|
|
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
MINNESOTA
|
|
41-1597886
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
9800 59
th
Avenue North
|
|
|
Minneapolis, Minnesota
|
|
55442
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, par value $.01 per share
|
|
The NASDAQ Stock Market LLC
|
|
|
(NASDAQ Global Select Market)
|
Securities registered pursuant to Section 12(g) of the Act:
None
|
Large accelerated filer
|
ý
|
|
|
Accelerated filer
o
|
Non-accelerated filer
|
o
|
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
|
|
|
PART I
|
|||
|
|
|
|
|
Item 1.
|
||
|
|
|
|
|
Item 1A.
|
||
|
|
|
|
|
Item 1B.
|
||
|
|
|
|
|
Item 2.
|
||
|
|
|
|
|
Item 3.
|
||
|
|
|
|
|
Item 4.
|
||
|
|
|
|
PART II
|
|||
|
|
|
|
|
Item 5.
|
||
|
|
|
|
|
Item 6.
|
||
|
|
|
|
|
Item 7.
|
||
|
|
|
|
|
Item 7A.
|
||
|
|
|
|
|
Item 8.
|
||
|
|
|
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
|
|
|
|
|
|
Item 9A.
|
||
|
|
|
|
|
Item 9B.
|
||
|
|
|
|
PART III
|
|||
|
|
|
|
|
Item 10.
|
||
|
|
|
|
|
Item 11.
|
||
|
|
|
|
|
Item 12.
|
||
|
|
|
|
|
Item 13.
|
||
|
|
|
|
|
Item 14.
|
||
|
|
|
|
PART IV
|
|||
|
|
|
|
|
Item 15.
|
•
|
Everyone will know Sleep Number and how it will improve their life;
|
•
|
Innovative Sleep Number products will move society forward with meaningful consumer benefits;
|
•
|
Sleep Number will be easy to find and customers will interact with us when and how they want;
|
•
|
Customers will love their Sleep Number experience and enthusiastically recommend Sleep Number to their family and friends; and
|
•
|
Leveraging our unique business model to fund innovation and growth will benefit our customers, employees and shareholders.
|
•
|
The Classic Series launched a sleep revolution with personal adjustability at an affordable price. The series includes the Sleep Number c2, c3 and c4 beds.
|
•
|
The Performance Series includes our most popular beds, featuring enhanced performance, comfort and a great value. The series includes the Sleep Number p5 and p6 beds.
|
•
|
The Innovation Series is the premier experience in personalized comfort combined with leading-edge innovations in sleep technology. The series includes the Sleep Number i8 and i10 beds.
|
•
|
In 2012, memory foam found its better half with the introduction of the Sleep Number Memory Foam Series. Combining cradling memory foam with exclusive DualAir technology, the series includes the Sleep Number m7 bed that cools, contours and adjusts on each side, and the supremely soft and breathable Sleep Number m9 bed.
|
•
|
Increase awareness for both brand and stores
|
•
|
Develop local markets
|
•
|
Robust product and service innovation
|
•
|
The Sleep Number bed with DualAir technology allows customers to adjust to the support their bodies need on each side of the bed.
|
•
|
The IndividualFit
®
3-D imaging process lets customers see and feel how the bed adjusts to the exact comfort their bodies need.
|
•
|
The exclusive Sleep Number bedding collection's innovative solutions are dedicated to individualizing each sleep experience. In 2011, we introduced our exclusive AirFit Pillow that adjusts to an individual's size, shape and sleeping position for more comfortable sleep.
|
•
|
In 2012, memory foam found its better half with the introduction of the Sleep Number Memory Foam Series. Combining cradling memory foam with exclusive DualAir technology, the series includes the Sleep Number m7 bed that cools, contours and adjusts on each side, and the supremely soft and breathable Sleep Number m9 bed.
|
•
|
Political instability resulting in disruption of trade;
|
•
|
Existing or potential duties, tariffs or quotas on certain types of goods that may be imported into the United States;
|
•
|
Disruptions in transportation due to acts of terrorism, shipping delays, foreign or domestic dock strikes, customs inspections or other factors;
|
•
|
Foreign currency fluctuations; and
|
•
|
Economic uncertainties, including inflation.
|
|
|
Retail
Stores
|
|
|
|
|
Retail
Stores
|
|
|
|
|
Retail
Stores
|
|
Alabama
|
|
4
|
|
|
Louisiana
|
|
6
|
|
|
North Carolina
|
|
13
|
|
Arizona
|
|
8
|
|
|
Maine
|
|
2
|
|
|
North Dakota
|
|
2
|
|
Arkansas
|
|
3
|
|
|
Maryland
|
|
11
|
|
|
Ohio
|
|
17
|
|
California
|
|
50
|
|
|
Massachusetts
|
|
4
|
|
|
Oklahoma
|
|
4
|
|
Colorado
|
|
11
|
|
|
Michigan
|
|
12
|
|
|
Oregon
|
|
4
|
|
Connecticut
|
|
6
|
|
|
Minnesota
|
|
13
|
|
|
Pennsylvania
|
|
17
|
|
Delaware
|
|
2
|
|
|
Mississippi
|
|
3
|
|
|
South Carolina
|
|
4
|
|
Florida
|
|
25
|
|
|
Missouri
|
|
12
|
|
|
South Dakota
|
|
1
|
|
Georgia
|
|
13
|
|
|
Montana
|
|
2
|
|
|
Tennessee
|
|
8
|
|
Idaho
|
|
2
|
|
|
Nebraska
|
|
4
|
|
|
Texas
|
|
33
|
|
Illinois
|
|
19
|
|
|
Nevada
|
|
4
|
|
|
Utah
|
|
3
|
|
Indiana
|
|
12
|
|
|
New Hampshire
|
|
5
|
|
|
Vermont
|
|
1
|
|
Iowa
|
|
6
|
|
|
New Jersey
|
|
12
|
|
|
Virginia
|
|
11
|
|
Kansas
|
|
3
|
|
|
New Mexico
|
|
3
|
|
|
Washington
|
|
10
|
|
Kentucky
|
|
5
|
|
|
New York
|
|
9
|
|
|
Wisconsin
|
|
11
|
|
|
|
|
|
|
|
|
|
Total
|
|
410
|
|
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second
Quarter
|
|
First
Quarter
|
||||||||
Fiscal 2012
|
|
|
|
|
|
|
|
|
||||||||
High
|
|
$
|
33.16
|
|
|
$
|
33.58
|
|
|
$
|
35.24
|
|
|
$
|
33.20
|
|
Low
|
|
24.48
|
|
|
21.10
|
|
|
19.33
|
|
|
22.15
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Fiscal 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
High
|
|
$
|
22.04
|
|
|
$
|
18.86
|
|
|
$
|
18.41
|
|
|
$
|
12.44
|
|
Low
|
|
12.41
|
|
|
12.20
|
|
|
12.09
|
|
|
9.64
|
|
Fiscal Period
|
|
Total
Number of Shares
Purchased
(1)(2)
|
|
Average
Price Paid
per Share
|
|
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
(1)
|
|
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
|
||||||
September 30, 2012 through October 27, 2012
|
|
101,460
|
|
|
$
|
30.98
|
|
|
101,460
|
|
|
$
|
183,603,000
|
|
October 28, 2012 through November 24, 2012
|
|
106,900
|
|
|
26.62
|
|
|
106,900
|
|
|
180,757,000
|
|
||
November 25, 2012 through December 29, 2012
|
|
189,952
|
|
|
25.44
|
|
|
156,933
|
|
|
176,739,000
|
|
||
Total
|
|
398,312
|
|
|
$
|
27.17
|
|
|
365,293
|
|
|
$
|
176,739,000
|
|
(1)
|
Under the current Board approved $290.0 million share repurchase program, we repurchased
365,293
shares of our common stock at a cost of
$10.0 million
(based on trade dates) during the three months ended
December 29, 2012
. As of
December 29, 2012
, the remaining authorization under our Board approved share repurchase program was
$176.7 million
. There is no expiration date governing the period over which we can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status.
|
|
|
12/29/2007
|
|
1/3/2009
|
|
1/2/2010
|
|
1/1/2011
|
|
12/31/2011
|
|
12/29/2012
|
||||||||||||
Select Comfort Corporation
|
|
$
|
100
|
|
|
$
|
4
|
|
|
$
|
91
|
|
|
$
|
128
|
|
|
$
|
303
|
|
|
$
|
343
|
|
S&P 400 Specialty Stores Index
|
|
100
|
|
|
60
|
|
|
88
|
|
|
132
|
|
|
151
|
|
|
184
|
|
||||||
The NASDAQ Stock Market (U.S.) Index
|
|
100
|
|
|
59
|
|
|
82
|
|
|
97
|
|
|
99
|
|
|
111
|
|
(1)
|
Fiscal year 2008 had 53 weeks. All other fiscal years presented had 52 weeks.
|
(2)
|
In February 2012, we announced that William R. McLaughlin, then President and Chief Executive Officer, would retire from the Company effective June 1, 2012. In recognition of Mr. McLaughlin's contributions, the Company's Compensation Committee approved the modification of Mr. McLaughlin's unvested stock awards, including performance stock awards. The performance stock awards are subject to applicable performance adjustments (through 2014) based on free cash flows and actual market share growth versus performance targets. During 2012, we incurred $5.6 million ($3.7 million, net of income tax) of non-recurring, non-cash expenses associated with these stock award modifications.
|
(3)
|
In 2009, we expensed $3.3 million ($2.1 million, net of income tax) of direct, incremental costs incurred in connection with a terminated equity financing transaction.
|
(4)
|
At the beginning of 2011, we changed our accounting policy for payments due from financial services companies for credit card and debit card transactions. Historically, at each reporting period, we classified all credit card and debit card transactions that processed in less than seven days as cash and cash equivalents on our consolidated balance sheets. We now classify these credit card and debit card transactions as accounts receivable until the cash is received. All previous periods have been restated to conform to the current year presentation.
|
(5)
|
For stores open during the entire period indicated.
|
(6)
|
Represents Company-Controlled channel total net sales divided by Company-Controlled channel mattress units.
|
(7)
|
Stores are included in the comparable sales calculation in the 13th full month of operation. Stores that have been remodeled or repositioned within the same shopping center remain in the comparable-store base. The number of comparable-stores used to calculate such data was 348, 359, 379, 399, 452 and 432 for 2012, 2011, 2010, 2009, 2008 and 2007, respectively. Fiscal 2008 included 53 weeks, as compared to 52 weeks for the other periods presented. Comparable sales have been adjusted and reported as if all years had the same number of weeks.
