SOMNIGROUP INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited)

(1)Summary of Significant Accounting Policies

(a) Basis of Presentation and Description of Business. Somnigroup International Inc., a Delaware corporation, together with its subsidiaries, is a U.S. based multinational company. The term "Somnigroup International" refers to Somnigroup International Inc. only, and the term "Company" refers to Somnigroup International Inc. and its consolidated subsidiaries.

On February 5, 2025, the Company completed the previously announced acquisition of Mattress Firm, the largest mattress specialty retailer in the U.S. Mattress Firm was founded in 1986 and operates over 2,100 brick-and-mortar retail locations and a growing e-commerce platform. Mattress Firm's highly trained retail sales associates provide personalized service to help consumers choose the ideal bedding products across their robust assortment of market-leading brands.

On August 26, 2026, the Company completed its previously announced acquisition of Leggett & Platt, a leading manufacturer of engineered components and products for the bedding, furniture, flooring, textile, automotive and industrial markets. Founded in 1883, Leggett & Platt operates approximately 100 manufacturing facilities across 19 countries and is a key supplier of bedding components, including innersprings, specialty foam, adjustable bed mechanisms and machinery. The acquisition strengthens the Company's vertical integration strategy by bringing a critical part of its supply chain in-house, enhancing product innovation, operational efficiency and global manufacturing capabilities across its portfolio.

The Company designs, manufactures, distributes and retails bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories, enhanced by Leggett & Platt's diversified component engineering expertise. The Company also derives income from royalties by licensing Sealy®, Stearns & Foster® and Tempur® brands, technology and trademarks to other manufacturers, as well as licensing the Mattress Firm® trademark to retail franchisees. The Company sells its products through three sales channels: Direct bedding, Wholesale bedding and furnishings and Specialized products.

The Company has ownership interests in Asia-Pacific joint ventures to develop markets for Sealy® and Stearns & Foster® branded products and ownership in a United Kingdom joint venture to manufacture, market and distribute Sealy® and Stearns & Foster® branded products. The Company's ownership interests in each of these joint ventures is 50.0%. The equity method of accounting is used for these joint ventures, over which the Company has significant influence but does not have control, and consolidation is not otherwise required. The Company's equity in the net income and losses of these investments is reported in equity income in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and include all of the information and disclosures required by generally accepted accounting principles in the United States ("GAAP") for interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2025, included in the 2025 Annual Report filed with the Securities and Exchange Commission on February 27, 2026.

The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. It is the opinion of management that all necessary adjustments for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

(b) Inventories. Inventories are stated at the lower of cost or net realizable value, determined by either the first-in, first-out method or the weighted average cost method, depending on reportable segment, and consist of the following:

(c) Fair Value. Financial instruments, although not recorded at fair value on a recurring basis, include cash and cash equivalents, accounts receivable, accounts payable and the Company's debt obligations. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of those instruments. Borrowings under the 2023 Credit Agreement (as defined in Note 5, "Debt") and the securitized debt are at variable interest rates and accordingly their carrying amounts approximate fair value. The fair values of the following material financial instruments were based on Level 1 and Level 2 inputs, which include observable inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of debt instruments. The fair values of these material financial instruments are as follows:

(d)Accounts Payable Programs. Following the Leggett & Platt Acquisition, the Company utilizes third-party programs that allow suppliers to be paid earlier at a discount. While the Company continues to make payments based on its customary terms, a supplier can elect to take payment from a third party earlier with a discount, and in that case, the Company pays the third party on the original due date of the invoice. Contracts with suppliers are negotiated independently of supplier participation in the programs, and the Company cannot increase payment terms pursuant to the programs. The accounts payable settled through the third-party programs, which remain on the Condensed Consolidated Balance Sheet, were approximately $110.0 million at September 30, 2026.

(2)Net Sales

The following table presents the Company's disaggregated revenue by channel and geographical region, including a reconciliation of disaggregated revenue by segment, for the three months ended September 30, 2026 and 2025:

The following table presents the Company's disaggregated revenue by channel and geographical region, including a reconciliation of disaggregated revenue by segment, for the nine months ended September 30, 2026 and 2025:

(3)Acquisitions and Divestitures

Acquisition of Mattress Firm Group Inc.

