking a more personalized and educational sales experience. These retail boutiques are strategically located in high traffic, premium retail centers that attract customers whose interests and purchasing behaviors align with our brand.

•SOVA - SOVA is a highly respected and well-established premium bedding chain in Sweden. Our stores are connected to the urban areas of Stockholm, Gothenburg and Malmö. The assortment primarily focuses on premium to ultra-premium brands and well-trained sales staff targeting to sell quality beds with a strong average selling price.

Omni-Channel Distribution

Our primary selling channels are Direct and Wholesale. These channels align to the operating margin characteristics of our business and our marketplace. Direct channel sales represented 63.5% of net sales in 2025, compared to 24.9% in 2024, primarily driven by the acquisition of Mattress Firm. Our wholesale distribution complements our broad direct channel distribution, and we believe this balanced approach enhances the overall global sales potential and profitability of Somnigroup.

Our Direct channel includes over 2,800 company-owned retail stores and our e-commerce platforms and call centers worldwide. Growth opportunities for our Direct channel include improving conversion, average order value and traffic, and through opening new brick and mortar stores and e-commerce channels.

Our Wholesale channel includes sales of product to third-party retailers, hospitality businesses and healthcare customers. Growth opportunities for our Wholesale business include driving slot velocity, increasing our slot placements with existing customers and expanding distribution through new retail partners and alternative distribution channels.

Our third-party retailers, Mattress Firm®, Tempur-Pedic® retail stores, Dreams® and 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.

Marketing

Our overall marketing strategy is to drive consumer demand for our brands by distinguishing them in the marketplace. To accomplish this, we target each brand to a particular and complementary audience, and tailor our product design/development, distribution and advertising accordingly. To maximize awareness and purchase intent for our brands, we invest at industry-leading levels in national television, radio, search-engine marketing, social media and other media channels. We also complement our own direct-to-consumer marketing activities and investments with marketing activity conducted in cooperation with our retail partners. This activity includes investments in co-operative advertising, new product launches and the deployment of in-store point-of-sale material and training programs designed to enhance the visibility of, and advocacy, for our brands.

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Seasonality

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 and global macroeconomic conditions. Additionally, the U.S. bedding industry generally experiences increases in sales around holidays and promotional periods.

Operations

Mattress Firm

Manufacturers ship merchandise directly to our national network of 62 distribution centers that serve our over 2,100 retail stores and e-commerce operations. Our merchandise is received, inspected and processed at our distribution centers and then delivered to customers’ homes or to stores through third-party delivery services.

Tempur Sealy

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".

Suppliers

We obtain the raw materials used to produce our pressure-relieving Tempur® material and components used in the manufacture of Tempur-Pedic® products from third-party sources. We currently acquire chemicals and proprietary additives for Tempur-Pedic® 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. 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 will become available.

Raw materials for Sealy® and non-branded products consist mainly of polyurethane 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 from key suppliers for each component. We also purchase a significant portion of our Sealy foundation parts from third-party sources.

Our Mattress Firm segment sources finished goods from various bedding manufacturers, including our Tempur Sealy North America segment. 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 believe over time that sufficient alternate sources of supply for the same or similar components will be available outside of China from our current or alternate suppliers.

For further information regarding the loss of suppliers and disruptions in the supply of our raw materials and components on the Company, please refer to "Risk Factors" in ITEM 1A of Part I of this Report.

Research and Development

We have four research and development centers, three in the U.S. and one in Denmark, that conduct technology and product development. Additionally, we have a product testing facility that conducts hundreds of consumer tests annually. We believe our consumer-research driven approach to innovation results in best-in-class products that benefit the consumer.

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Industry and Competition

We compete in the global bedding industry, comprised of mattresses and foundations, pillows and accessories. The mattress 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, gel, rubber and down. The primary distribution channels for bedding products are retail furniture and bedding stores, big-box retailers and e-commerce channels.

We encounter competition from other bedding manufacturers and retailers. The domestic market for manufacturers is concentrated and the domestic market for retailers is fragmented. The international market for both manufacturers and retailers is highly fragmented, with a large number of competitors primarily operating on a regional and local basis. Participants in the global bedding industry offer a broad range of mattress, bed base and pillow products and compete primarily on price, quality, brand name recognition, product availability and product performance.

Manufacturers and retailers in the global bedding industry are seeking to increase their channels of distribution and are looking for new ways to reach the consumer, resulting in an increase in the number of U.S. and international companies pursuing online direct-to-consumer models for mattresses. In addition, retailers both in the U.S. and internationally are increasingly seeking to offer their own private label products.

Intellectual Property

Patents, Trademarks and Licensing

As of December 31, 2025, we hold over one thousand 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, 2025, we held thousands of trademark registrations worldwide, which we believe have significant value and are important to the marketing of our products to retailers and consumers. Tempur®, Tempur-Pedic®, Sealy®, Sealy Posturpedic®, Stearns & Foster®, Sleepy's® and Mattress Firm® are our primary trademarks registered with the U.S. Patent and Trademark Office and various foreign trademark offices, as are many other of our registered trademarks and pending applications. 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 in the U.S. and a number of other countries, including Dreams® and SOVA.