|
(8)
|
These non-GAAP measures are not in accordance with, or preferable to, GAAP financial data. However, we are providing this information as we believe it facilitates annual and year-over-year comparisons for investors and financial analysts. See pages 24 and 25 for the reconciliation of these non-GAAP measures to the appropriate GAAP measure.
|
|
|
Year
|
||||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||||
Net income (loss) – as reported
|
|
$
|
78,094
|
|
|
$
|
60,478
|
|
|
$
|
31,568
|
|
|
$
|
35,552
|
|
|
$
|
(70,177
|
)
|
|
$
|
27,620
|
|
Adjustments – net of income tax
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
CEO transition costs
(2)
|
|
3,654
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Terminated equity financing costs
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,061
|
|
|
—
|
|
|
—
|
|
||||||
Impairments
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,163
|
|
|
—
|
|
||||||
Income tax valuation
(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,444
|
)
|
|
26,840
|
|
|
—
|
|
||||||
Net income (loss) – as adjusted
|
|
$
|
81,748
|
|
|
$
|
60,478
|
|
|
$
|
31,568
|
|
|
$
|
11,169
|
|
|
$
|
(23,174
|
)
|
|
$
|
27,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss) per share – as adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
1.47
|
|
|
$
|
1.10
|
|
|
$
|
0.58
|
|
|
$
|
0.24
|
|
|
$
|
(0.52
|
)
|
|
$
|
0.59
|
|
Diluted
|
|
$
|
1.43
|
|
|
$
|
1.07
|
|
|
$
|
0.57
|
|
|
$
|
0.24
|
|
|
$
|
(0.52
|
)
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic shares
|
|
55,516
|
|
|
55,081
|
|
|
54,005
|
|
|
45,682
|
|
|
44,186
|
|
|
46,536
|
|
||||||
Diluted shares
|
|
57,076
|
|
|
56,432
|
|
|
55,264
|
|
|
46,198
|
|
|
44,186
|
|
|
48,292
|
|
(1)
|
Reflects annual effective income tax rates, before discrete adjustments, of 34.7%, 38.0% and 40.0% for 2012, 2009 and 2008, respectively.
|
(2)
|
In February 2012, we announced that William R. McLaughlin, then President and Chief Executive Officer, would retire from the Company effective June 1, 2012. In recognition of Mr. McLaughlin's contributions, the Company's Compensation Committee approved the modification of Mr. McLaughlin's unvested stock awards, including performance stock awards. The performance stock awards are subject to applicable performance adjustments (through 2014) based on free cash flows and actual market share growth versus performance targets. During 2012, we incurred $5.6 million ($3.7 million, net of income tax) of non-recurring, non-cash expenses associated with these stock award modifications.
|
(3)
|
In 2009, we expensed $3.3 million ($2.1 million, net of income tax) of direct, incremental costs incurred in connection with a terminated equity financing transaction.
|
(4)
|
Fiscal 2008 includes impairment charges for the abandonment of our plan to implement SAP
®
-based applications and impairment charges in excess of $1.0 million for underperforming stores.
|
(5)
|
In 2008, we established a $26.8 million valuation allowance against deferred taxes based on uncertainty regarding future taxable income. In 2009, we reversed the valuation allowance against deferred taxes based on all available positive and negative evidence.
|
|
|
Year
|
||||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||||
Net income (loss)
|
|
$
|
78,094
|
|
|
$
|
60,478
|
|
|
$
|
31,568
|
|
|
$
|
35,552
|
|
|
$
|
(70,177
|
)
|
|
$
|
27,620
|
|
Income tax expense (benefit)
|
|
41,911
|
|
|
29,942
|
|
|
18,922
|
|
|
(20,862
|
)
|
|
(2,566
|
)
|
|
15,846
|
|
||||||
Interest expense
|
|
91
|
|
|
187
|
|
|
1,951
|
|
|
5,996
|
|
|
3,375
|
|
|
849
|
|
||||||
Depreciation and amortization
|
|
19,735
|
|
|
13,493
|
|
|
13,012
|
|
|
17,681
|
|
|
21,635
|
|
|
24,792
|
|
||||||
Stock-based compensation
|
|
10,306
|
|
|
4,971
|
|
|
3,962
|
|
|
3,236
|
|
|
3,702
|
|
|
6,252
|
|
||||||
Asset impairments
|
|
148
|
|
|
109
|
|
|
260
|
|
|
686
|
|
|
34,594
|
|
|
409
|
|
||||||
Adjusted EBITDA
|
|
$
|
150,285
|
|
|
$
|
109,180
|
|
|
$
|
69,675
|
|
|
$
|
42,289
|
|
|
$
|
(9,437
|
)
|
|
$
|
75,768
|
|
|
|
Year
|
||||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||||
Net cash provided by operating activities
|
|
$
|
100,626
|
|
|
$
|
91,046
|
|
|
$
|
71,407
|
|
|
$
|
63,176
|
|
|
$
|
5,821
|
|
|
$
|
45,653
|
|
Subtract: Purchases of property and equipment
|
|
51,593
|
|
|
23,527
|
|
|
7,349
|
|
|
2,459
|
|
|
32,202
|
|
|
43,514
|
|
||||||
Free cash flow
|
|
$
|
49,033
|
|
|
$
|
67,519
|
|
|
$
|
64,058
|
|
|
$
|
60,717
|
|
|
$
|
(26,381
|
)
|
|
$
|
2,139
|
|
•
|
Current and future general and industry economic trends and consumer confidence;
|
•
|
The effectiveness of our marketing messages;
|
•
|
The efficiency of our advertising and promotional efforts;
|
•
|
Our ability to execute our Company-Controlled distribution strategy;
|
•
|
Our ability to achieve and maintain acceptable levels of product and service quality, and acceptable product return and warranty claims rates;
|
•
|
Our ability to continue to improve and expand our product line, and consumer acceptance of our products, product quality, innovation and brand image;
|
•
|
Industry competition, the emergence of additional competitive products, and the adequacy of our intellectual property rights to protect our products and brand from competitive or infringing activities;
|
•
|
Availability of attractive and cost-effective consumer credit options, including the impact of recent changes in federal law that restricts various forms of consumer credit promotional offerings;
|
•
|
Pending and unforeseen litigation and the potential for adverse publicity associated with litigation;
|
•
|
Our “just-in-time” manufacturing processes with minimal levels of inventory, which may leave us vulnerable to shortages in supply;
|
•
|
Our dependence on significant suppliers and our ability to maintain relationships with key suppliers, including several sole-source suppliers;
|
•
|
Rising commodity costs and other inflationary pressures;
|
•
|
Risks inherent in global sourcing activities;
|
•
|
Risks of disruption in the operation of either of our two manufacturing facilities;
|
•
|
Increasing government regulation;
|
•
|
The adequacy of our management information systems to meet the evolving needs of our business and existing and evolving regulatory standards applicable to data privacy and security;
|
•
|
The costs and potential disruptions to our business related to upgrading our management information systems;
|
•
|
Our ability to attract, retain and motivate qualified management, executive and other key employees, including qualified retail sales professionals and managers; and
|
•
|
Uncertainties arising from global events, such as terrorist attacks or a pandemic outbreak, or the threat of such events.
|
•
|
Overview
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance-Sheet Arrangements and Contractual Obligations
|
•
|
Critical Accounting Policies and Estimates
|
•
|
Recent Accounting Pronouncements
|
•
|
Everyone will know Sleep Number and how it will improve their life;
|
•
|
Innovative Sleep Number products will move society forward with meaningful consumer benefits;
|
•
|
Sleep Number will be easy to find and customers will interact with us when and how they want;
|
•
|
Customers will love their Sleep Number experience and enthusiastically recommend Sleep Number to their family and friends; and
|
•
|
Leveraging our unique business model to fund innovation and growth will benefit our customers, employees and shareholders.
|
•
|
Net income
increased
29%
to
$78.1 million
, or
$1.37
per diluted share, compared with net income of
$60.5 million
, or
$1.07
per diluted share in
2011
.
|
•
|
Financial results for 2012 included a $5.6 million ($3.7 million, net of income tax), or $0.06 per diluted share, non-recurring, non-cash charge associated with the June 1, 2012 chief executive officer transition.
|
•
|
Net sales
increased
26%
to
$935.0 million
, compared with
$743.2 million
in
2011
, primarily due to a
23%
comparable sales increase in our Company-Controlled channel.
|
•
|
Operating income for
2012
improved to
$119.8 million
, or
12.8%
of net sales, compared with
$90.5 million
, or
12.2%
of net sales, for the same period one year ago. Excluding the
$5.6 million
CEO transition charge,
2012
operating income was
$125.4 million
, or 13.4% of net sales. The operating income improvement was driven by strong comparable sales growth and a 0.5 percentage points increase in our gross profit rate. Annual retail sales-per-store for 2012 increased by
26%
from one year ago to
$2.2 million
(for stores open at least one year).
|
•
|
Cash provided by operating activities in
2012
totaled
$100.6 million
, compared with
$91.0 million
for the prior year.
|
•
|
At
December 29, 2012
, cash, cash equivalents and marketable debt securities totaled
$177.8 million
compared with
$146.3 million
at
December 31, 2011
, and we had no borrowings under our revolving credit facility. In
2012
, we repurchased
1,140,861
shares of our common stock under our Board approved share repurchase program at a cost of
$30.0 million
(
$26.32
per share).