On February 5, 2025, the Company completed its Mattress Firm Acquisition for an aggregate purchase price of 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 the Company's common stock valued at $65.65 per share, which represents the simple average of the opening and closing price per share of the Company's common stock on the New York Stock Exchange (the "NYSE") on the trading day immediately prior to the date of acquisition, with the value of any fractional shares paid in cash.

The Mattress Firm Acquisition enhances the Company's global omni-channel strategy and enables a seamless consumer experience, among other things. Mattress Firm operates as a separate business segment within the Company. The Company accounted for this transaction as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Mattress Firm's financial results for the period July 1, 2025 through September 30, 2025 and February 5, 2025 through September 30, 2025 (the "Mattress Firm stub period") are included in our Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2025, respectively.

On May 1, 2025, the Company completed the previously announced divestiture of 73 Mattress Firm retail locations and the Company's Sleep Outfitters subsidiary, which includes 103 specialty mattress retail locations andseven distribution centers to MW SO Holdings Company, LLC ("Mattress Warehouse").

Purchase Price Consideration

The final purchase price of Mattress Firm as of February 5, 2025 consists of the following items:

Final Purchase Price Allocation

The final allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of February 5, 2025.

The components of the final purchase price allocation are as follows:

The indefinite-lived intangible asset represents the Mattress Firm trade name. The Company applied the income approach through a relief from royalty method to fair value the trade name asset using Level 3 inputs. The indefinite-lived intangible asset is not deductible for income tax purposes.

Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the future economic benefits expected from the expansion of consumer touchpoints, the assembled workforce acquired and operating efficiencies. Due to carryover tax basis, approximately $164.6 million of the goodwill is deductible for income tax purposes and approximately $3,329.3 million is non-deductible for income tax purposes. Combined total goodwill of $3,493.9 million is included within the Mattress Firm segment.

Transaction Costs

The Company incurred animmaterial amount of transaction costs (primarily legal and professional fees) related to the Mattress Firm Acquisition during the three months ended September 30, 2025. The Company incurred $50.2 million of transaction costs related to the Mattress Firm Acquisition during the nine months ended September 30, 2025, which are included in general, administrative and other expenses in the Condensed Consolidated Statements of Income.

Consolidated Results of Operations

The business acquired in the Mattress Firm Acquisition contributed revenue of $1,070.8 million and $2,613.3 million for the three and nine months ended September 30, 2025, respectively, and contributed net income of $66.7 million and $119.8 million for the three and nine months ended September 30, 2025, respectively.

Acquisition of Leggett & Platt

On August 26, 2026, the Company completed its Leggett & Platt Acquisition, pursuant to which the Company acquired 100% of Leggett & Platt, for an aggregate purchase price of approximately $730.0 million, net of cash acquired of $560.2 million. The total consideration of $1.3 billion consisted of approximately 19.9 million shares of the Company's common stock valued at $64.09 per share, which represents the closing price per share of the Company's 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 Leggett & Platt Acquisition, the Company assumed certain outstanding Leggett & Platt equity awards, including restricted stock units ("RSUs"), performance restricted stock units ("PRSUs") and stock options (the "Somnigroup Assumed Awards"). These awards were converted to Somnigroup awards based on the merger exchange ratio of 0.1455 and retained the remaining service periods and other applicable terms of the original Leggett & Platt awards.

The Leggett & Platt deferred compensation plans were converted into notional cash investments based on the average closing price of Leggett & Platt common stock for the five trading days immediately prior to the closing date of the merger (the "Leggett & Platt Cash-Settled Plans").

The Leggett & Platt Acquisition continues the Company's vertical integration strategy by bringing a critical part of its supply chain in-house, enhancing product innovation, operational efficiency and global manufacturing capabilities across its portfolio. Leggett & Platt operates as a separate business segment within the Company. The Company accounted for this transaction as a business combination in accordance with ASC 805, Business Combinations. Leggett & Platt's financial results for the period August 26, 2026 through September 30, 2026 (the "Leggett & Platt stub period") are included in the Company's Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2026.

Purchase Price Consideration

The preliminary purchase price of Leggett & Platt as of August 26, 2026 consists of the following items:

Preliminary Purchase Price Allocation

The preliminary allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of August 26, 2026.