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 in designated jurisdictions. We also provide our licensees with product specifications, research and development, statistical services and marketing programs. We license the Mattress Firm® trademark to our retail franchisees for use in retail store operations in certain U.S. jurisdictions in exchange for royalty fees. For the year ended December 31, 2025, our licensing activities generated royalty and franchise revenue of $39.5 million.

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Governmental Regulation

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" or otherwise, controls as to chemical and other substances, hygiene and other aspects of product safety, handling, marketing and sale and penalties for violations. New regulations can require us to change the way in which our products are labeled and marketed. For example, the European Union's General Product Safety Regulation, which came into force on December 13, 2024, required us to make changes to the way in which our products are labeled and to add product safety and manufacturer information to all of our online product listings. In July 2025, the U.K. government published a new framework law on product regulation, the Product Regulation and Metrology Act 2025, which provides for further detailed regulations to be enacted which may have a similar impact. 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 regulations and standards may require modifications to our products to comply with such changes. For example, the U.K. is in the process of a major reform of furniture fire safety regulations which would include measures to reduce the use of chemical fire retardants. 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 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 Resource, Conservation and Recovery Act. We are subject to similar requirements in Canada, the EU and other jurisdictions, with further waste management and prevention, and other environmental protection regulations coming into effect both this year and over the next few years. Additionally, California, Connecticut, Oregon and Rhode Island have all enacted laws requiring the collection of fees to help facilitate the recycling of mattresses discarded in their states. 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 international or 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 or other regulatory requirements in the foreseeable future.

In connection with sales of our products and operation of our business, we collect and process personal data from our customers, business partners and employees. As such, we are subject to certain laws and regulations relating to IT security, artificial intelligence ("AI") and personal data protection and privacy. For example, the European Union ("EU") adopted the General Data Protection Regulation ("GDPR"). The GDPR imposed ongoing compliance requirements on companies, including us, that process personal data from citizens resident in the EU. In addition, there are country-specific data privacy laws in Europe that impose additional requirements on data controllers and several of these laws are more stringent than the GDPR.

In recent years, U.S. states have adopted legislation offering similar protections for resident citizens, such as the California Privacy Rights Act (which amends the California Consumer Privacy Act ("CCPA")). Numerous other states have introduced similar privacy laws. These U.S. state privacy laws grant consumers new rights over their personal information, such as access to and deletion of their personal information, placing strict data collection requirements on businesses, including ours.

In the Asia-Pacific region, several data privacy laws regulate the processing of personal data of resident citizens and compliance requirements vary widely. For example, the People's Republic of China consolidated its data privacy laws into one overarching regime with the introduction of the Personal Information Protection Law ("PIPL"). The PIPL is widely considered one of the strictest personal data protection laws in the world, with significant restrictions placed on the transfer of personal information outside of China or use without separate citizen consent.

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Recently the EU harmonized its existing laws governing AI with the introduction of the consolidated EU AI Act ("AI Act"). The AI Act regulates the development and/or use of AI and has extra-territorial reach. The law places risk and technology-based obligations on companies deploying AI in their operations, such as ours. To address the requirements, we have implemented a global AI policy and set up AI governance and controls through a new management committee and compliance program.

In response to the changing regulatory global landscape, we have implemented a global compliance system, appointed dedicated resources and have put measures in place to facilitate adherence to the continuing compliance requirements of applicable worldwide data privacy laws.

Sustainability and Corporate Social Values

Our Board of Directors and executive management team believe that our commitment to robust sustainability practices unlocks shareholder value and contributes to our long-term financial growth by helping us to identify and manage associated risks and opportunities most relevant to our business.

Additional details on our approach to sustainability can be found in our annual Corporate Social Values reports located on the Somnigroup website at http://somnigroup.com under the "Sustainability" tab. Our website and its contents are not incorporated by reference into this Report.

In 2024, we shifted our annual sustainability reporting period to be aligned with our fiscal year. Our latest Sustainability report, published in 2025, covers our 2024 operations.

Sustainability Governance

Somnigroup's Nominating and Corporate Governance ("NCG") Committee has primary responsibility for oversight of risk associated with leadership structure, corporate governance matters and the Company's sustainability practices and positions. The NCG Committee reviews our practices and positions relating to sustainability, technology (including artificial intelligence) and social issues that may affect the Company's business and key stakeholders and exercises oversight on such matters. As part of this oversight, the NCG Committee reviews the effectiveness of management's strategies and programs in progressing towards the Company's goals, including with respect to responsible sourcing and waste management.