|
|
|||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||
|
|
$
|
|
% of
Net Sales
|
|
$
|
|
% of
Net Sales
|
|
$
|
|
% of
Net Sales
|
|||||||||
Net sales
|
|
$
|
935.0
|
|
|
100.0
|
%
|
|
$
|
743.2
|
|
|
100.0
|
%
|
|
$
|
605.7
|
|
|
100.0
|
%
|
Cost of sales
|
|
338.4
|
|
|
36.2
|
|
|
272.9
|
|
|
36.7
|
|
|
227.4
|
|
|
37.5
|
|
|||
Gross profit
|
|
596.5
|
|
|
63.8
|
|
|
470.3
|
|
|
63.3
|
|
|
378.3
|
|
|
62.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
398.2
|
|
|
42.6
|
|
|
317.5
|
|
|
42.7
|
|
|
269.9
|
|
|
44.6
|
|
|||
General and administrative
|
|
66.6
|
|
|
7.1
|
|
|
58.1
|
|
|
7.8
|
|
|
53.6
|
|
|
8.8
|
|
|||
Research and development
|
|
6.2
|
|
|
0.7
|
|
|
4.2
|
|
|
0.6
|
|
|
2.1
|
|
|
0.4
|
|
|||
CEO transition costs
|
|
5.6
|
|
|
0.6
|
|
|
—
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|||
Asset impairment charges
|
|
0.1
|
|
|
0.0
|
|
|
0.1
|
|
|
0.0
|
|
|
0.3
|
|
|
0.0
|
|
|||
Total operating expenses
|
|
476.8
|
|
|
51.0
|
|
|
379.9
|
|
|
51.1
|
|
|
325.9
|
|
|
53.8
|
|
|||
Operating income
|
|
119.8
|
|
|
12.8
|
|
|
90.5
|
|
|
12.2
|
|
|
52.4
|
|
|
8.6
|
|
|||
Operating income – as adjusted
(1)
|
|
125.4
|
|
|
13.4
|
|
|
90.5
|
|
|
12.2
|
|
|
52.4
|
|
|
8.6
|
|
|||
Other income (expense), net
|
|
0.2
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|
(1.9
|
)
|
|
(0.3
|
)
|
|||
Income before income taxes
|
|
120.0
|
|
|
12.8
|
|
|
90.4
|
|
|
12.2
|
|
|
50.5
|
|
|
8.3
|
|
|||
Income tax expense
|
|
41.9
|
|
|
4.5
|
|
|
29.9
|
|
|
4.0
|
|
|
18.9
|
|
|
3.1
|
|
|||
Net income
|
|
$
|
78.1
|
|
|
8.4
|
%
|
|
$
|
60.5
|
|
|
8.1
|
%
|
|
$
|
31.6
|
|
|
5.2
|
%
|
Net income – as adjusted
(1)
|
|
$
|
81.7
|
|
|
8.7
|
%
|
|
$
|
60.5
|
|
|
8.1
|
%
|
|
$
|
31.6
|
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.41
|
|
|
|
|
|
$
|
1.10
|
|
|
|
|
$
|
0.58
|
|
|
|
||
Diluted
|
|
$
|
1.37
|
|
|
|
|
|
$
|
1.07
|
|
|
|
|
$
|
0.57
|
|
|
|
||
Diluted – as adjusted
(1)
|
|
$
|
1.43
|
|
|
|
|
$
|
1.07
|
|
|
|
|
$
|
0.57
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted-average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic
|
|
55.5
|
|
|
|
|
|
55.1
|
|
|
|
|
54.0
|
|
|
|
|||||
Diluted
|
|
57.1
|
|
|
|
|
|
56.4
|
|
|
|
|
55.3
|
|
|
|
(1)
|
This non-GAAP measure is not in accordance with, or preferable to, GAAP financial data. However, we are providing this information as we believe it facilitates annual and year-over-year comparisons for investors and financial analysts. See page 24 for a reconciliation of this non-GAAP measure to the appropriate GAAP measure.
|
|
|
2012
|
|
2011
|
|
2010
|
|||
Company-Controlled channel
|
|
96.7
|
%
|
|
96.2
|
%
|
|
94.8
|
%
|
Wholesale channel
|
|
3.3
|
%
|
|
3.8
|
%
|
|
5.2
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Net Sales Increase/(Decrease)
|
|||||||
|
|
2012
|
|
2011
|
|
2010
|
|||
|
|
|
|
|
|
|
|||
Retail comparable-store sales
(1)
|
|
24
|
%
|
|
29
|
%
|
|
21
|
%
|
Direct and E-Commerce
|
|
9
|
%
|
|
(1
|
%)
|
|
5
|
%
|
Company-Controlled comparable sales change
|
|
23
|
%
|
|
26
|
%
|
|
19
|
%
|
Net store openings/closings
|
|
3
|
%
|
|
(1
|
%)
|
|
(5
|
%)
|
Total Company-Controlled channel
|
|
26
|
%
|
|
25
|
%
|
|
14
|
%
|
Wholesale channel
|
|
10
|
%
|
|
(11
|
%)
|
|
(21
|
%)
|
Total net sales change
|
|
26
|
%
|
|
23
|
%
|
|
11
|
%
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
|
|
|
|
|
|
||||||
Average sales per store
(1)
($ in thousands)
|
|
$
|
2,164
|
|
|
$
|
1,721
|
|
|
$
|
1,295
|
|
Average sales per square foot
(1)
|
|
$
|
1,324
|
|
|
$
|
1,135
|
|
|
$
|
873
|
|
Stores > $1 million in net sales
(1)
|
|
98
|
%
|
|
93
|
%
|
|
70
|
%
|
|||
Stores > $2 million in net sales
(1)
|
|
49
|
%
|
|
24
|
%
|
|
7
|
%
|
|||
Average net sales per mattress unit – Company-Controlled channel
(2)
|
|
$
|
3,050
|
|
|
$
|
2,694
|
|
|
$
|
2,424
|
|
|
|
2012
|
|
2011
|
|
2010
|
|||
|
|
|
|
|
|
|
|||
Beginning of period
|
|
381
|
|
|
386
|
|
|
403
|
|
Opened
|
|
57
|
|
|
19
|
|
|
7
|
|
Closed
|
|
(28
|
)
|
|
(24
|
)
|
|
(24
|
)
|
End of period
|
|
410
|
|
|
381
|
|
|
386
|
|
|
|
Fiscal Year Ended
|
||||||
|
|
December 29,
2012 |
|
December 31,
2011 |
||||
Total cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
100.6
|
|
|
$
|
91.0
|
|
Investing activities
|
|
(112.1
|
)
|
|
(56.2
|
)
|
||
Financing activities
|
|
(16.9
|
)
|
|
5.4
|
|
||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(28.3
|
)
|
|
$
|
40.2
|
|
|
|
Payments Due by Period
(1)
|
||||||||||||||||||
|
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
> 5 Years
|
||||||||||
Operating leases
(2)
|
|
$
|
161,190
|
|
|
$
|
37,322
|
|
|
$
|
56,950
|
|
|
$
|
37,782
|
|
|
$
|
29,136
|
|
Capital leases
|
|
115
|
|
|
112
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments
|
|
4,023
|
|
|
4,023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
165,328
|
|
|
$
|
41,457
|
|
|
$
|
56,953
|
|
|
$
|
37,782
|
|
|
$
|
29,136
|
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results
Differ From Assumptions
|
Asset Impairment Charges
|
|
|
|
|
Long-lived assets other than goodwill and other intangible assets, which are separately tested for impairment, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges). If the estimated undiscounted cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. We generally estimate fair value of long-lived assets, including our retail stores, using the income approach, which we base on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated fair value plus net proceeds expected from disposition of the asset (if any). When we recognize an impairment loss, the carrying amount of the asset is permanently reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques.
Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results.
If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining useful life of that asset.
|
|
Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to identify events or changes in circumstances indicating the carrying value of assets may not be recoverable, estimate future cash flows, estimate asset fair values, and select a discount rate that reflects the risk inherent in future cash flows.
Expected cash flows may not be realized, which could cause long-lived assets to become impaired in future periods and could have a material adverse effect on future results of operations.
|
|
We have not made any material changes in our impairment loss assessment methodology during the past three fiscal years.
As of December 29, 2012, all retail stores had sufficient projected future cash flows to support the carrying value of their long-lived assets.
We believe that our estimates and assumptions used to determine long-lived asset impairment charges were reasonable and reflect the current economic environment. Our fair value calculations reflect current consumer spending trends. Our fair value calculations assume the ongoing availability of consumer credit and our ability to provide cost-effective consumer credit options. However, it is reasonably possible that an unexpected decline in consumer spending may expose us to future impairment charges that could be material.
Asset impairment charges totaled $0.1 million, $0.1 million and $0.3 million for 2012, 2011 and 2010, respectively.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results
Differ From Assumptions
|
Stock-Based Compensation
|
|
|
|
|
We have a stock-based compensation plan, which includes non-qualified stock options and stock awards. See Note 1,
Business and Summary of Significant Accounting Policies
, and Note 8,
Shareholders’ Equity
, to the Notes to Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data
, of this Annual Report on Form 10-K, for a complete discussion of our stock-based compensation programs.
We determine the fair value of our nonqualified stock option awards and the resulting compensation expense at the date of grant using the Black-Scholes-Merton option-pricing model. The most significant inputs into the Black-Scholes-Merton model are exercise price, our estimate of expected stock price volatility and the expected term of the options.
We determine the fair value of our performance-based stock awards at the date of grant based on the closing market price of our stock. H
owever, the final number of shares earned and the related compensation expense is adjusted up or down to the extent the performance target is met as of the last day of the performance period. The actual number of shares that will ultimately vest ranges from 0% to 150% of the targeted amount. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance stock awards granted in 2012, the performance target is actual market share growth and the performance period is from January 2012 through December 2014. For performance stock awards granted in 2011, the performance targets are actual market share growth and free cash flow and the performance period is from January 2011 through December 2013. For performance stock awards granted in 2010, the performance targets were net sales and net operating profit and the performance period was from January 2010 through December 2010. The actual number of shares that ultimately vested for the 2010 performance stock awards was 150% of the targeted amount.
|
|
Option-pricing models and generally accepted valuation techniques require management to make assumptions and to apply judgment to determine the fair value of our awards. These assumptions and judgments include estimating the volatility of our stock price, future employee forfeiture rates and future employee stock option exercise behaviors. Changes in these assumptions can materially affect the fair value estimate or future earnings adjustments.
Performance-based stock awards require management to make assumptions regarding the likelihood of achieving performance targets.
|
|
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in stock-based compensation expense that could be material.
In addition, if actual results are not consistent with the assumptions used, the stock-based compensation expense reported in our financial statements may not be representative of the actual economic cost of the stock-based compensation. Finally, if the actual forfeiture rates, or the actual achievement of performance targets, are not consistent with the assumptions used, we could experience future earnings adjustments.
A 10% change in our stock-based compensation expense for the year ended December 29, 2012, would have affected net income by approximately $673,000 in 2012.
|
Warranty Liabilities
|
|
|
|
|
The estimated cost to service warranty and customer service claims is included in cost of sales. This estimate is based on historical trends and warranty claim rates.
We regularly assess and adjust the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs.
|
|
The majority of our warranty claims are incurred within the first year. However, our warranty liability contains uncertainties because our warranty obligations cover an extended period of time. A revision of estimated claim rates or the projected cost of materials and freight associated with sending replacement parts to customers could have a material adverse effect on future results of operations.
|
|
We have not made any material changes in our warranty liability assessment methodology during the past three fiscal years. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate our warranty liability. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material.