The components of the preliminary purchase price allocation are as follows:

The fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available to management at the time the unaudited Condensed Consolidated Financial Statements were prepared. The Company will finalize the valuation and complete the purchase price allocation as soon as practical, but no later than the measurement period of one year from the Leggett & Platt Acquisition date. The most significant open items include the estimation of certain long-lived and intangible assets and the accounting for leases, as management is awaiting additional information to complete its assessment of these matters. The Company has not completed its analysis of the income tax effects of the Leggett & Platt Acquisition, including its review of the book and tax bases of the assets acquired and liabilities assumed, applicable jurisdictional tax rates, acquired tax attributes, tax assessments, and the tax effects of other preliminary purchase accounting adjustments. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company’s purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material.

Trade Name and Intangible Assets

The Company applied the income approach through a relief from royalty method to fair value the Leggett & Platt trade name asset using Level 3 inputs. The trade name asset is indefinite-lived and is not deductible for income tax purposes. The Company also applied the multi-period excess earnings method to fair value customer relationships and the relief from royalty method to fair value technology, using Level 3 inputs for both methods. At the closing date of August 26, 2026, the preliminary fair value of intangible assets acquired and estimated useful lives are as follows:

Goodwill

Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the future economic benefits expected from the assembled workforce acquired and operating efficiencies. Goodwill will be subject to adjustment for the impact of the measurement period adjustments described above. A portion of the goodwill may be deductible for income tax purposes. The goodwill of $221.6 million is included within the Leggett & Platt business segment.

Transaction Costs

The Company incurred $33.4 million and $45.4 million of transaction costs (primarily legal and professional fees) related to the Leggett & Platt Acquisition during the three and nine months ended September 30, 2026, respectively, which are included in general, administrative and other expenses in the Condensed Consolidated Statements of Income.

Consolidated Results of Operations

The Leggett & Platt Acquisition contributed net sales and net income of $372.6 million and $10.0 million, respectively, for the period August 26, 2026 through September 30, 2026, which are included in the Company's Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2026.

Unaudited Pro Forma Financial Information

The following represents the unaudited consolidated pro forma financial information for the period as if Leggett & Platt had been included in the consolidated results of the Company since January 1, 2025. Pro forma results do not include the effect of any future synergies anticipated to be achieved from the acquisition, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition was consummated on the date indicated or that may result in the future.

The pro forma amounts have been calculated after applying the Company's accounting policies and by including the results of Leggett & Platt, and adjusting the combined results to give effect to the following, as if the acquisition had been consummated on January 1, 2025, together with the consequential tax effects thereon:

(4)Goodwill

The following summarizes changes to the Company's goodwill, by segment:

(5)Debt

Debt for the Company and certain of its subsidiaries consists of the following:

As of September 30, 2026, the Company was in compliance with all applicable debt covenants.

2023 Credit Agreement

On October 10, 2023, the Company entered into the 2023 Credit Agreement with a syndicate of banks. The 2023 Credit Agreement provides for a $1,190.0 million revolving credit facility, a $500.0 million term loan facility, a $625.0 million Delayed Draw Term A Loan, a $1,600.0 million Term B Loan (which was initially placed in escrow, net of an original issue discount, and released upon the consummation of the Mattress Firm Acquisition) and an incremental facility in an aggregate amount up to the greater of $850.0 million and additional amounts subject to the conditions set forth in the 2023 Credit Agreement, plus the amount of certain prepayments, plus an additional unlimited amount subject to compliance with a maximum consolidated secured leverage ratio test. The 2023 Credit Agreement also contains a $60.0 million sub-facility for the issuance of letters of credit.

On July 27, 2026, the Company entered into an Amendment No. 5 to the 2023 Credit Agreement ("Amendment No. 5"), which provides for (i) a term loan A of $1,200.0 million (the "Term A Loans"), (ii) an incremental revolving commitment of $510.0 million and (iii) an incremental $90.0 million added to the sub-facility for the issuances of letters of credit. The proceeds of the Term A Loans were used to refinance the amounts outstanding under the term loan facility and the Delayed Draw Term A Loan under the 2023 Credit Agreement. The Company's commitments under the Company's revolving credit facility were $1,700.0 million after giving effect to Amendment No. 5.

Amendment No. 5 was executed in connection with the then-pending Leggett & Platt Acquisition and extended the maturity dates of the Term A Loans and the revolving credit facility to July 27, 2031. Borrowings under the Term A Loans and the revolving credit facility will generally bear interest, at the election of the Company and its subsidiary borrowers, at either (i) a base rate plus an applicable margin of 0.125% to 0.875%, (ii) a term SOFR rate plus an applicable margin of 1.125% to 1.875% or (iii) a daily simple SOFR rate plus an applicable margin of 1.125% to 1.875%. For the Term A Loans and the revolving credit facility the applicable margin is determined by a pricing grid based on the consolidated total net leverage ratio of the Company.