The NCG Committee is supported in its oversight of our key sustainability topics by our Human Resources/Capital and Talent Committee and our Audit Committee. The Human Resources/Capital and Talent Committee oversees risks related to compensation and initiatives related to talent management. The Audit Committee has primary responsibility for independent, objective oversight with respect to our accounting and financial reporting functions; internal and external audit functions and systems of internal controls over financial reporting and oversight regarding the Company's legal, ethical and regulatory compliance, including safety and health, data privacy and cybersecurity risks; and compliance with the Foreign Corrupt Practices Act of the United States, the Bribery Act of 2010 of the United Kingdom and similar laws and regulations.

At a management level, our Sustainability Working Group is a cross-functional team overseen by our Chief Financial Officer that plays a critical role in shaping and executing our sustainability strategy. Through partnering with internal subject matter experts and external advisors, the group helps to identify emerging sustainability-related risks and opportunities, informs strategic objectives and accelerates initiatives that advance our sustainability commitments. The Sustainability Working Group provides regular updates to the Board on sustainability initiatives, emerging opportunities and potential risks to help mitigate business impacts.

Note on Sustainability Discussion and Mattress Firm

The impact of any acquisitions will generally be integrated into our Sustainability and Corporate Responsibility disclosures and initiatives approximately 24 months after closing. We plan to formally incorporate Mattress Firm into our next sustainability report to be published in 2026 covering our activities in fiscal year 2025.

While we anticipate that we will apply the same or similar strategies to managing these focus areas with Mattress Firm as a part of our company, the following descriptions regarding the Company's approach to Environment and Human Capital Management pertain to the Company immediately prior to the Mattress Firm Acquisition. Because of the acquisition, we also plan to revisit, and update if needed, our key sustainability-related targets, including our goal to achieve carbon neutrality by 2040 discussed below.

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Environment

Somnigroup's approach to managing our environmental impact is focused on three pillars: resource conservation, product and packaging and waste management. This approach helps to ensure compliance with relevant regulations, better positions our products to meet evolving consumer expectations and drives cost savings through efficiency gains.

Resource Conservation. We are investing in resource efficiency throughout our production and distribution processes. This includes our efforts to manage risks associated with the transition to a lower-carbon economy by investing in renewable energy and reducing our greenhouse gas emissions. We are committed to achieving carbon neutrality in our global wholly-owned operations by 2040. Our objective is to reduce or offset 100% of Scope 1 and 2 greenhouse gas emissions from our wholly-owned manufacturing, retail and logistics operations.

Product and Packaging. In line with our unwavering focus on consumer and employee safety and meeting the regulations of different jurisdictions, we are building these regulatory requirements into our product plans. This includes considering the entire lifecycle of our products, beginning with our supplier engagement and ensuring the safety of all materials used on our products.

Our Chemical Safety Policy demonstrates our commitment to maintaining a healthy and safe work environment for our employees and providing a safe product for our customers. It also reflects our efforts to ensure safety through comprehensive chemical safety management, compliance with regulations, rigorous product testing and employee training and preparedness.

Waste Management. We are committed to reducing waste from our operations and improving the recyclability of our products. We seek to achieve zero waste-to-landfill status across our global operations which not only helps reduce costs related to waste management but also reinforces our efforts to improve resource efficiency throughout our production and distribution processes.

Human Capital Management

As a global organization, our workforce is important to us. As of December 31, 2025, we had over 19,000 full-time employees. Our joint ventures also employ over 1,500 full-time employees. We believe a key driver of long-term success is the strength of our workforce and we are committed to investing in our workforce. As part of our commitment to our workforce, we focus on the following key areas:

Wellness, Health and Safety

With sleep, health and wellness at the core of what we do every day, we recognize the importance of employee well-being and offer a holistic suite of programs and initiatives to support employee's health.

We also strive to continue to be proactive in our operational health and safety initiatives. We are focused on ensuring compliance with health and safety best practices, requiring employee health and safety training for 100% of our applicable employees, raising workplace awareness through safety initiatives and identifying risk elimination opportunities.

Equal Opportunity Employment

We have a diverse global workforce that includes a range of skill sets, perspectives, backgrounds and qualifications. As an Equal Employment Opportunity Employer, we are committed to providing opportunities to all employees and applicants and prohibiting discrimination and harassment. The following are some of the actions that we take to realize our commitment to equal opportunity employment:

•Promotion of a qualified slate of candidates during the hiring process based on merit and regardless of background, with the goal of having a workforce that brings broad experiences and ideas to strengthen our Company

•Employ a uniform, global process for determining compensation based on experience and skillsets to remove potential biases

•Conduct a review of compensation practice periodically

•Participate in external, community-based activities sponsored by local organizations to support the resilience of the communities where we operate and where our employees live

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People Development and Training

Our goal is to design and offer development opportunities that improve Company performance and meet employees' 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 Somnigroup includes, but is not limited to, formal training programs, leadership development mentorships, professional and industry conferences and education assistance.

We offer employees access to a learning management system where they can take courses on a variety of individual and leadership development topics. All our professional employees have access to this system which offers thousands of individual learning modules.