A10% change in our warranty liability at December 29, 2012, would have affected net income by approximately $317,000 in 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Recognition
|
|
|
|
|
Revenue is recognized when the sales price is fixed or determinable, collectability is reasonably assured and title passes. Amounts billed to customers for delivery and set up are included in net sales. Revenue is reported net of estimated sales returns and excludes sales taxes.
We accrue for sales returns at the time revenue is recognized and charge actual returns against the liability when they are received. Our general return policy is to accept returns after a 30-night trial period. We estimate future projected returns based on historical return rates.
|
|
Our estimates of sales returns contain uncertainties as actual returns may vary from expected rates, resulting in adjustments to net sales in future periods. These adjustments could have an adverse effect on future results of operations.
|
|
We have not made any material changes in the accounting methodology used to establish our sales returns allowance during the past three fiscal years. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate our sales returns allowance. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to additional losses or gains in future periods. A 10% change in our sales returns allowance at December 29, 2012 would have affected net income by approximately $348,000 in 2012.
|
|
2012
|
|
2011
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
87,915
|
|
|
$
|
116,255
|
|
Marketable debt securities – current
|
51,264
|
|
|
20,020
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $348 and $397, respectively
|
16,613
|
|
|
13,844
|
|
||
Inventories
|
35,564
|
|
|
24,851
|
|
||
Prepaid expenses
|
4,299
|
|
|
5,778
|
|
||
Deferred income taxes
|
5,401
|
|
|
4,443
|
|
||
Other current assets
|
9,522
|
|
|
6,004
|
|
||
Total current assets
|
210,578
|
|
|
191,195
|
|
||
|
|
|
|
||||
Non-current assets:
|
|
|
|
|
|||
Marketable debt securities – non-current
|
38,642
|
|
|
10,042
|
|
||
Property and equipment, net
|
79,356
|
|
|
43,850
|
|
||
Deferred income taxes
|
8,511
|
|
|
12,964
|
|
||
Other assets
|
4,934
|
|
|
4,606
|
|
||
Total assets
|
$
|
342,021
|
|
|
$
|
262,657
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
67,703
|
|
|
$
|
50,141
|
|
Customer prepayments
|
15,194
|
|
|
13,529
|
|
||
Compensation and benefits
|
21,597
|
|
|
29,806
|
|
||
Taxes and withholding
|
9,282
|
|
|
9,883
|
|
||
Other current liabilities
|
19,285
|
|
|
15,691
|
|
||
Total current liabilities
|
133,061
|
|
|
119,050
|
|
||
|
|
|
|
||||
Non-current liabilities:
|
|
|
|
|
|||
Warranty liabilities
|
1,457
|
|
|
2,714
|
|
||
Other long-term liabilities
|
13,806
|
|
|
11,502
|
|
||
Total liabilities
|
148,324
|
|
|
133,266
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 142,500 shares authorized, 55,903 and 56,397 shares issued and outstanding, respectively
|
559
|
|
|
564
|
|
||
Additional paid-in capital
|
33,923
|
|
|
47,701
|
|
||
Retained earnings
|
159,195
|
|
|
81,101
|
|
||
Accumulated other comprehensive income
|
20
|
|
|
25
|
|
||
Total shareholders’ equity
|
193,697
|
|
|
129,391
|
|
||
Total liabilities and shareholders’ equity
|
$
|
342,021
|
|
|
$
|
262,657
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net sales
|
$
|
934,978
|
|
|
$
|
743,203
|
|
|
$
|
605,676
|
|
Cost of sales
|
338,432
|
|
|
272,858
|
|
|
227,413
|
|
|||
Gross profit
|
596,546
|
|
|
470,345
|
|
|
378,263
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Sales and marketing
|
398,205
|
|
|
317,502
|
|
|
269,901
|
|
|||
General and administrative
|
66,617
|
|
|
58,106
|
|
|
53,572
|
|
|||
Research and development
|
6,194
|
|
|
4,175
|
|
|
2,147
|
|
|||
CEO transition costs
|
5,595
|
|
|
—
|
|
|
—
|
|
|||
Asset impairment charges
|
148
|
|
|
109
|
|
|
260
|
|
|||
Total operating expenses
|
476,759
|
|
|
379,892
|
|
|
325,880
|
|
|||
Operating income
|
119,787
|
|
|
90,453
|
|
|
52,383
|
|
|||
Other income (expense), net
|
218
|
|
|
(33
|
)
|
|
(1,893
|
)
|
|||
Income before income taxes
|
120,005
|
|
|
90,420
|
|
|
50,490
|
|
|||
Income tax expense
|
41,911
|
|
|
29,942
|
|
|
18,922
|
|
|||
Net income
|
$
|
78,094
|
|
|
$
|
60,478
|
|
|
$
|
31,568
|
|
|
|
|
|
|
|
||||||
Basic net income per share:
|
|
|
|
|
|
|
|
|
|||
Net income per share – basic
|
$
|
1.41
|
|
|
$
|
1.10
|
|
|
$
|
0.58
|
|
Weighted-average shares – basic
|
55,516
|
|
|
55,081
|
|
|
54,005
|
|
|||
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|||
Net income per share – diluted
|
$
|
1.37
|
|
|
$
|
1.07
|
|
|
$
|
0.57
|
|
Weighted-average shares – diluted
|
57,076
|
|
|
56,432
|
|
|
55,264
|
|
|
|
2012
|
|
2011
|
|
2010
|
|||||
Net income
|
|
$
|
78,094
|
|
|
$
|
60,478
|
|
|
31,568
|
|
Other comprehensive (loss) income – unrealized (loss) gain on available-for-sale marketable debt securities, net of income tax
|
|
(5
|
)
|
|
25
|
|
|
—
|
|
||
Comprehensive income
|
|
$
|
78,089
|
|
|
$
|
60,503
|
|
|
31,568
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings(Accumulated
Deficit)
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance at January 2, 2010
|
54,310
|
|
|
$
|
543
|
|
|
$
|
32,860
|
|
|
$
|
(10,945
|
)
|
|
$
|
—
|
|
|
$
|
22,458
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
31,568
|
|
|
—
|
|
|
31,568
|
|
|||||
Exercise of common stock options
|
958
|
|
|
10
|
|
|
1,004
|
|
|
—
|
|
|
—
|
|
|
1,014
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
366
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|||||
Stock-based compensation
|
353
|
|
|
4
|
|
|
3,958
|
|
|
—
|
|
|
—
|
|
|
3,962
|
|
|||||
Repurchases of common stock
|
(166
|
)
|
|
(2
|
)
|
|
(1,389
|
)
|
|
—
|
|
|
—
|
|
|
(1,391
|
)
|
|||||
Balance at January 1, 2011
|
55,455
|
|
|
$
|
555
|
|
|
$
|
36,799
|
|
|
$
|
20,623
|
|
|
$
|
—
|
|
|
$
|
57,977
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
60,478
|
|
|
—
|
|
|
60,478
|
|
|||||
Unrealized gain on available-for-sale marketable debt securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
60,503
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Exercise of common stock options
|
725
|
|
|
7
|
|
|
4,349
|
|
|
—
|
|
|
—
|
|
|
4,356
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
1,865
|
|
|
—
|
|
|
—
|
|
|
1,865
|
|
|||||
Stock-based compensation
|
204
|
|
|
2
|
|
|
4,969
|
|
|
—
|
|
|
—
|
|
|
4,971
|
|
|||||
Repurchases of common stock
|
(30
|
)
|
|
—
|
|
|
(371
|
)
|
|
—
|
|
|
—
|
|
|
(371
|
)
|
|||||
Other
|
43
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|||||
Balance at December 31, 2011
|
56,397
|
|
|
$
|
564
|
|
|
$
|
47,701
|
|
|
$
|
81,101
|
|
|
$
|
25
|
|
|
$
|
129,391
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
78,094
|
|
|
—
|
|
|
78,094
|
|
|||||
Unrealized loss on available-for-sale marketable debt securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,089
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Exercise of common stock options
|
659
|
|
|
7
|
|
|
5,131
|
|
|
—
|
|
|
—
|
|
|
5,138
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
5,665
|
|
|
—
|
|
|
—
|
|
|
5,665
|
|
|||||
Stock-based compensation
|
170
|
|
|
1
|
|
|
10,305
|
|
|
—
|
|
|
—
|
|
|
10,306
|
|
|||||
Repurchases of common stock
|
(1,323
|
)
|
|
(13
|
)
|
|
(34,879
|
)
|
|
—
|
|
|
—
|
|
|
(34,892
|
)
|
|||||
Balance at December 29, 2012
|
55,903
|
|
|
$
|
559
|
|
|
$
|
33,923
|
|
|
$
|
159,195
|
|
|
$
|
20
|
|
|
$
|
193,697
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
78,094
|
|
|
$
|
60,478
|
|
|
$
|
31,568
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
20,401
|
|
|
13,543
|
|
|
14,626
|
|
|||
Stock-based compensation
|
10,306
|
|
|
4,971
|
|
|
3,962
|
|
|||
Net loss on disposals and impairments of assets
|
115
|
|
|
98
|
|
|
251
|
|
|||
Excess tax benefits from stock-based compensation
|
(6,446
|
)
|
|
(2,190
|
)
|
|
(1,358
|
)
|
|||
Deferred income taxes
|
3,499
|
|
|
2,839
|
|
|
2,352
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
(2,705
|
)
|
|
(3,935
|
)
|
|
718
|
|
|||
Inventories
|
(10,713
|
)
|
|
(5,204
|
)
|
|
(4,001
|
)
|
|||
Income taxes
|
4,299
|
|
|
4,445
|
|
|
6,647
|
|
|||
Prepaid expenses and other assets
|
(2,382
|
)
|
|
(1,976
|
)
|
|
1,579
|
|
|||
Accounts payable
|
7,114
|
|
|
6,913
|
|
|
3,995
|
|
|||
Customer prepayments
|
1,665
|
|
|
585
|
|
|
1,707
|
|
|||
Accrued compensation and benefits
|
(8,108
|
)
|
|
5,167
|
|
|
11,471
|
|
|||
Other taxes and withholding
|
765
|
|
|
1,944
|
|
|
53
|
|
|||
Warranty liabilities
|
(1,454
|
)
|
|
566
|
|
|
(1,398
|
)
|
|||
Other accruals and liabilities
|
6,176
|
|
|
2,802
|
|
|
(765
|
)
|
|||
Net cash provided by operating activities
|
100,626
|
|
|
91,046
|
|
|
71,407
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(51,593
|
)
|
|
(23,527
|
)
|
|
(7,349
|
)
|
|||
Investments in marketable debt securities
|
(86,803
|
)
|
|
(40,021
|
)
|
|
—
|
|
|||
Proceeds from maturities of marketable debt securities