In connection with Amendment No. 5, the Company prepaid $700.0 million of the outstanding Term B Loan with the remaining proceeds from the Term A Loans and revolving credit facility.

As a result of Amendment No. 5 and the Company's prepayment of the outstanding Term B Loan, the Company recognized $13.0 million of loss on extinguishment of debt, which includes the write-off of $9.4 million of unamortized deferred financing costs and $3.6 million of legal and professional fees.

The Company had outstanding borrowings of $516.5 million under the revolving credit facility as of September 30, 2026. Total availability under the revolving facility was $1,182.7 million, after a $0.8 million reduction for outstanding letters of credit, as of September 30, 2026.

On October 1, 2026, the Company prepaid $200.0 million of the outstanding Term B Loan with cash acquired from the Leggett & Platt Acquisition and cash from operations.

Leggett & Platt Senior Notes

In connection with the Leggett & Platt Acquisition, the Leggett & Platt Senior Notes of $1.5 billion remain outstanding as general unsecured senior obligations of Leggett & Platt, Incorporated and do not benefit from any guarantees. The Company recorded a discount of $224.1 million to reflect the total fair value of $1.3 billion on the date of the Leggett & Platt Acquisition. The discount is recorded as a reduction to long-term debt in the Condensed Consolidated Balance Sheet and is being amortized into interest expense over the remaining terms of each note, as described below.

2051 Leggett & Platt Senior Notes

The Company recorded the outstanding $500.0 million aggregate principal amount of 3.50% senior notes due 2051 (the “2051 Leggett & Platt Senior Notes”) at a discount of $201.5 million to reflect its fair value of $298.5 million on the date of the Leggett & Platt Acquisition. The 2051 Leggett & Platt Senior Notes are general unsecured senior obligations of Leggett & Platt, Incorporated and do not benefit from any guarantees. The 2051 Leggett & Platt Senior Notes mature on November 15, 2051, and interest is payable semi-annually in arrears on each May 15 and November 15.

The 2051 Leggett & Platt Senior Notes were issued pursuant to the Senior Indenture dated May 6, 2005 between Leggett & Platt, Incorporated and U.S. Bank Trust Company, National Association (successor in interest to The Bank of New York Mellon Trust Company, NA, which was successor in interest to JPMorgan Chase Bank, N.A.), as Trustee (the “L&P Senior Indenture”) (as modified by the Officer’s Certificate pursuant to Section 3.1 of the Indenture, dated as of November 16, 2017).

Leggett & Platt, Incorporated has the option to redeem all or a portion of the 2051 Leggett & Platt Senior Notes at any time on or after May 15, 2051. The redemption price is 100% of the principal amount, plus accrued and unpaid interest, if any. In addition, Leggett & Platt, Incorporated has the option at any time prior to May 15, 2051 to redeem some or all of the 2051 Leggett & Platt Senior Notes at 100% of the original principal amount plus a "make-whole" premium and accrued and unpaid interest, if any.

The 2051 Leggett & Platt Senior Notes restrict the ability of Leggett & Platt, Incorporated and its subsidiaries, to, among other things: (i) incur, directly or indirectly, secured indebtedness and (ii) enter into sale and leaseback transactions on their principal property. These covenants are subject to a number of exceptions and qualifications.

2029 Leggett & Platt Senior Notes

The Company recorded the outstanding $500.0 million aggregate principal amount of 4.40% senior notes due 2029 (the “2029 Leggett & Platt Senior Notes”) at a discount of $14.1 million to reflect its fair value of $485.9 million on the date of the Leggett & Platt Acquisition. The 2029 Leggett & Platt Senior Notes are general unsecured senior obligations of Leggett & Platt, Incorporated and do not benefit from any guarantees. The 2029 Leggett & Platt Senior Notes mature on March 15, 2029, and interest is payable semi-annually in arrears on each March 15 and September 15.

The 2029 Leggett & Platt Senior Notes were issued pursuant to L&P Senior Indenture (as modified by the Officer’s Certificate pursuant to Section 3.1 of the Indenture, dated as of March 7, 2019).