|
26,249
|
|
|
10,000
|
|
|
—
|
|
|||
Proceeds from sales of property and equipment
|
45
|
|
|
11
|
|
|
10
|
|
|||
Increase in restricted cash
|
—
|
|
|
(2,650
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(112,102
|
)
|
|
(56,187
|
)
|
|
(7,339
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||
Repurchases of common stock
|
(34,892
|
)
|
|
(371
|
)
|
|
(1,391
|
)
|
|||
Excess tax benefits from stock-based compensation
|
6,446
|
|
|
2,190
|
|
|
1,358
|
|
|||
Net increase (decrease) in short-term borrowings
|
6,494
|
|
|
(795
|
)
|
|
(1,074
|
)
|
|||
Proceeds from issuance of common stock
|
5,138
|
|
|
4,356
|
|
|
1,014
|
|
|||
Debt issuance costs
|
(50
|
)
|
|
—
|
|
|
(143
|
)
|
|||
Net cash (used in) provided by financing activities
|
(16,864
|
)
|
|
5,380
|
|
|
(236
|
)
|
|||
|
|
|
|
|
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(28,340
|
)
|
|
40,239
|
|
|
63,832
|
|
|||
Cash and cash equivalents, at beginning of period
|
116,255
|
|
|
76,016
|
|
|
12,184
|
|
|||
Cash and cash equivalents, at end of period
|
$
|
87,915
|
|
|
$
|
116,255
|
|
|
$
|
76,016
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||||||
Income taxes paid
|
$
|
34,181
|
|
|
$
|
23,778
|
|
|
$
|
9,732
|
|
Interest paid
|
$
|
81
|
|
|
$
|
113
|
|
|
$
|
44
|
|
Capital lease obligations incurred
|
$
|
—
|
|
|
$
|
83
|
|
|
$
|
466
|
|
Purchases of property and equipment included in accounts payable
|
$
|
3,817
|
|
|
$
|
1,486
|
|
|
$
|
965
|
|
Leasehold improvements
|
5 to 10 years
|
Furniture and equipment
|
5 to 7 years
|
Production machinery, computer equipment and software
|
3 to 7 years
|
Property under capital lease
|
3 to 4 years
|
|
2012
|
|
2011
|
|
2010
|
||||||
Balance at beginning of period
|
$
|
6,310
|
|
|
$
|
5,744
|
|
|
$
|
7,143
|
|
Additions charged to costs and expenses for current-year sales
|
4,114
|
|
|
4,232
|
|
|
3,630
|
|
|||
Deductions from reserves
|
(5,094
|
)
|
|
(4,750
|
)
|
|
(4,318
|
)
|
|||
Changes in liability for pre-existing warranties during the current year, including expirations
(1)
|
(472
|
)
|
|
1,084
|
|
|
(711
|
)
|
|||
Balance at end of period
|
$
|
4,858
|
|
|
$
|
6,310
|
|
|
$
|
5,744
|
|
(1)
|
Includes
$1.6 million
increase for customer-service reserves during 2011.
|
•
|
Level 1 – observable inputs such as quoted prices in active markets;
|
•
|
Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly including:
|
•
|
Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
Cost of Sales
|
|
Sales & Marketing
|
• Costs associated with purchasing, manufacturing, shipping, handling and delivering our products to our retail stores and customers;
• Physical inventory losses, scrap and obsolescence;
• Related occupancy and depreciation expenses;
• Costs associated with returns and exchanges; and
• Estimated costs to service warranty claims of customers.
|
|
• Advertising and media production;
• Marketing and selling materials such as brochures, videos, customer mailings and in-store signage;
• Payroll and benefits for sales and customer service staff;
• Store occupancy costs;
• Store depreciation expense;
• Credit card processing fees; and
• Promotional financing costs.
|
G&A
|
|
R&D
(1)
|
• Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management;
• Occupancy costs of corporate facilities;
• Depreciation related to corporate assets;
• Information hardware, software and maintenance;
• Insurance;
• Investor relations costs; and
• Other overhead costs.
|
|
• Internal labor and benefits related to research and development activities;
• Outside consulting services related to research and development activities; and
• Testing equipment related to research and development activities.
(1)
Costs incurred in connection with R&D are charged to expense as incurred.
|
|
|
December 29, 2012
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Marketable debt securities – current
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
$
|
17,538
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,538
|
|
Corporate bonds
|
|
—
|
|
|
21,549
|
|
|
—
|
|
|
21,549
|
|
||||
U.S. Agency bonds
|
|
—
|
|
|
7,586
|
|
|
—
|
|
|
7,586
|
|
||||
Municipal bonds
|
|
—
|
|
|
4,591
|
|
|
—
|
|
|
4,591
|
|
||||
|
|
17,538
|
|
|
33,726
|
|
|
—
|
|
|
51,264
|
|
||||
Marketable debt securities – non-current
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
15,004
|
|
|
—
|
|
|
—
|
|
|
15,004
|
|
||||
Corporate bonds
|
|
—
|
|
|
10,359
|
|
|
—
|
|
|
10,359
|
|
||||
U.S. Agency bonds
|
|
—
|
|
|
10,056
|
|
|
—
|
|
|
10,056
|
|
||||
Municipal bonds
|
|
—
|
|
|
3,223
|
|
|
—
|
|
|
3,223
|
|
||||
|
|
15,004
|
|
|
23,638
|
|
|
—
|
|
|
38,642
|
|
||||
|
|
$
|
32,542
|
|
|
$
|
57,364
|
|
|
$
|
—
|
|
|
$
|
89,906
|
|
|
|
December 31, 2011
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Marketable debt securities – current
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
$
|
20,020
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,020
|
|
|
|
|
|
|
|
|
|
|
||||||||
Marketable debt securities – non-current
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
10,042
|
|
|
—
|
|
|
—
|
|
|
10,042
|
|
||||
|
|
$
|
30,062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,062
|
|
|
December 29, 2012
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
(1)
|
||||||||
U.S. Treasury securities
|
$
|
32,518
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
32,542
|
|
Corporate bonds
|
31,929
|
|
|
2
|
|
|
(23
|
)
|
|
31,908
|
|
||||
U.S. Agency bonds
|
17,632
|
|
|
11
|
|
|
(1
|
)
|
|
17,642
|
|
||||
Municipal bonds
|
7,794
|
|
|
20
|
|
|
—
|
|
|
7,814
|
|
||||
|
$
|
89,873
|
|
|
$
|
57
|
|
|
$
|
(24
|
)
|
|
$
|
89,906
|
|
|
December 31, 2011
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
(1)
|
||||||||
U.S. Treasury securities
|
$
|
30,021
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
30,062
|
|
|
December 29, 2012
|
|
December 31, 2011
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
(1)
|
|
Amortized
Cost
|
|
Fair
Value
(1)
|
||||||||
Marketable debt securities – current (due in less than one year)
|
$
|
51,238
|
|
|
$
|
51,264
|
|
|
$
|
20,004
|
|
|
$
|
20,020
|
|
Marketable debt securities – non-current (due in one to two years)
|
38,635
|
|
|
38,642
|
|
|
10,017
|
|
|
10,042
|
|
||||
|
$
|
89,873
|
|
|
$
|
89,906
|
|
|
$
|
30,021
|
|
|
$
|
30,062
|
|
|
December 29,
2012 |
|
December 31,
2011 |
||||
Raw materials
|
$
|
5,089
|
|
|
$
|
4,834
|
|
Work in progress
|
236
|
|
|
96
|
|
||
Finished goods
|
30,239
|
|
|
19,921
|
|
||
|
$
|
35,564
|
|
|
$
|
24,851
|
|
|
|
December 29,
2012 |
|
December 31,
2011 |
||||
Land
|
|
$
|
1,999
|
|
|
$
|
1,999
|
|
Leasehold improvements
|
|
78,764
|
|
|
75,408
|
|
||
Furniture and equipment
|
|
26,957
|
|
|
13,645
|
|
||
Production machinery, computer equipment and software
|
|
89,183
|
|
|
78,082
|
|
||
Property under capital lease
|
|
1,672
|
|
|
1,672
|
|
||
Construction in progress
|
|
12,838
|
|
|
5,050
|
|
||
Less: Accumulated depreciation and amortization
|
|
(132,057
|
)
|
|
(132,006
|
)
|
||
|
|
$
|
79,356
|
|
|
$
|
43,850
|
|
Facility Rents:
|
|
2012
|
|
2011
|
|
2010
|
||||||
Minimum rents
|
|
$
|
36,104
|
|
|
$
|
32,928
|
|
|
$
|
33,195
|
|
Contingent rents
|
|
9,813
|
|
|
6,480
|
|
|
3,074
|
|
|||
Total
|
|
$
|
45,917
|
|
|
$
|
39,408
|
|
|
$
|
36,269
|
|
|
|
|
|
|
|
|
||||||
Equipment Rents
|
|
$
|
2,627
|
|
|
$
|
2,469
|
|
|
$
|
2,259
|
|
|
|
Operating
|
|
Capital
|
||||
2013
|
|
$
|
37,322
|
|
|
$
|
112
|
|
2014
|
|
31,726
|
|
|
3
|
|
||
2015
|
|
25,224
|
|
|
—
|
|
||
2016
|
|
21,456
|
|
|
—
|
|
||
2017
|
|
16,326
|
|
|
—
|
|
||
Thereafter
|
|
29,136
|
|
|
—
|
|
||
Total future minimum lease payments
|
|
$
|
161,190
|
|
|
115
|
|
|
Less: amount representing interest
|
|
|
|
|
(3
|
)
|
||
Present value of future minimum lease payments
|
|
|
|
|
$
|
112
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Stock options
|
|
$
|
3,688
|
|
|
$
|
2,721
|
|
|
$
|
2,491
|
|
Stock awards
|
|
6,618
|
|
|
2,250
|
|
|
1,471
|
|
|||
Total stock-based compensation expense
(1)
|
|
10,306
|
|
|
4,971
|
|
|
3,962
|
|
|||
Income tax benefit
|
|
3,576
|
|
|
1,710
|
|
|
1,379
|
|
|||
Total stock-based compensation expense, net of tax
|
|
$
|
6,730
|
|
|
$
|
3,261
|
|
|
$
|
2,583
|
|
|
|
Stock
Options
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
Outstanding at December 31, 2011
|
|
3,305
|
|
|
$
|
13.36
|
|
|
5.4
|
|
$
|
29,907
|
|
Granted
|
|
267
|
|
|
28.32
|
|
|
|
|
|
|
||
Exercised
|
|
(679
|
)
|
|
8.32
|
|
|
|
|
|
|
||
Canceled/Forfeited
|
|
(4
|
)
|
|
22.32
|
|
|
|
|
|
|
||
Outstanding at December 29, 2012
|
|
2,889
|
|
|
$
|
15.92
|
|
|
5.0
|
|
$
|
26,109
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 29, 2012
|
|
2,250
|
|
|
$
|
15.86
|
|
|
4.2
|
|
$
|
19,917
|
|
|
|
|
|
|
|
|
|
|
|||||
Vested and expected to vest at December 29, 2012
|
|
2,830
|
|
|
$
|
15.93
|
|
|
5.0
|
|
$
|
25,496
|
|
(1)
|
Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant.
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Weighted-average grant date fair value of stock options granted
|
|
$
|
14.28
|
|
|
$
|
10.91
|
|
|
$
|
6.18
|
|
Total intrinsic value (at exercise) of stock options exercised
|
|
$
|
12,724
|
|
|
$
|
8,295
|
|
|
$
|
5,860
|
|
Valuation Assumptions
|
|
2012
|
|
2011
|
|
2010
|
|||
Expected dividend yield
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility
|
|
63
|
%
|
|
78
|
%
|
|
78
|
%
|
Risk-free interest rate
|
|
1.1
|
%
|
|
1.9
|
%
|
|
2.0
|
%
|
Expected term (in years)
|
|
5.6
|
|
|
5.0
|
|
|
4.9
|
|
|
|
Time-
Based
Stock
Awards
|
|
Weighted-Average
Grant Date
Fair Value
|
|
Performance
Stock
Awards
|
|
Weighted-Average
Grant Date
Fair Value
|
||||||
Outstanding at December 31, 2011
|
|
391
|
|
|
$
|
9.06
|
|
|
726
|
|
|
$
|
7.65
|
|
Granted
|
|
58
|
|
|
28.65
|
|
|
125
|
|
|
28.34
|
|
||
Vested
|
|
(190
|
)
|
|
12.73
|
|
|
(291
|
)
|
|
6.70
|
|
||
Canceled/Forfeited
|
|
(4
|
)
|
|
8.74
|
|
|
(6
|
)
|
|
14.55
|
|
||
Outstanding at December 29, 2012
|
|
255
|
|
|
$
|
13.62
|
|
|
554
|
|
|
$
|
11.47
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Amount repurchased under Board approved share repurchase program
|
|
$
|
30,023
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Amount repurchased in connection with the vesting of employee restricted stock grants
|
|
4,869
|
|
|
371
|
|
|
1,391
|
|
|||
Total amount repurchased
|
|
$
|
34,892
|
|
|
$
|
371
|
|
|
$
|
1,391
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
78,094
|
|
|
$
|
60,478
|
|
|
$
|
31,568
|
|
|
|
|
|
|
|
||||||
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Basic weighted-average shares outstanding
|
55,516
|
|
|
55,081
|
|
|
54,005
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|||
Options
|
1,059
|
|
|
821
|
|
|
817
|
|
|||
Restricted shares
|
501
|
|
|
530
|
|
|
442
|
|
|||
Diluted weighted-average shares outstanding
|
57,076
|
|
|
56,432
|
|
|
55,264
|
|
|||
|
|
|
|
|
|
||||||
Net income per share – basic
|
$
|
1.41
|
|
|
$
|
1.10
|
|
|
$
|
0.58
|
|
Net income per share – diluted
|
$
|
1.37
|
|
|
$
|
1.07
|
|
|
$
|
0.57
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Interest expense
|
$
|
(92
|
)
|
|
$
|
(188
|
)
|
|
$
|
(838
|
)
|
Interest income
|
310
|
|
|
155
|
|
|
59
|
|
|||
Write-off unamortized debt cost
|
—
|
|
|
—
|
|
|
(1,114
|
)
|
|||
Other income (expense), net
|
$
|
218
|
|
|
$
|
(33
|
)
|
|
$
|
(1,893
|
)
|
Current:
|
|
2012
|
|
2011
|
|
2010
|
||||||
Federal
|
|
$
|
34,993
|
|
|
$
|
23,481
|
|
|
$
|
15,812
|
|
State
|
|
3,419
|
|
|
3,622
|
|
|
758
|
|
|||
|
|
38,412
|
|
|
27,103
|
|
|
16,570
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
2,176
|
|
|
2,434
|
|
|
564
|
|
|||
State
|
|
1,323
|
|
|
405
|
|
|
1,788
|
|
|||
|
|
3,499
|
|
|
2,839
|
|
|
2,352
|
|
|||
Income tax expense
|
|
$
|
41,911
|
|
|
$
|
29,942
|
|
|
$
|
18,922
|
|
|
|
2012
|
|
2011
|
|
2010
|
|||
Statutory federal income tax
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
|
2.9
|
|
|
3.2
|
|
|
2.9
|
|
Manufacturing deduction
|
|
(3.1
|
)
|
|
(2.9
|
)
|
|
(2.7
|
)
|
Changes in unrecognized tax benefits
|
|
(0.2
|
)
|
|
(0.8
|
)
|
|
1.8
|
|
Other
|
|
0.3
|
|
|
(1.4
|
)
|
|
0.5
|
|
Effective income tax rate
|
|
34.9
|
%
|
|
33.1
|
%
|
|
37.5
|
%
|
Deferred tax assets:
|
|
2012
|
|
2011
|
||||
Current:
|
|
|
|
|
||||
Compensation and benefits
|
|
$
|
1,448
|
|
|
$
|
1,175
|
|
Warranty and returns liabilities
|
|
3,040
|
|
|
2,492
|
|
||
Deferred rent and lease incentives
|
|
867
|
|
|
862
|
|
||
Other
|
|
246
|
|
|
107
|
|
||
Long-term:
|
|
|
|
|
|
|||
Property and equipment
|
|
—
|
|
|
1,119
|
|
||
Stock-based compensation
|
|
8,061
|
|
|
6,380
|
|
||
Deferred rent and lease incentives
|
|
3,237
|
|
|
2,411
|
|
||
Warranty liability
|
|
563
|
|
|
1,047
|
|
||
Net operating loss and capital loss carryforwards
|
|
1,339
|
|
|
2,090
|
|
||
Other
|
|
459
|
|
|
417
|
|
||
Total gross deferred tax assets
|
|
19,260
|
|
|
18,100
|
|
||
Valuation allowance
|
|
(647
|
)
|
|
(693
|
)
|
||
Total deferred tax assets after valuation allowance
|
|
18,613
|
|
|
17,407
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Long-term:
|
|
|
|
|
||||
Property and equipment
|
|
4,701
|
|
|
—
|
|
||
Total gross deferred tax liabilities
|
|
4,701
|
|
|
—
|
|
||
Net deferred tax assets
|
|
$
|
13,912
|
|
|
$
|
17,407
|
|
|
|
Federal and State Tax
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
Beginning balance
|
|
$
|
425
|
|
|
$
|
1,354
|
|
|
$
|
1,375
|
|
Increases related to prior-year tax positions
|
|
—
|
|
|
355
|
|
|
621
|
|
|||
Decreases related to prior-year tax positions
|
|
(230
|
)
|
|
—
|
|
|
(572
|
)
|
|||
Settlements with taxing authorities
|
|
—
|
|
|
(1,506
|
)
|
|
(138
|
)
|
|||
Lapse of statute of limitations
|
|
—
|
|
|
(70
|
)
|
|
—
|
|
|||
Increases related to current-year tax positions
|
|
18
|
|
|
292
|
|
|
68
|
|
|||
Ending balance
|
|
$
|
213
|
|
|
$
|
425
|
|
|
$
|
1,354
|
|
2012
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fiscal
Year
|
||||||||||
Net sales
|
|
$
|
262,383
|
|
|
$
|
205,219
|
|
|
$
|
246,817
|
|
|
$
|
220,559
|
|
|
$
|
934,978
|
|
Gross profit
|
|
164,299
|
|
|
131,571
|
|
|
160,729
|
|
|
139,947
|
|
|
596,546
|
|
|||||
Operating income
|
|
34,296
|
|
|
25,852
|
|
|
40,225
|
|
|
19,414
|
|
|
119,787
|
|
|||||
Net income
|
|
22,417
|
|
|
16,973
|
|
|
26,209
|
|
|
12,495
|
|
|
78,094
|
|
|||||
Net income per share – diluted
|
|
0.39
|
|
|
0.30
|
|
|
0.46
|
|
|
0.22
|
|
|
1.37
|
|
2011
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fiscal
Year
|
||||||||||
Net sales
|
|
$
|
193,068
|
|
|
$
|
161,462
|
|
|
$
|
199,600
|
|
|
$
|
189,073
|
|
|
$
|
743,203
|
|
Gross profit
|
|
123,101
|
|
|
102,504
|
|
|
125,762
|
|
|
118,978
|
|
|
470,345
|
|
|||||
Operating income
|
|
26,398
|
|
|
17,626
|
|
|
26,459
|
|
|
19,970
|
|
|
90,453
|
|
|||||
Net income
|
|
16,583
|
|
|
11,289
|
|
|
17,236
|
|
|
15,370
|
|
|
60,478
|
|
|||||
Net income per share – diluted
|
|
0.30
|
|
|
0.20
|
|
|
0.31
|
|
|
0.27
|
|
|
1.07
|
|
Plan Category
|
|
Number of
securities to
be
issued
upon exercise
of outstanding
options, warrants
and
rights
(1)
|
|
Weighted
average
exercise
price of
outstanding
options,
warrants and
rights
|
|
Number of
securities
remaining
available
for
future issuance
under equity
compensation
plans
(excluding
securities
reflected in the
first
column)
|
||||
Equity compensation plans approved by security holders
|
|
2,889,000
|
|
|
$
|
15.92
|
|
|
1,130,000
|
|
Equity compensation plans not approved by security holders
|
|
None
|
|
|
Not applicable
|
|
|
None
|
|
|
Total
|
|
2,889,000
|
|
|
$
|
15.92
|
|
|
1,130,000
|
|
(1)
|
Includes the Select Comfort Corporation 1997 Stock Incentive Plan, the Select Comfort Corporation 2004 Stock Incentive Plan and the Select Comfort Corporation 2010 Omnibus Incentive Plan.
|
1.
|
Select Comfort Corporation 1997 Stock Incentive Plan, as amended and restated
|
2.
|
Form of Incentive Stock Option Agreement under the 1997 Stock Plan
|
3.
|
Form of Performance Based Stock Option Agreement under the 1997 Stock Plan
|
4.
|
Select Comfort Corporation 2004 Stock Incentive Plan (Amended and Restated as of January 1, 2007)
|
5.
|
Form of Nonstatutory Stock Option Award Agreement under the 2004 Stock Incentive Plan
|
6.
|
Form of Restricted Stock Award Agreement under the 2004 Stock Incentive Plan
|
7.
|
Form of Performance Stock Award Agreement under the 2004 Stock Incentive Plan
|
8.
|
Form of Nonstatutory Stock Option Award Agreement (Subject to Performance Adjustment) under the 2004 Stock Incentive Plan
|
9.
|
Select Comfort Corporation 2010 Omnibus Incentive Plan
|
10.
|
Form of Nonstatutory Stock Option Award Agreement under the 2010 Omnibus Incentive Plan
|
11.
|
Form of Restricted Stock Award Agreement under the 2010 Omnibus Incentive Plan
|
12.
|
Form of Performance Stock Award Agreement under the 2010 Omnibus Incentive Plan
|
13.
|
Select Comfort Profit Sharing and 401(K) Plan – 2007 Restatement
|
14.
|
Select Comfort Executive Investment Plan – July 1, 2012 Restatement
|
15.
|
Employment Letter from the Company to William R. McLaughlin dated March 3, 2000
|
16.
|
Employment Letter from the Company to William R. McLaughlin dated March 2, 2006
|
17.
|
Letter Agreement between William R. McLaughlin and Select Comfort Corporation dated as of February 21, 2008
|
18.
|
Amended and Restated Non-Statutory Stock Option Agreement between Select Comfort Corporation and William R. McLaughlin dated as of April 22, 2008
|
19.
|
Employment Letter from the Company to Shelly R. Ibach dated February 9, 2007
|
20.
|
Employment Letter from the Company to Kathryn V. Roedel dated March 8, 2005
|
21.
|
Employment Letter from the Company to Wendy L. Schoppert dated March 15, 2005
|
22.
|
Employment Letter from the Company to Mark A. Kimball dated April 22, 1999
|
23.
|
Summary of Executive Health Program
|
24.
|
Summary of Executive Tax and Financial Planning Program
|
25.
|
Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
26.
|
First Amendment to Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
27.
|
Summary of Non-Employee Director Compens
ation
|
|
|
SELECT COMFORT CORPORATION
|
|
||
|
|
(Registrant)
|
|
||
|
|
|
|
||
Dated:
|
February 21, 2013
|
By:
|
|
/s/ Shelly R. Ibach
|
|
|
|
|
|
Shelly R. Ibach
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Wendy L. Schoppert
|
|
|
|
|
|
Wendy L. Schoppert
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Robert J. Poirier
|
|
|
|
|
|
Robert J. Poirier
|
|
|
|
|
|
Chief Accounting Officer
|
|
|
|
|
|
(principal accounting officer)
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Jean-Michel Valette
|
|
Chairman of the Board
|
|
February 20, 2013
|
Jean-Michel Valette
|
|
|
|
|
|
|
|
|
|
/s/ Shelly R. Ibach
|
|
Director
|
|
February 20, 2013
|
Shelly R. Ibach
|
|
|
|
|
|
|
|
|
|
/s/ Stephen L. Gulis, Jr.
|
|
Director
|
|
February 19, 2013
|
Stephen L. Gulis, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Harrison
|
|
Director
|
|
February 19, 2013
|
Michael J. Harrison
|
|
|
|
|
|
|
|
|
|
/s/ David T. Kollat
|
|
Director
|
|
February 19, 2013
|
David T. Kollat
|
|
|
|
|
|
|
|
|
|
/s/ Brenda J. Lauderback
|
|
Director
|
|
February 20, 2013
|
Brenda J. Lauderback
|
|
|
|
|
|
|
|
|
|
Kathleen L. Nedorostek
|
|
Director
|
|
February 20, 2013
|
Kathleen L. Nedorostek
|
|
|
|
|
|
|
|
|
|
/s/ Michael A. Peel
|
|
Director
|
|
February 19, 2013
|
Michael A. Peel
|
|
|
|
|
|
|
|
|
|
/s/ Ervin R. Shames
|
|
Director
|
|
February 19, 2013
|
Ervin R. Shames
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
3.1
|
|
Third Restated Articles of Incorporation of the Company, as amended
|
|
Incorporated by reference to Exhibit 3.1 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 1, 2000 (File No. 0-25121)
|
|
|
|
|
|
3.2
|
|
Articles of Amendment to Third Restated Articles of Incorporation of the Company
|
|
Incorporated by reference to Exhibit 3.1 contained in Select Comfort's Current Report on Form 8-K filed May 16, 2006 (File No. 0-25121)
|
|
|
|
|
|
3.3
|
|
Articles of Amendment to Third Restated Articles of Incorporation of the Company
|
|
Incorporated by reference to Exhibit 3.1 contained in Select Comfort's Current Report on Form 8-K filed May 25, 2010 (File No. 0-25121)
|
|
|
|
|
|
3.4
|
|
Restated Bylaws of the Company
|
|
Incorporated by reference to Exhibit 3.1 contained in Select Comfort's Current Report on Form 8-K filed December 20, 2010 (File No. 0-25121)
|
|
|
|
|
|
10.1
|
|
Net Lease Agreement dated December 3, 1993 between the Company and Opus Corporation
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.2
|
|
Amendment of Lease dated August 10, 1994 between the Company and Opus Corporation
|
|
Incorporated by reference to Exhibit 10.2 contained in the Select Comfort's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.3
|
|
Second Amendment to Lease dated May 10, 1995 between the Company and Rushmore Plaza Partners Limited Partnership (successor to Opus Corporation)
|
|
Incorporated by reference to Exhibit 10.3 contained in Select Comfort's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.4
|
|
Letter Agreement dated as of October 5, 1995 between the Company and Rushmore Plaza Partners Limited Partnership
|
|
Incorporated by reference to Exhibit 10.4 contained in Select Comfort's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.5
|
|
Third Amendment of Lease, Assignment and Assumption of Lease and Consent dated as of January 1, 1996 among the Company, Rushmore Plaza Partners Limited Partnership and Select Comfort Direct Corporation
|
|
Incorporated by reference to Exhibit 10.5 contained in Select Comfort's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.6
|
|
Fourth Amendment to Lease dated June 30, 2003 between Cabot Industrial Properties, L.P. (successor to Rushmore Plaza Partners Limited Partnership) and Select Comfort Direct Corporation
|
|
Incorporated by reference to Exhibit 10.6 contained in Select Comfort's Annual report on Form 10-K for the fiscal year ended January 3, 2004 (File No. 0-25121)
|
|
|
|
|
|
10.7
|
|
Fifth Amendment to Lease dated August 28, 2006 between Cabot Industrial Properties, L.P. (successor to Rushmore Plaza Partners Limited Partnership) and Select Comfort Direct Corporation
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Quarterly report on Form 10-Q for the quarter ended September 30, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.8
|
|
Lease Agreement dated as of September 19, 2002 between the Company and Blind John, LLC (as successor to Frastacky (US) Properties Limited Partnership)
|
|
Incorporated by reference to Exhibit 10.6 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 28, 2002 (File No. 0-25121)
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
10.9
|
|
Amendment Three to Lease between Select Comfort Corporation and Blind John, LLC dated February 28, 2012
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed March 2, 2012 (File No. 0-25121)
|
|
|
|
|
|
10.10
|
|
Lease Agreement dated September 30, 1998 between the Company and ProLogis Development Services Incorporated
|
|
Incorporated by reference to Exhibit 10.12 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 28, 2002 (File No. 0-25121)
|
|
|
|
|
|
10.11
|
|
Net Lease Agreement (Build-to-Suit) by and between Opus Northwest LLC, as Landlord, and Select Comfort Corporation, as Tenant, dated July 26, 2006
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Quarterly report on Form 10-Q for the quarter ended July 1, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.12
|
|
Select Comfort Corporation 1997 Stock Incentive Plan, as amended and restated
|
|
Incorporated by reference to Exhibit 10.8 contained in Select Comfort's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 (File No. 0-25121)
|
|
|
|
|
|
10.13
|
|
Form of Incentive Stock Option Agreement under the 1997 Stock Plans
|
|
Incorporated by reference to Exhibit 10.16 contained in the Company's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.14
|
|
Form of Performance Based Stock Option Agreement under the 1997 Stock Plans
|
|
Incorporated by reference to Exhibit 10.17 contained in Select Comfort's Registration Statement on Form S-1, as amended (Reg. No. 333-62793)
|
|
|
|
|
|
10.15
|
|
Select Comfort Corporation 2004 Stock Incentive Plan (Amended and Restated as of January 1, 2007)
|
|
Incorporated by reference to Exhibit 10.16 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 30, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.16
|
|
Form of Nonstatutory Stock Option Award Agreement under the Select Comfort Corporation 2004 Stock Incentive Plan
|
|
Incorporated by reference to Exhibit 10.28 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.17
|
|
Form of Restricted Stock Award Agreement under the Select Comfort Corporation 2004 Stock Incentive Plan
|
|
Incorporated by reference to Exhibit 10.29 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.18
|
|
Form of Performance Stock Award Agreement under the Select Comfort Corporation 2004 Stock Incentive Plan
|
|
Incorporated by reference to Exhibit 10.30 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.19
|
|
Form of Nonstatutory Stock Option Award Agreement (Subject to Performance Adjustment) under the Select Comfort Corporation 2004 Stock Incentive Plan
|
|
Incorporated by reference to Exhibit 10.20 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 30, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.20
|
|
Select Comfort Corporation 2010 Omnibus Incentive Plan
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed May 25, 2010 (File No. 0-25121)
|
|
|
|
|
|
10.21
|
|
Form of Nonstatutory Stock Option Award Agreement under the 2010 Omnibus Incentive Plan
|
|
Incorporated by reference to Exhibit 10.20 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (File No. 0-25121)
|
|
|
|
|
|
10.22
|
|
Form of Restricted Stock Award Agreement under the 2010 Omnibus Incentive Plan
|
|
Incorporated by reference to Exhibit 10.21 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (File No. 0-25121)
|
|
|
|
|
|
10.23
|
|
Form of Performance Stock Award Agreement under the 2010 Omnibus Incentive Plan
|
|
Incorporated by reference to Exhibit 10.22 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (File No. 0-25121)
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
10.24
|
|
Select Comfort Profit Sharing and 401(K) Plan - 2007 Restatement
|
|
Incorporated by reference to Exhibit 10.22 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 30, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.25
|
|
Select Comfort Executive Investment Plan (July 1, 2012 Restatement)
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed July 2, 2012 (File No. 0-25121)
|
|
|
|
|
|
10.26
|
|
Employment Letter from the Company to William R. McLaughlin dated March 3, 2000
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Quarterly Report on Form 10-Q for the quarter ended April 1, 2000 (File No. 0-25121)
|
|
|
|
|
|
10.27
|
|
Employment Letter from the Company to William R. McLaughlin dated March 2, 2006
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed March 6, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.28
|
|
Letter Agreement between William R. McLaughlin and Select Comfort Corporation dated as of February 21, 2008
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed February 27, 2008 (File No. 0-25121)
|
|
|
|
|
|
10.29
|
|
Amended and Restated Non-Statutory Stock Option Agreement between Select Comfort Corporation and William R. McLaughlin dated as of April 22, 2008
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed April 24, 2008 (File No. 0-25121)
|
|
|
|
|
|
10.30
|
|
Employment Letter from the Company to Shelly R. Ibach dated February 9, 2007
|
|
Filed herewith
|
|
|
|
|
|
10.31
|
|
Employment Letter from the Company to Kathryn V. Roedel dated March 8, 2005
|
|
Incorporated by reference to Exhibit 10.17 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.32
|
|
Employment Letter from the Company to Wendy L. Schoppert dated March 15, 2005
|
|
Incorporated by reference to Exhibit 10.18 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.33
|
|
Employment Letter from the Company to Mark A. Kimball dated April 22, 1999
|
|
Incorporated by reference to Exhibit 10.25 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 1, 2000 (File No. 0-25121)
|
|
|
|
|
|
10.34
|
|
Summary of Executive Health Program
|
|
Incorporated by reference to Exhibit 10.36 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.35
|
|
Summary of Executive Tax and Financial Planning Program
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed January 3, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.36
|
|
Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed August 21, 2008 (File No. 0-25121)
|
|
|
|
|
|
10.37
|
|
First Amendment to Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
|
Incorporated by reference to Exhibit 10.34 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 3, 2009 (File No. 0-25121).
|
|
|
|
|
|
10.38
|
|
Summary of Non-Employee Director Compensation
|
|
Filed herewith.
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
10.39
|
|
Supply Agreement dated October 3, 2006 between the Company and Supplier (1)
|
|
Incorporated by reference to Exhibit 10.39 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 30, 2006 (File No. 0-25121)
|
|
|
|
|
|
10.40
|
|
Amended and Restated Private Label Consumer Credit Card Program Agreement dated as of December 14, 2005 between GE Money Bank and Select Comfort Corporation and Select Comfort Retail Corporation (1)
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed December 20, 2005 (File No. 0-25121)
|
|
|
|
|
|
10.41
|
|
First Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement dated as of April 23, 2007 between GE Money Bank and Select Comfort Corporation and Select Comfort Retail Corporation
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed April 27, 2007 (File No. 0-25121)
|
|
|
|
|
|
10.42
|
|
Second Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement dated as of February 1, 2008 between GE Money Bank and Select Comfort Corporation and Select Comfort Retail Corporation
|
|
Incorporated by reference to Exhibit 10.3 contained in Select Comfort's Current Report on Form 8-K filed February 7, 2008 (File No. 0-25121)
|
|
|
|
|
|
10.43
|
|
GE Waiver and Consent dated May 21, 2009
|
|
Incorporated by reference to Exhibit 10.6 contained in Select Comfort's Current Report on Form 8-K filed May 26, 2009 (File No. 0-25121)
|
|
|
|
|
|
10.44
|
|
Credit Agreement, dated March 26, 2010, by and among Select Comfort Corporation and Wells Fargo Bank, National Association
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed March 29, 2010 (File No. 0-25121)
|
|
|
|
|
|
10.45
|
|
Ninth Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement dated June 29, 2011 (1)
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed July 6, 2011 (File No. 0-25121)
|
|
|
|
|
|
10.46
|
|
Tenth Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement dated July 18, 2011
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed July 22, 2011 (File No. 0-25121)
|
|
|
|
|
|
10.47
|
|
Select Comfort Corporation Non-Employee Director Deferral Plan
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed September 16, 2011 (File No. 0-25121)
|
|
|
|
|
|
10.48
|
|
Eleventh Amendment to Amended and Restated Private Label Consumer Credit Card Program Agreement dated June 18, 2012 (1)
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed June 20, 2012 (File No. 0-25121)
|
|
|
|
|
|
10.49
|
|
Amendment to Credit Agreement, dated April 23, 2012, by and among Select Comfort Corporation and Wells Fargo Bank, National Association
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed April 24, 2012 (File No. 0-25121)
|
|
|
|
|
|
21.1
|
|
Subsidiaries of the Company
|
|
Filed herewith
|
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
Filed herewith
|
|
|
|
|
|
24.1
|
|
Power of Attorney
|
|
Included on signature page
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
31.1
|
|
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
|
|
|
|
31.2
|
|
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
|
|
|
|
32.1
|
|
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
|
|
Furnished herewith
(2)
|
|
|
|
|
|
32.2
|
|
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
|
|
Furnished herewith
(2)
|
|
|
|
|
|
101
|
|
The following financial information from the Company's Annual Report on Form 10-K for the year ended December 29, 2012, filed with the SEC on February 21, 2013, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011, (ii) Consolidated Statements of Operations for the years ended December 29, 2012, December 31, 2011, and January 1, 2011, (iii) Consolidated Statements of Comprehensive Income for the years ended December 29, 2012, December 31, 2011, and January 1, 2011, (iv) Consolidated Statements of Shareholders' Equity for the years ended December 29, 2012, December 31, 2011, and January 1, 2011, (v) Consolidated Statements of Cash Flows for the years ended December 29, 2012, December 31, 2011, and January 1, 2011, and (vi) Notes to Consolidated Financial Statements.
|
|
Furnished herewith
(3)
|
(1)
|
Confidential treatment has been requested by the issuer with respect to designated portions contained within document. Such portions have been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.
|
(2)
|
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended, (15 U.S.C. 78r) or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any document filed under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as otherwise expressly stated in any such filing.
|
(3)
|
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
Description
|
|
2012
|
|
2011
|
|
2010
|
||||||
Allowance for doubtful accounts
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
397
|
|
|
$
|
302
|
|
|
$
|
379
|
|
Additions charged to costs and expenses
|
|
246
|
|
|
275
|
|
|
197
|
|
|||
Deductions from reserves
|
|
(295
|
)
|
|
(180
|
)
|
|
(274
|
)
|
|||
Balance at end of period
|
|
$
|
348
|
|
|
$
|
397
|
|
|
$
|
302
|
|
|
|
|
|
|
|
|
||||||
Accrued sales return
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
4,402
|
|
|
$
|
2,944
|
|
|
$
|
2,885
|
|
Additions charged to costs and expenses
|
|
44,284
|
|
|
40,449
|
|
|
29,885
|
|
|||
Deductions from reserves
|
|
(43,356
|
)
|
|
(38,991
|
)
|
|
(29,826
|
)
|
|||
Balance at end of period
|
|
$
|
5,330
|
|
|
$
|
4,402
|
|
|
$
|
2,944
|
|
•
|
Starting annual salary of $260,000.
You will be eligible for your next salary review in February, 2008.
|
•
|
You will also be eligible to receive a sign-on bonus of $100,000 (less withholdings) payable in four installments. $25,000 will be payable within the first 30 days of employment, $25,000 will be payable after 3 months of employment, $25,000 will be payable after 9 months of employment and the final $25,000 installment will be payable at the completion of 12 months of employment. In the event you leave the company within 12 months of start date, the full amount of the sign-on bonus paid would need to be reimbursed to the company.
|
•
|
You will be eligible to participate in the Company's corporate bonus plan. Under the plan as established for 2007, you will be eligible for a targeted bonus of 40% of base compensation. For the 2007 bonus year, payable in February 2008, you will be eligible to receive a full-year payout (not pro-rated) with minimum payout of 100% of target. The actual bonus payment may range up to 250% of the targeted bonus level, depending on the performance of the Company.
|
•
|
You will be granted options to purchase 14,500 shares of the Company's common stock at a fixed exercise price equal to the fair market value per share as of the starting date of your employment. Subject to your continuing employment with the Company, these options will vest 25% per year on each of the first 4 anniversaries of the date of grant. The options will terminate following the termination of your employment, and the schedule for termination of the options will vary depending upon the reason for termination of your employment. You will be eligible for annual equity grants as part of our annual long-term incentive plan.
|
•
|
You will be granted 2500 shares of restricted stock in the Company. You will also be granted 5000 shares of restricted stock in the form of performance shares. The value of the performance shares is calculated based on the performance of the company against its annual net operating profit target. The performance criteria
|
|
Dated:
|
|
Shelly R. Ibach
|
|
|
|
|
|
|
|
|
Name of Subsidiary
|
|
Organized
under the Laws of
|
|
|
|
Select Comfort Retail Corporation
|
|
Minnesota (USA)
|
|
|
|
Select Comfort Canada Holding Inc.
|
|
Minnesota (USA)
|
|
|
|
Select Comfort SC Corporation
|
|
Minnesota (USA)
|
|
|
|
Select Comfort COSC Canada ULC
|
|
Alberta, Canada
|
|
|
|
Select Comfort Limited
|
|
United Kingdom
|
1.
|
I have reviewed this
annual
report on
Form 10-K
of Select Comfort Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 21, 2013
|
|
|
|
|
|
|
/s/ Shelly R. Ibach
|
|
|
Shelly R. Ibach
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this
annual
report on
Form 10-K
of Select Comfort Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 21, 2013
|
|
|
|
|
|
|
/s/ Wendy L. Schoppert
|
|
|
Wendy L. Schoppert
|
|
|
Executive Vice President and Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
February 21, 2013
|
|
|
|
|
/s/ Shelly R. Ibach
|
|
Shelly R. Ibach
|
|
Chief Executive Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
February 21, 2013
|
|
|
|
|
/s/ Wendy L. Schoppert
|
|
Wendy L. Schoppert
|
|
Executive Vice President and Chief Financial Officer
|