Leggett & Platt, Incorporated has the option to redeem all or a portion of the 2029 Leggett & Platt Senior Notes at any time on or after December 15, 2028. The redemption price is 100% of the principal amount, plus accrued and unpaid interest, if any. In addition, Leggett & Platt, Incorporated has the option at any time prior to December 15, 2028 to redeem some or all of the 2029 Leggett & Platt Senior Notes at 100% of the original principal amount plus a "make-whole" premium and accrued and unpaid interest, if any.

The 2029 Leggett & Platt Senior Notes restrict the ability of Leggett & Platt, Incorporated and its subsidiaries, to, among other things: (i) incur, directly or indirectly, secured indebtedness and (ii) enter into sale and leaseback transactions on their principal property. These covenants are subject to a number of exceptions and qualifications.

2027 Leggett & Platt Senior Notes

The Company recorded the outstanding $500.0 million aggregate principal amount of 3.50% senior notes due 2027 (the “2027 Leggett & Platt Senior Notes”) at a discount of $8.5 million to reflect its fair value of $491.5 million on the date of the Leggett & Platt Acquisition. The 2027 Leggett & Platt Senior Notes are general unsecured senior obligations of Leggett & Platt, Incorporated and do not benefit from any guarantees. The 2027 Leggett & Platt Senior Notes mature on November 15, 2027, and interest is payable semi-annually in arrears on each May 15 and November 15.

The 2027 Leggett & Platt Senior Notes were issued pursuant to L&P Senior Indenture (as modified by the Officer’s Certificate pursuant to Section 3.1 of the Indenture, dated as of November 16, 2017).

Leggett & Platt, Incorporated has the option to redeem all or a portion of the 2027 Leggett & Platt Senior Notes at any time on or after August 15, 2027. The redemption price is 100% of the principal amount, plus accrued and unpaid interest, if any. In addition, Leggett & Platt, Incorporated has the option at any time prior to August 15, 2027 to redeem some or all of the 2027 Leggett & Platt Senior Notes at 100% of the original principal amount plus a "make-whole" premium and accrued and unpaid interest, if any.

The 2027 Leggett & Platt Senior Notes restrict the ability of Leggett & Platt, Incorporated and its subsidiaries, to, among other things: (i) incur, directly or indirectly, secured indebtedness and (ii) enter into sale and leaseback transactions on their principal property. These covenants are subject to a number of exceptions and qualifications.

Securitized Debt

The Company and certain of its subsidiaries are party to a securitization transaction with respect to certain accounts receivable due to the Company and certain of its subsidiaries (as amended, the "Accounts Receivable Securitization"). While subject to a $150.0 million overall limit, the availability of revolving loans varies over the course of the year based on the seasonality of the Company's accounts receivable. As of September 30, 2026, the Company had fully drawn down the Accounts Receivable Securitization with borrowings of $100.5 million. Borrowings under this facility are classified as long-term debt within the Condensed Consolidated Balance Sheets at September 30, 2026, based on the Company's ability and intent to refinance on a long-term basis.

(6) Stockholders' Equity

(a)Treasury Stock. As of September 30, 2026, the Company had approximately $774.5 million remaining under its share repurchase authorization. The Company did not repurchase shares under the program during the three and nine months ended September 30, 2026 or 2025.

The Company acquired an insignificant amount of shares upon the exercise of stock options, the vesting of certain RSUs and PRSUs, which were withheld to satisfy tax withholding obligations during each of the three months ended September 30, 2026 and 2025, respectively. The shares withheld were valued at the closing price of the stock on the NYSE on the vesting date or first business day prior to vesting, resulting in animmaterial amount of treasury stock acquired during the three months ended September 30, 2026 and 2025, respectively. The Company acquired 0.3 million and 2.0 million shares during the nine months ended September 30, 2026 and 2025, respectively, resulting in $26.3 million and $132.4 million in treasury stock acquired for the nine months ended September 30, 2026 and 2025, respectively.

(b)Accumulated Other Comprehensive Loss ("AOCL"). AOCL consisted of the following:

(7) Other Items

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:

(8) Stock-Based Compensation

The Company's stock-based compensation expense for the three and nine months ended September 30, 2026 and 2025 included PRSUs, RSUs and non-qualified stock options. A summary of the Company's stock-based compensation expense is presented in the following table:

The Company grants PRSUs to executive officers and certain members of management. Actual payout under the PRSUs is dependent upon the achievement of certain financial goals. During the first quarter of 2026, the Company granted PRSUs as a component of the long-term incentive plan ("2026 PRSUs"). The Company has recorded stock-based compensation expense related to the 2026 PRSUs during the three and nine months ended September 30, 2026, as it was probable that the Company would achieve the specified performance targets for the performance period.

In connection with the Leggett & Platt Acquisition, the Somnigroup Assumed Awards were converted into Company awards based on the merger exchange ratio of 0.1455 and retained the remaining service periods and other applicable terms of the original Leggett & Platt awards. Outstanding Leggett & Platt PRSUs with remaining performance periods were converted into Company RSUs at maximum performance achievement, with 50% to be settled in Company common stock and 50% in cash upon vesting. Outstanding Leggett & Platt RSUs were converted into Company RSUs to be settled in Company common stock upon vesting. Outstanding Leggett & Platt stock options were converted into Company stock options to be settled in Company common stock upon exercise.

(9) Commitments and Contingencies

The Company is involved in various legal and administrative proceedings incidental to the operations of its business. Except as disclosed, the Company believes that the outcome of all such pending proceedings in the aggregate will not have a material adverse effect on its business, financial condition, liquidity or operating results. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable potential losses. Accordingly, the Company has not established material reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses is not reasonably estimable. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings in which it is involved, it could, in the future, enter into settlements of claims that could have a material adverse effect on the Company's financial position, results of operations or cash flows.

(10) Income Taxes

The Company's effective tax rates for the three months ended September 30, 2026 and 2025 were 26.8% and 24.0%, respectively. The Company's effective tax rates for the nine months ended September 30, 2026 and 2025 were 25.7% and 14.9%, respectively. The Company's effective tax rates for the three and nine months ended September 30, 2026 and 2025 differed from the U.S. federal statutory rate of 21.0% principally due to subpart F income (i.e., net CFC tested income, or "NCTI," earned by the Company's foreign subsidiaries), foreign income tax rate differentials, state and local taxes, changes in the Company's uncertain tax positions, the excess tax benefit related to stock-based compensation and certain other permanent items.

(11) Earnings Per Common Share

The following table sets forth the components of the numerator and denominator for the computation of basic and diluted earnings per share for net income attributable to Somnigroup International Inc.:

The Company excludes shares issuable upon exercise of certain outstanding stock options from the diluted earnings per common share computation because their exercise price was greater than the average market price of Somnigroup International Inc.'s common stock or they were otherwise anti-dilutive.

As a result, the Company excluded 1.4 million shares for both the three and nine months ended September 30, 2026, and excluded 1.2 million shares for the three months ended September 30, 2025, and 0.4 million shares for the nine months ended September 30, 2025. Holders of non-vested stock-based compensation awards do not have voting rights but do participate in dividend equivalents distributed upon the award vesting.

(12) Business Segment Information

The Company operates infour segments: Mattress Firm, Leggett & Platt, Tempur Sealy North America and Tempur Sealy International. These segments are strategic business units that are managed separately. The Mattress Firm segment consists of retail stores and distribution centers located in the U.S. The Leggett & Platt segment consists of manufacturers located in North America, Europe, Asia-Pacific and Latin America that design and produce a broad range of engineered components and products for bedding, furniture, flooring, textile, automotive, and industrial end markets. The 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). The 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). The Company evaluates segment performance based on net sales, gross profit and operating income.

The Company's Leggett & Platt, Tempur Sealy North America and Tempur Sealy International segment assets include investments in subsidiaries that are appropriately eliminated in the Company's accompanying Condensed Consolidated Financial Statements. The remaining inter-segment balance sheet eliminations are comprised of intercompany accounts receivable and payable. Inter-segment sales are made primarily at prices that approximate market-based selling prices.

The following table summarizes total assets by segment:

The following table summarizes property, plant and equipment, net, by segment:

The following table summarizes operating lease right-of-use assets by segment:

The following table summarizes segment information for the three months ended September 30, 2026:

The following table summarizes segment information for the three months ended September 30, 2025:

The following table summarizes segment information for the nine months ended September 30, 2026:

The following table summarizes segment information for the nine months ended September 30, 2025:

The following table summarizes property, plant and equipment, net by geographic region:

The following table summarizes operating lease right-of-use assets by geographic region: