|
|
|
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.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
|
|
|
|
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.
|
•
|
The Classic Series offers Sleep Number adjustability starting at $799 for a queen mattress. The series includes the Sleep Number c2 and c4 beds.
|
•
|
The Performance Series includes our most popular mattresses with a perfect balance of softness and pressure-relieving support. The series includes the Sleep Number p5 and p6 beds.
|
•
|
The Memory Foam Series is breathable and contouring. The series includes the Sleep Number m6 and m7 beds.
|
•
|
The Innovation Series is the ultimate in individualized comfort and temperature-balancing innovation. The series includes the Sleep Number i8 and i10 beds.
|
•
|
The Sleep Number x12 bed features the integration of multiple technology options including our exclusive FlexFit™ 3 adjustable base, and our breakthrough SleepIQ
®
technology - Probably the Best Bed in the World
®
.
|
•
|
The SleepIQ Kids™ bed features our core adjustability and SleepIQ technology to the children’s mattress market and is the only bed that adjusts with children as they grow.
|
•
|
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
|
|
7
|
|
|
Maryland
|
|
11
|
|
|
Oklahoma
|
|
4
|
|
Arizona
|
|
8
|
|
|
Massachusetts
|
|
9
|
|
|
Oregon
|
|
6
|
|
Arkansas
|
|
4
|
|
|
Michigan
|
|
13
|
|
|
Pennsylvania
|
|
18
|
|
California
|
|
59
|
|
|
Minnesota
|
|
13
|
|
|
Rhode Island
|
|
1
|
|
Colorado
|
|
11
|
|
|
Mississippi
|
|
5
|
|
|
South Carolina
|
|
7
|
|
Connecticut
|
|
5
|
|
|
Missouri
|
|
14
|
|
|
South Dakota
|
|
2
|
|
Delaware
|
|
2
|
|
|
Montana
|
|
2
|
|
|
Tennessee
|
|
10
|
|
Florida
|
|
30
|
|
|
Nebraska
|
|
3
|
|
|
Texas
|
|
45
|
|
Georgia
|
|
17
|
|
|
Nevada
|
|
5
|
|
|
Utah
|
|
4
|
|
Idaho
|
|
2
|
|
|
New Hampshire
|
|
4
|
|
|
Vermont
|
|
1
|
|
Illinois
|
|
18
|
|
|
New Jersey
|
|
15
|
|
|
Virginia
|
|
17
|
|
Indiana
|
|
11
|
|
|
New Mexico
|
|
3
|
|
|
Washington
|
|
11
|
|
Iowa
|
|
8
|
|
|
New York
|
|
14
|
|
|
West Virginia
|
|
1
|
|
Kansas
|
|
6
|
|
|
North Carolina
|
|
13
|
|
|
Wisconsin
|
|
11
|
|
Kentucky
|
|
7
|
|
|
North Dakota
|
|
3
|
|
|
Wyoming
|
|
1
|
|
Louisiana
|
|
7
|
|
|
Ohio
|
|
18
|
|
|
|
|
|
|
Maine
|
|
2
|
|
|
|
|
|
|
Total
|
|
488
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Fiscal 2015
|
|
|
|
|
|
|
|
|
||||||||
High
|
|
$
|
34.62
|
|
|
$
|
34.50
|
|
|
$
|
30.79
|
|
|
$
|
25.50
|
|
Low
|
|
26.43
|
|
|
29.11
|
|
|
21.34
|
|
|
20.63
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Fiscal 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
High
|
|
$
|
21.65
|
|
|
$
|
20.32
|
|
|
$
|
22.54
|
|
|
$
|
27.35
|
|
Low
|
|
15.67
|
|
|
17.12
|
|
|
18.98
|
|
|
20.09
|
|
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
(3)
|
||||||
October 4, 2015 through October 31, 2015
|
|
213,310
|
|
|
$
|
22.76
|
|
|
212,817
|
|
|
$
|
161,589,000
|
|
November 1, 2015 through November 28, 2015
|
|
595,525
|
|
|
23.62
|
|
|
595,525
|
|
|
147,521,000
|
|
||
November 29, 2015 through January 2, 2016
|
|
474,843
|
|
|
23.12
|
|
|
474,843
|
|
|
136,542,000
|
|
||
Total
|
|
1,283,678
|
|
|
$
|
23.29
|
|
|
1,283,185
|
|
|
$
|
136,542,000
|
|
(1)
|
Under the current Board-approved
$250 million
share repurchase program, we repurchased
1,283,185
shares of our common stock at a cost of
$30 million
(based on trade dates) during the three months ended
January 2, 2016
.
|
(2)
|
In connection with the vesting of employee restricted stock grants, we also repurchased
493
shares of our common stock at a cost of
$11 thousand
during the three months ended
January 2, 2016
.
|
(3)
|
There is no expiration date governing the period over which we can repurchase shares under our Board-approved share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.
|
|
|
1/1/2011
|
|
12/31/2011
|
|
12/29/2012
|
|
12/28/2013
|
|
1/3/2015
|
|
1/2/2016
|
||||||||||||
Select Comfort Corporation
|
|
$
|
100
|
|
|
$
|
238
|
|
|
$
|
268
|
|
|
$
|
232
|
|
|
$
|
294
|
|
|
$
|
235
|
|
S&P 400 Specialty Stores Index
|
|
100
|
|
|
114
|
|
|
140
|
|
|
211
|
|
|
263
|
|
|
195
|
|
||||||
The NASDAQ Stock Market (U.S.) Index
|
|
100
|
|
|
99
|
|
|
114
|
|
|
162
|
|
|
187
|
|
|
200
|
|
|
Year
|
||||||||||||||||||
|
2015
|
|
2014
(1)
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,213,699
|
|
|
$
|
1,156,757
|
|
|
$
|
960,171
|
|
|
$
|
934,978
|
|
|
$
|
743,203
|
|
Gross profit
|
740,751
|
|
|
706,850
|
|
|
601,755
|
|
|
596,546
|
|
|
470,345
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales and marketing
|
550,475
|
|
|
512,007
|
|
|
439,156
|
|
|
398,205
|
|
|
317,502
|
|
|||||
General and administrative
|
99,209
|
|
|
84,864
|
|
|
62,967
|
|
|
66,765
|
|
|
58,215
|
|
|||||
Research and development
|
15,971
|
|
|
8,233
|
|
|
9,478
|
|
|
6,194
|
|
|
4,175
|
|
|||||
Other
(2)
|
—
|
|
|
—
|
|
|
(534
|
)
|
|
5,595
|
|
|
—
|
|
|||||
Operating income
|
75,096
|
|
|
101,746
|
|
|
90,688
|
|
|
119,787
|
|
|
90,453
|
|
|||||
Net income
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
|
$
|
78,094
|
|
|
$
|
60,478
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.99
|
|
|
$
|
1.27
|
|
|
$
|
1.10
|
|
|
$
|
1.41
|
|
|
$
|
1.10
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
1.25
|
|
|
$
|
1.08
|
|
|
$
|
1.37
|
|
|
$
|
1.07
|
|
Shares used in calculation of net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
51,252
|
|
|
53,452
|
|
|
54,866
|
|
|
55,516
|
|
|
55,081
|
|
|||||
Diluted
|
52,101
|
|
|
54,193
|
|
|
55,803
|
|
|
57,076
|
|
|
56,432
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash, cash equivalents and marketable debt securities
|
$
|
36,114
|
|
|
$
|
166,045
|
|
|
$
|
145,014
|
|
|
$
|
177,821
|
|
|
$
|
146,317
|
|
Total assets
|
513,396
|
|
|
474,187
|
|
|
381,765
|
|
|
342,021
|
|
|
262,657
|
|
|||||
Total shareholders’ equity
|
222,339
|
|
|
256,907
|
|
|
225,220
|
|
|
193,697
|
|
|
129,391
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Selected Operating Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Stores open at period-end
|
488
|
|
|
463
|
|
|
440
|
|
|
410
|
|
|
381
|
|
|||||
Stores opened during period
|
38
|
|
|
57
|
|
|
71
|
|
|
57
|
|
|
19
|
|
|||||
Stores closed during period
|
13
|
|
|
34
|
|
|
41
|
|
|
28
|
|
|
24
|
|
|||||
Average revenue per store (000’s)
(3)
|
$
|
2,377
|
|
|
$
|
2,327
|
|
|
$
|
2,093
|
|
|
$
|
2,164
|
|
|
$
|
1,721
|
|
Percentage of stores with more than $1.0 million in net sales
(3)
|
99
|
%
|
|
98
|
%
|
|
96
|
%
|
|
98
|
%
|
|
93
|
%
|
|||||
Percentage of stores with more than $2.0 million in net sales
(3)
|
62
|
%
|
|
59
|
%
|
|
46
|
%
|
|
49
|
%
|
|
24
|
%
|
|||||
Average revenue per mattress unit - Company-Controlled channel
(4)
|
$
|
4,028
|
|
|
$
|
3,671
|
|
|
$
|
3,245
|
|
|
$
|
3,050
|
|
|
$
|
2,694
|
|
Company-Controlled comparable-sales increase (decrease)
(5)
|
3
|
%
|
|
12
|
%
|
|
(4
|
)%
|
|
23
|
%
|
|
26
|
%
|
|||||
Total retail square footage (at period-end) (000's)
|
1,214
|
|
|
1,106
|
|
|
949
|
|
|
759
|
|
|
610
|
|
|||||
Average square footage per store open during period
(3)
|
2,445
|
|
|
2,302
|
|
|
1,985
|
|
|
1,670
|
|
|
1,526
|
|
|||||
Net sales per square foot
(3)
|
$
|
980
|
|
|
$
|
1,025
|
|
|
$
|
1,077
|
|
|
$
|
1,324
|
|
|
$
|
1,135
|
|
Average store age (in months at period-end)
|
99
|
|
|
97
|
|
|
102
|
|
|
113
|
|
|
113
|
|
|||||
Earnings before interest, depreciation and amortization (Adjusted EBITDA)
(6)
|
$
|
133,057
|
|
|
$
|
148,223
|
|
|
$
|
125,020
|
|
|
$
|
150,285
|
|
|
$
|
109,180
|
|
Free cash flows
(6)
|
$
|
22,356
|
|
|
$
|
67,874
|
|
|
$
|
11,294
|
|
|
$
|
49,033
|
|
|
$
|
67,519
|
|
Return on Invested Capital (ROIC)
(6)
|
11.2
|
%
|
|
15.1
|
%
|
|
15.1
|
%
|
|
21.5
|
%
|
|
19.9
|
%
|
(1)
|
Fiscal year 2014 had 53 weeks. All other fiscal years presented had 52 weeks.
|
(2)
|
In February 2012, we announced that William R. McLaughlin, then President and CEO, would retire from the Company effective June 1, 2012. In recognition of Mr. McLaughlin's contributions, the Compensation Committee approved the modification of Mr. McLaughlin's unvested stock awards, including performance-based stock awards. As a result of these modifications, we recorded incremental non-cash compensation of $5.6 million ($3.7 million, net of income tax). The performance-based stock awards were subject to applicable adjustments through 2014 based on actual performance. During 2013 we recorded a non-cash compensation benefit of
$0.5 million
(
$0.4 million
, net of income tax) resulting from performance-based stock award adjustments. There were no performance-based stock award adjustments in 2014 or 2015.
|
(3)
|
For stores open during the entire period indicated.
|
(4)
|
Represents Company-Controlled channel total net sales divided by Company-Controlled channel mattress units.
|
(5)
|
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
442
,
396
,
359
,
348
and
359
for
2015
,
2014
,
2013
,
2012
and
2011
, respectively. Fiscal 2014 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.
|
(6)
|
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 23 and 24 for the reconciliation of these non-GAAP measures to the appropriate GAAP measures.
|
|
|
Year
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Net income
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
|
$
|
78,094
|
|
|
$
|
60,478
|
|
Income tax expense
|
|
24,911
|
|
|
34,134
|
|
|
30,930
|
|
|
41,911
|
|
|
29,942
|
|
|||||
Interest expense
|
|
160
|
|
|
53
|
|
|
51
|
|
|
91
|
|
|
187
|
|
|||||
Depreciation and amortization
|
|
46,916
|
|
|
38,767
|
|
|
29,599
|
|
|
19,735
|
|
|
13,493
|
|
|||||
Stock-based compensation
|
|
10,290
|
|
|
6,798
|
|
|
4,232
|
|
|
10,306
|
|
|
4,971
|
|
|||||
Asset impairments
|
|
261
|
|
|
497
|
|
|
127
|
|
|
148
|
|
|
109
|
|
|||||
Adjusted EBITDA
|
|
$
|
133,057
|
|
|
$
|
148,223
|
|
|
$
|
125,020
|
|
|
$
|
150,285
|
|
|
$
|
109,180
|
|
|
|
Year
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Net cash provided by operating activities
|
|
$
|
107,942
|
|
|
$
|
144,468
|
|
|
$
|
88,105
|
|
|
$
|
100,626
|
|
|
$
|
91,046
|
|
Subtract: Purchases of property and equipment
|
|
85,586
|
|
|
76,594
|
|
|
76,811
|
|
|
51,593
|
|
|
23,527
|
|
|||||
Free cash flow
|
|
$
|
22,356
|
|
|
$
|
67,874
|
|
|
$
|
11,294
|
|
|
$
|
49,033
|
|
|
$
|
67,519
|
|
|
|
Year
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Net operating profit after taxes (NOPAT)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
|
$
|
75,096
|
|
|
$
|
101,746
|
|
|
$
|
90,688
|
|
|
$
|
119,787
|
|
|
$
|
90,453
|
|
Add: Rent expense
(1)
|
|
62,369
|
|
|
57,605
|
|
|
50,289
|
|
|
48,543
|
|
|
41,878
|
|
|||||
Add: Interest income
|
|
494
|
|
|
415
|
|
|
375
|
|
|
310
|
|
|
155
|
|
|||||
Less: Depreciation on capitalized operating leases
(2)
|
|
(16,203
|
)
|
|
(14,265
|
)
|
|
(13,095
|
)
|
|
(12,072
|
)
|
|
(10,677
|
)
|
|||||
Less: Income taxes
(3)
|
|
(40,384
|
)
|
|
(48,900
|
)
|
|
(43,827
|
)
|
|
(54,358
|
)
|
|
(41,920
|
)
|
|||||
NOPAT
|
|
$
|
81,372
|
|
|
$
|
96,601
|
|
|
$
|
84,430
|
|
|
$
|
102,210
|
|
|
$
|
79,889
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average invested capital
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity
|
|
$
|
222,339
|
|
|
$
|
256,907
|
|
|
$
|
225,220
|
|
|
$
|
193,697
|
|
|
$
|
129,391
|
|
Less: Cash greater than target
(4)
|
|
—
|
|
|
(37,319
|
)
|
|
(29,622
|
)
|
|
(62,627
|
)
|
|
(32,788
|
)
|
|||||
Add: Long-term debt
(5)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
112
|
|
|
292
|
|
|||||
Add: Capitalized operating lease obligations
(6)
|
|
498,952
|
|
|
460,840
|
|
|
402,312
|
|
|
388,344
|
|
|
335,024
|
|
|||||
Total invested capital at end of period
|
|
$
|
721,291
|
|
|
$
|
680,428
|
|
|
$
|
597,912
|
|
|
$
|
519,526
|
|
|
$
|
431,919
|
|
Average invested capital
(7)
|
|
$
|
726,756
|
|
|
$
|
639,118
|
|
|
$
|
560,133
|
|
|
$
|
475,159
|
|
|
$
|
402,240
|
|
Return on invested capital (ROIC)
(8)
|
|
11.2
|
%
|
|
15.1
|
%
|
|
15.1
|
%
|
|
21.5
|
%
|
|
19.9
|
%
|
•
|
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 main 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
|
•
|
In the fourth quarter 2015, we replaced our nearly 20-year-old legacy computer systems with a new vertically-integrated Enterprise Resource Planning (ERP) system. We experienced technical and operational issues in our plants and supply chain as we ramped up the new system, which led to delivery delays and inconveniences for our customers. The lost sales and increases in cost of sales and operating expenses negatively impacted 2015 results by approximately $0.40 per diluted share ($0.43 per diluted share for the fourth quarter). Through the filing date of this document, we have made progress resolving technical and operational issues associated with the ERP implementation. While we continue to learn to use the new system proficiently and at higher volumes, the system is operating at near normal levels across our vertical enterprise.
|
•
|
Net sales for
2015
increased
5%
to
$1.21 billion
, compared with
$1.16 billion
in the prior year. Company-Controlled comparable sales increased
3%
and sales from
25
net new stores opened in the past 12 months. In addition,
2015
included 52 weeks compared with 53 weeks in the prior year, with the extra week benefiting fourth quarter 2014 net sales growth by approximately $24 million. During the first nine months of 2015, demand for our latest product innovations and more effective marketing drove traffic to our stores and contributed to a 20% year-to-date net sales increase. However, net sales decreased 33% in the fourth quarter compared to the prior year, reflecting approximately $84 million in sales disruptions from our ERP system implementation.
|
•
|
On a trailing twelve-month basis, sales per store (for stores open at least one year) increased
2.1%
to
$2.4 million
compared with the prior-year trailing twelve-month period.
|
•
|
Operating income for
2015
decreased
26%
to
$75 million
, or
6.2%
of net sales, compared with
$102 million
, or
8.8%
of net sales, for the same period one year ago. The decrease in operating income was attributable to the fourth-quarter 2015 reduction in net sales, and increases in cost of sales and operating expenses resulting from our ERP implementation challenges.
|
•
|
Net income
decreased
26%
to
$51 million
, or
$0.97
per diluted share, compared with net income of
$68 million
, or
$1.25
per diluted share in
2014
. As noted above, our fourth-quarter 2015 ERP implementation issues negatively impacted 2015 diluted earnings per share by approximately $0.40. In addition, diluted earnings per share for 2014 benefited from the profits generated during the additional 53
rd
week ($0.06 per diluted share) and a favorable fourth quarter 2014 legal settlement ($0.04 per diluted share).
|
•
|
We achieved a return on invested capital (ROIC) of
11.2%
in
2015
, above our 10% cost of capital.
|
•
|
Cash provided by operating activities in
2015
totaled
$108 million
, compared with
$144 million
for the prior year.
|
•
|
At
January 2, 2016
, cash, cash equivalents and marketable debt securities totaled
$36 million
compared with
$166 million
at
January 3, 2015
, and we had no borrowings under our revolving credit facility. During 2015, we invested $86 million in capital projects, $57 million to acquire BAM Labs, Inc. (now operating as SleepIQ LABS) and returned $98 million to shareholders through share repurchases.
|
•
|
In
2015
, we repurchased
3.6 million
shares of our common stock under our Board-approved share repurchase program at a cost of
$98 million
(
$27.46
per share). As of
January 2, 2016
, the remaining authorization under our Board-approved share repurchase program was
$137 million
.
|
•
|
In September 2015, we completed the acquisition of BAM Labs, Inc. (now operating as SleepIQ LABS) the leading provider of biometric sensor and sleep monitoring for data-driven health and wellness. The addition of SleepIQ LABS strengthens Sleep Number’s leadership in sleep innovation, adjustability and individualization. The acquisition broadens and deepens electrical, biomedical, software and backend capabilities - API (application program interface) and bio-signal analysis. Our ownership and control of biometric data advances smart, connected products that empower our customers with the knowledge to adjust for their best sleep. In connection with the acquisition, our previous equity investment was remeasured to a fair value of
$12.9 million
, resulting in a
$3.5 million
gain net of expenses, including
$3.4 million
of acquisition-related expenses. The remeasured fair value of our equity investment was based on the fair value of BAM Labs, Inc. at the acquisition date. The net gain of
$3.5 million
is included in general and administrative expenses on our consolidated statement of operations for the fiscal year ended
January 2, 2016
. See Note 2,
Acquisition of BAM Labs, Inc.,
and Note 4,
Investments,
of the Notes to Consolidated Financial Statements for additional details.
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Company-Controlled channel
|
|
97.6
|
%
|
|
97.3
|
%
|
|
96.2
|
%
|
Wholesale/Other channel
|
|
2.4
|
%
|
|
2.7
|
%
|
|
3.8
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Net Sales Increase/(Decrease)
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
Retail comparable-store sales
(1)
|
|
3
|
%
|
|
12
|
%
|
|
(4
|
%)
|
E-Commerce and Direct
(1)
|
|
(4
|
%)
|
|
9
|
%
|
|
(5
|
%)
|
Company-Controlled comparable sales change
(1)
|
|
3
|
%
|
|
12
|
%
|
|
(4
|
%)
|
Net opened/closed stores and 53
rd
week in 2014
|
|
2
|
%
|
|
10
|
%
|
|
6
|
%
|
Total Company-Controlled channel
|
|
5
|
%
|
|
22
|
%
|
|
2
|
%
|
Wholesale/Other channel
|
|
(9
|
%)
|
|
(13
|
%)
|
|
18
|
%
|
Total net sales change
|
|
5
|
%
|
|
20
|
%
|
|
3
|
%
|
|
|
2015
|
|
2014
(3)
|
|
2013
|
||||||
Average sales per store
(1)
($ in thousands)
|
|
$
|
2,377
|
|
|
$
|
2,327
|
|
|
$
|
2,093
|
|
Average sales per square foot
(1)
|
|
$
|
980
|
|
|
$
|
1,025
|
|
|
$
|
1,077
|
|
Stores > $1 million in net sales
(1)
|
|
99
|
%
|
|
98
|
%
|
|
96
|
%
|
|||
Stores > $2 million in net sales
(1)
|
|
62
|
%
|
|
59
|
%
|
|
46
|
%
|
|||
Average revenue per mattress unit – Company-Controlled channel
(2)
|
|
$
|
4,028
|
|
|
$
|
3,671
|
|
|
$
|
3,245
|
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Beginning of period
|
|
463
|
|
|
440
|
|
|
410
|
|
Opened
|
|
38
|
|
|
57
|
|
|
71
|
|
Closed
|
|
(13
|
)
|
|
(34
|
)
|
|
(41
|
)
|
End of period
|
|
488
|
|
|
463
|
|
|
440
|
|
|
|
2015
|
|
2014
|
||||
Total cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
107.9
|
|
|
$
|
144.5
|
|
Investing activities
|
|
(44.3
|
)
|
|
(114.4
|
)
|
||
Financing activities
|
|
(94.7
|
)
|
|
(36.3
|
)
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(31.0
|
)
|
|
$
|
(6.2
|
)
|
|
|
Payments Due by Period
(1)
|
||||||||||||||||||
|
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
> 5 Years
|
||||||||||
Operating leases
(2)
|
|
$
|
299,254
|
|
|
$
|
59,096
|
|
|
$
|
98,723
|
|
|
$
|
62,009
|
|
|
$
|
79,426
|
|
Purchase commitments
|
|
9,800
|
|
|
9,800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
4,600
|
|
|
4,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
313,654
|
|
|
$
|
73,496
|
|
|
$
|
98,723
|
|
|
$
|
62,009
|
|
|
$
|
79,426
|
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results
Differ From Assumptions
|
Stock-Based Compensation
|
|
|
|
|
We have stock-based compensation plans, which includes non-qualified stock options and stock awards.
See Note 1,
Business and Summary of Significant Accounting Policies
, and Note 10,
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.
|
|
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 estimates 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 January 2, 2016, would have affected net income by approximately $688,000 in 2015. |
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results
Differ From Assumptions |
Goodwill and Indefinite-Lived Intangible Assets
|
||||
Goodwill represents the excess of cost over the fair value of identifiable net assets of businesses acquired. Our indefinite-lived intangible assets include trade names/trademarks.
See Note 1, Business and Summary of Significant Accounting Policies and Note 7, Goodwill and Intangible Assets, Net , 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 goodwill and indefinite-lived intangible assets. |
|
The determination of fair value involves uncertainties because it requires management to make assumptions and to apply judgment to estimate industry and economic factors and the profitability of future business strategies. Management’s assumptions also include projected revenues, operating profit levels and discount rates, as well as consideration of any other factors that may indicate potential impairment.
|
|
In the fourth quarter of fiscal 2015, management completed its annual goodwill and other indefinite-lived intangible asset impairment tests and determined there was no impairment. We believe our assumptions and judgments used in estimating cash flows and determining fair value were reasonable. However, unexpected changes to such assumptions and judgments could affect our impairment analyses and future results of operations, including an impairment charge that could be material.
|
Warranty Liabilities
|
|
|
|
|
We provide a limited warranty on most of the products we sell.
See Note 1,
Business and Summary of Significant Accounting Policies
, 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 warranty program and liabilities.
|
|
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.
A 10% change in our warranty liability at January 2, 2016, would have affected net income by approximately $670,000 in 2015.
|
Revenue Recognition
|
||||
Certain accounting estimates relating to revenue recognition contain uncertainty because they require management to make assumptions and to apply judgment regarding the effects of future events.
See Note 1,
Business and Summary of Significant Accounting Policies
,
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 revenue recognition policies.
|
|
Our estimates of sales returns contain uncertainties as actual sales return rates 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 January 2, 2016 would have affected net income by approximately $1.4 million in 2015. |
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
20,994
|
|
|
$
|
51,995
|
|
Marketable debt securities – current
|
6,567
|
|
|
69,609
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,039 and $739, respectively
|
29,002
|
|
|
19,693
|
|
||
Inventories
|
86,600
|
|
|
53,535
|
|
||
Income taxes receivable
|
15,284
|
|
|
—
|
|
||
Prepaid expenses
|
10,207
|
|
|
17,792
|
|
||
Deferred income taxes
|
15,535
|
|
|
8,786
|
|
||
Other current assets
|
13,737
|
|
|
11,185
|
|
||
Total current assets
|
197,926
|
|
|
232,595
|
|
||
|
|
|
|
||||
Non-current assets:
|
|
|
|
|
|||
Marketable debt securities – non-current
|
8,553
|
|
|
44,441
|
|
||
Property and equipment, net
|
204,376
|
|
|
165,453
|
|
||
Goodwill and intangible assets, net
|
83,344
|
|
|
15,986
|
|
||
Deferred income taxes
|
—
|
|
|
3,433
|
|
||
Other assets
|
19,197
|
|
|
12,279
|
|
||
Total assets
|
$
|
513,396
|
|
|
$
|
474,187
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
103,941
|
|
|
$
|
84,197
|
|
Customer prepayments
|
51,473
|
|
|
28,726
|
|
||
Accrued sales returns
|
20,562
|
|
|
15,262
|
|
||
Compensation and benefits
|
15,670
|
|
|
33,066
|
|
||
Taxes and withholding
|
9,856
|
|
|
10,207
|
|
||
Other current liabilities
|
23,447
|
|
|
15,594
|
|
||
Total current liabilities
|
224,949
|
|
|
187,052
|
|
||
|
|
|
|
||||
Non-current liabilities:
|
|
|
|
|
|||
Warranty liabilities
|
4,942
|
|
|
2,722
|
|
||
Deferred income taxes
|
12,499
|
|
|
—
|
|
||
Other long-term liabilities
|
48,667
|
|
|
27,506
|
|
||
Total liabilities
|
291,057
|
|
|
217,280
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 142,500 shares authorized, 49,402 and 52,798 shares issued and outstanding, respectively
|
494
|
|
|
528
|
|
||
Additional paid-in capital
|
—
|
|
|
—
|
|
||
Retained earnings
|
221,859
|
|
|
256,413
|
|
||
Accumulated other comprehensive loss
|
(14
|
)
|
|
(34
|
)
|
||
Total shareholders’ equity
|
222,339
|
|
|
256,907
|
|
||
Total liabilities and shareholders’ equity
|
$
|
513,396
|
|
|
$
|
474,187
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net sales
|
$
|
1,213,699
|
|
|
$
|
1,156,757
|
|
|
$
|
960,171
|
|
Cost of sales
|
472,948
|
|
|
449,907
|
|
|
358,416
|
|
|||
Gross profit
|
740,751
|
|
|
706,850
|
|
|
601,755
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Sales and marketing
|
550,475
|
|
|
512,007
|
|
|
439,156
|
|
|||
General and administrative
|
99,209
|
|
|
84,864
|
|
|
62,433
|
|
|||
Research and development
|
15,971
|
|
|
8,233
|
|
|
9,478
|
|
|||
Total operating expenses
|
665,655
|
|
|
605,104
|
|
|
511,067
|
|
|||
Operating income
|
75,096
|
|
|
101,746
|
|
|
90,688
|
|
|||
Other income, net
|
334
|
|
|
362
|
|
|
323
|
|
|||
Income before income taxes
|
75,430
|
|
|
102,108
|
|
|
91,011
|
|
|||
Income tax expense
|
24,911
|
|
|
34,134
|
|
|
30,930
|
|
|||
Net income
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
|
|
|
|
|
|
||||||
Basic net income per share:
|
|
|
|
|
|
|
|
|
|||
Net income per share – basic
|
$
|
0.99
|
|
|
$
|
1.27
|
|
|
$
|
1.10
|
|
Weighted-average shares – basic
|
51,252
|
|
|
53,452
|
|
|
54,866
|
|
|||
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|||
Net income per share – diluted
|
$
|
0.97
|
|
|
$
|
1.25
|
|
|
$
|
1.08
|
|
Weighted-average shares – diluted
|
52,101
|
|
|
54,193
|
|
|
55,803
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
Other comprehensive income (loss) – unrealized gain (loss) on available-for-sale marketable debt securities, net of income tax
|
|
20
|
|
|
(47
|
)
|
|
(7
|
)
|
|||
Comprehensive income
|
|
$
|
50,539
|
|
|
$
|
67,927
|
|
|
$
|
60,074
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
|
Total
|
|||||||||||||
Shares
|
|
Amount
|
||||||||||||||||||||
Balance at December 29, 2012
|
55,903
|
|
|
$
|
559
|
|
|
$
|
33,923
|
|
|
$
|
159,195
|
|
|
$
|
20
|
|
|
$
|
193,697
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
60,081
|
|
|
—
|
|
|
60,081
|
|
|||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unrealized loss on available-for-sale marketable debt securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||||
Exercise of common stock options
|
757
|
|
|
7
|
|
|
7,959
|
|
|
—
|
|
|
—
|
|
|
7,966
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
1,007
|
|
|
—
|
|
|
—
|
|
|
1,007
|
|
|||||
Stock-based compensation
|
160
|
|
|
2
|
|
|
4,230
|
|
|
—
|
|
|
—
|
|
|
4,232
|
|
|||||
Repurchases of common stock
|
(1,919
|
)
|
|
(19
|
)
|
|
(42,053
|
)
|
|
—
|
|
|
—
|
|
|
(42,072
|
)
|
|||||
Other
|
—
|
|
|
—
|
|
|
316
|
|
|
—
|
|
|
—
|
|
|
316
|
|
|||||
Balance at December 28, 2013
|
54,901
|
|
|
$
|
549
|
|
|
$
|
5,382
|
|
|
$
|
219,276
|
|
|
$
|
13
|
|
|
$
|
225,220
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
67,974
|
|
|
—
|
|
|
67,974
|
|
|||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unrealized loss on available-for-sale marketable debt securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
(47
|
)
|
|||||
Exercise of common stock options
|
239
|
|
|
2
|
|
|
2,871
|
|
|
—
|
|
|
—
|
|
|
2,873
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
581
|
|
|
—
|
|
|
—
|
|
|
581
|
|
|||||
Stock-based compensation
|
(96
|
)
|
|
(1
|
)
|
|
6,799
|
|
|
—
|
|
|
—
|
|
|
6,798
|
|
|||||
Repurchases of common stock
|
(2,246
|
)
|
|
(22
|
)
|
|
(15,633
|
)
|
|
(30,837
|
)
|
|
—
|
|
|
(46,492
|
)
|
|||||
Balance at January 3, 2015
|
52,798
|
|
|
$
|
528
|
|
|
$
|
—
|
|
|
$
|
256,413
|
|
|
$
|
(34
|
)
|
|
$
|
256,907
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
50,519
|
|
|
—
|
|
|
50,519
|
|
|||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unrealized gain on available-for-sale marketable debt securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|||||
Exercise of common stock options
|
253
|
|
|
3
|
|
|
2,973
|
|
|
—
|
|
|
—
|
|
|
2,976
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
1,828
|
|
|
—
|
|
|
—
|
|
|
1,828
|
|
|||||
Stock-based compensation
|
(7
|
)
|
|
—
|
|
|
10,290
|
|
|
—
|
|
|
—
|
|
|
10,290
|
|
|||||
Repurchases of common stock
|
(3,642
|
)
|
|
(37
|
)
|
|
(15,091
|
)
|
|
(85,073
|
)
|
|
—
|
|
|
(100,201
|
)
|
|||||
Balance at January 2, 2016
|
49,402
|
|
|
$
|
494
|
|
|
$
|
—
|
|
|
$
|
221,859
|
|
|
$
|
(14
|
)
|
|
$
|
222,339
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
47,630
|
|
|
39,809
|
|
|
30,811
|
|
|||
Stock-based compensation
|
10,290
|
|
|
6,798
|
|
|
4,232
|
|
|||
Net loss on disposals and impairments of assets
|
190
|
|
|
492
|
|
|
24
|
|
|||
Excess tax benefits from stock-based compensation
|
(2,182
|
)
|
|
(1,163
|
)
|
|
(3,831
|
)
|
|||
Deferred income taxes
|
11,924
|
|
|
(311
|
)
|
|
2,037
|
|
|||
Gain on sale of non-marketable equity securities
|
(6,891
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of effect of acquisition:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
(9,259
|
)
|
|
(4,717
|
)
|
|
1,993
|
|
|||
Inventories
|
(33,065
|
)
|
|
(13,383
|
)
|
|
(3,910
|
)
|
|||
Income taxes
|
(13,943
|
)
|
|
(4,314
|
)
|
|
4,395
|
|
|||
Prepaid expenses and other assets
|
8,680
|
|
|
(9,973
|
)
|
|
(3,169
|
)
|
|||
Accounts payable
|
19,130
|
|
|
14,340
|
|
|
(3,477
|
)
|
|||
Customer prepayments
|
22,735
|
|
|
13,334
|
|
|
198
|
|
|||
Accrued compensation and benefits
|
(17,493
|
)
|
|
17,735
|
|
|
(5,202
|
)
|
|||
Other taxes and withholding
|
135
|
|
|
2,584
|
|
|
(153
|
)
|
|||
Warranty liabilities
|
4,204
|
|
|
1,671
|
|
|
(1,236
|
)
|
|||
Other accruals and liabilities
|
15,338
|
|
|
13,592
|
|
|
5,312
|
|
|||
Net cash provided by operating activities
|
107,942
|
|
|
144,468
|
|
|
88,105
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from marketable debt securities
|
127,664
|
|
|
54,506
|
|
|
53,565
|
|
|||
Purchases of property and equipment
|
(85,586
|
)
|
|
(76,594
|
)
|
|
(76,811
|
)
|
|||
Acquisition of business
|
(70,018
|
)
|
|
—
|
|
|
(15,500
|
)
|
|||
Investments in marketable debt securities
|
(29,299
|
)
|
|
(90,349
|
)
|
|
(44,170
|
)
|
|||
Proceeds from (investment in) non-marketable equity securities
|
12,891
|
|
|
(1,500
|
)
|
|
(4,500
|
)
|
|||
Proceeds from sales of property and equipment
|
72
|
|
|
5
|
|
|
117
|
|
|||
Increase in restricted cash
|
—
|
|
|
(500
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(44,276
|
)
|
|
(114,432
|
)
|
|
(87,299
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||
Repurchases of common stock
|
(100,201
|
)
|
|
(46,492
|
)
|
|
(42,072
|
)
|
|||
Net increase (decrease) in short-term borrowings
|
1,097
|
|
|
6,192
|
|
|
(223
|
)
|
|||
Proceeds from issuance of common stock
|
2,976
|
|
|
2,873
|
|
|
7,966
|
|
|||
Excess tax benefits from stock-based compensation
|
2,182
|
|
|
1,163
|
|
|
3,831
|
|
|||
Debt issuance costs
|
(721
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(94,667
|
)
|
|
(36,264
|
)
|
|
(30,498
|
)
|
|||
|
|
|
|
|
|
||||||
Net decrease in cash and cash equivalents
|
(31,001
|
)
|
|
(6,228
|
)
|
|
(29,692
|
)
|
|||
Cash and cash equivalents, at beginning of period
|
51,995
|
|
|
58,223
|
|
|
87,915
|
|
|||
Cash and cash equivalents, at end of period
|
$
|
20,994
|
|
|
$
|
51,995
|
|
|
$
|
58,223
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||||||
Income taxes paid
|
$
|
26,681
|
|
|
$
|
38,474
|
|
|
$
|
24,253
|
|
Interest paid
|
$
|
96
|
|
|
$
|
49
|
|
|
$
|
34
|
|
Purchases of property and equipment included in accounts payable
|
$
|
5,051
|
|
|
$
|
5,802
|
|
|
$
|
3,465
|
|
Leasehold improvements
|
5 to 11 years
|
Furniture and equipment
|
5 to 7 years
|
Production machinery
|
3 to 7 years
|
Computer equipment and software
|
3 to 12 years
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at beginning of period
|
$
|
5,824
|
|
|
$
|
4,153
|
|
|
$
|
4,858
|
|
Additions charged to costs and expenses for current-year sales
|
9,368
|
|
|
9,437
|
|
|
4,603
|
|
|||
Deductions from reserves
|
(6,486
|
)
|
|
(8,118
|
)
|
|
(6,070
|
)
|
|||
Changes in liability for pre-existing warranties during the current year, including expirations
|
1,322
|
|
|
352
|
|
|
230
|
|
|||
Acquired warranty reserve
|
—
|
|
|
—
|
|
|
532
|
|
|||
Balance at end of period
|
$
|
10,028
|
|
|
$
|
5,824
|
|
|
$
|
4,153
|
|
•
|
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 customer warranty claims.
|
|
• 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.
|
|
|
||
Accounts receivable
|
$
|
105
|
|
Deferred income taxes - ST
|
83
|
|
|
Prepaid expenses
|
98
|
|
|
Property and equipment
|
91
|
|
|
Deferred income taxes - LT
|
2,671
|
|
|
Goodwill
|
55,083
|
|
|
Intangible assets
|
13,619
|
|
|
Total assets acquired
|
71,750
|
|
|
Accounts payable
|
269
|
|
|
Compensation and benefits
|
322
|
|
|
Other long-term liabilities
|
1,141
|
|
|
Total liabilities acquired
|
1,732
|
|
|
Net assets acquired
|
$
|
70,018
|
|
|
|
January 2, 2016
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Marketable debt securities – current
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
|
$
|
—
|
|
|
$
|
4,055
|
|
|
$
|
—
|
|
|
$
|
4,055
|
|
Corporate bonds
|
|
—
|
|
|
2,512
|
|
|
—
|
|
|
2,512
|
|
||||
|
|
—
|
|
|
6,567
|
|
|
—
|
|
|
6,567
|
|
||||
Marketable debt securities – non-current
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
—
|
|
|
5,001
|
|
|
—
|
|
|
5,001
|
|
||||
U.S. Agency bonds
|
|
—
|
|
|
2,496
|
|
|
—
|
|
|
2,496
|
|
||||
Municipal bonds
|
|
—
|
|
|
1,056
|
|
|
—
|
|
|
1,056
|
|
||||
|
|
—
|
|
|
8,553
|
|
|
—
|
|
|
8,553
|
|
||||
|
|
$
|
—
|
|
|
$
|
15,120
|
|
|
$
|
—
|
|
|
$
|
15,120
|
|
|
|
January 3, 2015
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Marketable debt securities – current
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
$
|
17,506
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,506
|
|
Corporate bonds
|
|
—
|
|
|
20,139
|
|
|
—
|
|
|
20,139
|
|
||||
U.S. Agency bonds
|
|
—
|
|
|
12,525
|
|
|
—
|
|
|
12,525
|
|
||||
Municipal bonds
|
|
—
|
|
|
6,953
|
|
|
—
|
|
|
6,953
|
|
||||
Commercial paper
|
|
—
|
|
|
12,486
|
|
|
—
|
|
|
12,486
|
|
||||
|
|
17,506
|
|
|
52,103
|
|
|
—
|
|
|
69,609
|
|
||||
Marketable debt securities – non-current
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
14,990
|
|
|
—
|
|
|
—
|
|
|
14,990
|
|
||||
Corporate bonds
|
|
—
|
|
|
15,236
|
|
|
—
|
|
|
15,236
|
|
||||
U.S. Agency bonds
|
|
—
|
|
|
10,014
|
|
|
—
|
|
|
10,014
|
|
||||
Municipal bonds
|
|
—
|
|
|
4,201
|
|
|
—
|
|
|
4,201
|
|
||||
|
|
14,990
|
|
|
29,451
|
|
|
—
|
|
|
44,441
|
|
||||
|
|
$
|
32,496
|
|
|
$
|
81,554
|
|
|
$
|
—
|
|
|
$
|
114,050
|
|
|
January 2, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Corporate bonds
|
$
|
7,532
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
7,513
|
|
Municipal bonds
|
5,114
|
|
|
—
|
|
|
(3
|
)
|
|
5,111
|
|
||||
U.S. Agency bonds
|
2,497
|
|
|
—
|
|
|
(1
|
)
|
|
2,496
|
|
||||
|
$
|
15,143
|
|
|
$
|
—
|
|
|
$
|
(23
|
)
|
|
$
|
15,120
|
|
|
January 3, 2015
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
U.S. Treasury securities
|
$
|
32,507
|
|
|
$
|
12
|
|
|
$
|
(23
|
)
|
|
$
|
32,496
|
|
Corporate bonds
|
35,409
|
|
|
2
|
|
|
(36
|
)
|
|
35,375
|
|
||||
U.S. Agency bonds
|
22,545
|
|
|
4
|
|
|
(10
|
)
|
|
22,539
|
|
||||
Municipal bonds
|
11,157
|
|
|
2
|
|
|
(5
|
)
|
|
11,154
|
|
||||
Commercial paper
|
12,487
|
|
|
—
|
|
|
(1
|
)
|
|
12,486
|
|
||||
|
$
|
114,105
|
|
|
$
|
20
|
|
|
$
|
(75
|
)
|
|
$
|
114,050
|
|
|
January 2, 2016
|
|
January 3, 2015
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
Marketable debt securities – current (due in less than one year)
|
$
|
6,575
|
|
|
$
|
6,567
|
|
|
$
|
69,607
|
|
|
$
|
69,609
|
|
Marketable debt securities – non-current (due in one to two years)
|
8,568
|
|
|
8,553
|
|
|
44,498
|
|
|
44,441
|
|
||||
|
$
|
15,143
|
|
|
$
|
15,120
|
|
|
$
|
114,105
|
|
|
$
|
114,050
|
|
|
January 2,
2016 |
|
January 3,
2015 |
||||
Raw materials
|
$
|
9,349
|
|
|
$
|
10,220
|
|
Work in progress
|
48
|
|
|
411
|
|
||
Finished goods
|
77,203
|
|
|
42,904
|
|
||
|
$
|
86,600
|
|
|
$
|
53,535
|
|
|
|
January 2,
2016 |
|
January 3,
2015 |
||||
Land
|
|
$
|
1,999
|
|
|
$
|
1,999
|
|
Leasehold improvements
|
|
91,184
|
|
|
89,203
|
|
||
Furniture and equipment
|
|
68,276
|
|
|
59,587
|
|
||
Production machinery, computer equipment and software
|
|
191,482
|
|
|
122,913
|
|
||
Property under capital lease
|
|
1,077
|
|
|
1,077
|
|
||
Construction in progress
|
|
3,540
|
|
|
56,937
|
|
||
Less: Accumulated depreciation and amortization
|
|
(153,182
|
)
|
|
(166,263
|
)
|
||
|
|
$
|
204,376
|
|
|
$
|
165,453
|
|
|
Twelve Months Ended
|
|
Twelve Months Ended
|
|||||||||||||
|
January 2, 2016
|
|
January 3, 2015
|
|||||||||||||
|
Goodwill
|
|
Indefinite-Lived
Trade Name/ Trademarks |
|
Goodwill
|
|
Indefinite-Lived
Trade Name/ Trademarks |
|||||||||
Beginning balance
|
$
|
8,963
|
|
|
$
|
1,396
|
|
|
$
|
8,963
|
|
|
$
|
1,396
|
|
|
SleepIQ LABS
|
55,083
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Ending balance
|
$
|
64,046
|
|
|
$
|
1,396
|
|
|
$
|
8,963
|
|
|
$
|
1,396
|
|
|
January 2, 2016
|
|
January 3, 2015
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Developed technologies
(1)
|
$
|
18,851
|
|
|
$
|
2,342
|
|
|
$
|
5,231
|
|
|
$
|
1,342
|
|
Customer relationships
|
2,413
|
|
|
1,020
|
|
|
2,413
|
|
|
675
|
|
||||
Trade names/trademarks
|
101
|
|
|
101
|
|
|
101
|
|
|
101
|
|
||||
|
$
|
21,365
|
|
|
$
|
3,463
|
|
|
$
|
7,745
|
|
|
$
|
2,118
|
|
Facility Rents:
|
|
2015
|
|
2014
|
|
2013
|
||||||
Minimum rents
|
|
$
|
52,650
|
|
|
$
|
47,754
|
|
|
$
|
41,816
|
|
Contingent rents
|
|
5,168
|
|
|
6,241
|
|
|
5,779
|
|
|||
Total
|
|
$
|
57,818
|
|
|
$
|
53,995
|
|
|
$
|
47,595
|
|
|
|
|
|
|
|
|
||||||
Equipment Rents
|
|
$
|
4,362
|
|
|
$
|
3,609
|
|
|
$
|
2,694
|
|
2016
|
|
$
|
59,096
|
|
2017
|
|
54,938
|
|
|
2018
|
|
43,785
|
|
|
2019
|
|
34,217
|
|
|
2020
|
|
27,792
|
|
|
Thereafter
|
|
79,426
|
|
|
Total future minimum lease payments
|
|
$
|
299,254
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Stock options
|
|
$
|
2,634
|
|
|
$
|
2,125
|
|
|
$
|
2,698
|
|
Stock awards
|
|
7,656
|
|
|
4,673
|
|
|
1,534
|
|
|||
Total stock-based compensation expense
(1)
|
|
10,290
|
|
|
6,798
|
|
|
4,232
|
|
|||
Income tax benefit
|
|
3,413
|
|
|
2,284
|
|
|
1,447
|
|
|||
Total stock-based compensation expense, net of tax
|
|
$
|
6,877
|
|
|
$
|
4,514
|
|
|
$
|
2,785
|
|
|
|
Stock
Options
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
Outstanding at January 3, 2015
|
|
1,513
|
|
|
$
|
16.06
|
|
|
5.6
|
|
$
|
16,642
|
|
Granted
|
|
135
|
|
|
32.91
|
|
|
|
|
|
|
||
Exercised
|
|
(252
|
)
|
|
11.77
|
|
|
|
|
|
|
||
Canceled/Forfeited
|
|
(8
|
)
|
|
23.46
|
|
|
|
|
|
|
||
Outstanding at January 2, 2016
|
|
1,388
|
|
|
$
|
18.44
|
|
|
5.3
|
|
$
|
7,366
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at January 2, 2016
|
|
1,035
|
|
|
$
|
16.14
|
|
|
4.4
|
|
$
|
6,883
|
|
|
|
|
|
|
|
|
|
|
|||||
Vested and expected to vest at January 2, 2016
|
|
1,353
|
|
|
$
|
18.23
|
|
|
5.3
|
|
$
|
7,315
|
|
(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.
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Weighted-average grant date fair value of stock options granted
|
|
$
|
15.94
|
|
|
$
|
9.33
|
|
|
$
|
10.57
|
|
Total intrinsic value (at exercise) of stock options exercised
|
|
$
|
4,592
|
|
|
$
|
2,478
|
|
|
$
|
7,726
|
|
Valuation Assumptions
|
|
2015
|
|
2014
|
|
2013
|
|||
Expected dividend yield
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility
|
|
54
|
%
|
|
58
|
%
|
|
61
|
%
|
Risk-free interest rate
|
|
1.6
|
%
|
|
1.8
|
%
|
|
0.9
|
%
|
Expected term (in years)
|
|
5.2
|
|
|
5.3
|
|
|
5.7
|
|
|
|
Time-
Based
Stock
Awards
|
|
Weighted-Average
Grant Date
Fair Value
|
|
Performance- and
Market-Based
Stock Awards
|
|
Weighted-Average
Grant Date
Fair Value
|
||||
Outstanding at January 3, 2015
|
|
472
|
|
|
$19.00
|
|
630
|
|
|
$18.61
|
||
Granted
|
|
135
|
|
|
31.57
|
|
|
190
|
|
|
33.32
|
|
Vested
|
|
(137
|
)
|
|
17.30
|
|
|
(45
|
)
|
|
13.59
|
|
Canceled/Forfeited
|
|
(16
|
)
|
|
22.14
|
|
|
(65
|
)
|
|
28.05
|
|
Outstanding at January 2, 2016
|
|
454
|
|
|
$23.14
|
|
710
|
|
|
$22.01
|
||
|
|
|
|
|
|
|
|
|
Valuation Assumptions
|
|
2015
|
|
2014
|
|
2013
|
Expected dividend yield
|
|
NA
|
|
0%
|
|
NA
|
Expected volatility
|
|
NA
|
|
58%
|
|
NA
|
Risk-free interest rate
|
|
NA
|
|
0.9%
|
|
NA
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Amount repurchased under Board-approved share repurchase program
|
|
$
|
98,446
|
|
|
$
|
45,044
|
|
|
$
|
40,037
|
|
Amount repurchased in connection with the vesting of employee restricted stock grants
|
|
1,755
|
|
|
1,448
|
|
|
2,035
|
|
|||
Total amount repurchased
|
|
$
|
100,201
|
|
|
$
|
46,492
|
|
|
$
|
42,072
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
|
|
|
|
|
|
||||||
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Basic weighted-average shares outstanding
|
51,252
|
|
|
53,452
|
|
|
54,866
|
|
|||
Dilutive effect of stock-based awards
|
849
|
|
|
741
|
|
|
937
|
|
|||
Diluted weighted-average shares outstanding
|
52,101
|
|
|
54,193
|
|
|
55,803
|
|
|||
|
|
|
|
|
|
||||||
Net income per share – basic
|
$
|
0.99
|
|
|
$
|
1.27
|
|
|
$
|
1.10
|
|
Net income per share – diluted
|
$
|
0.97
|
|
|
$
|
1.25
|
|
|
$
|
1.08
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Interest income
|
$
|
494
|
|
|
$
|
415
|
|
|
375
|
|
|
Interest expense
|
(160
|
)
|
|
(53
|
)
|
|
(52
|
)
|
|||
Other income, net
|
$
|
334
|
|
|
$
|
362
|
|
|
$
|
323
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
7,272
|
|
|
$
|
29,484
|
|
|
$
|
25,091
|
|
State
|
|
3,870
|
|
|
4,161
|
|
|
3,802
|
|
|||
|
|
11,142
|
|
|
33,645
|
|
|
28,893
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
13,567
|
|
|
747
|
|
|
1,953
|
|
|||
State
|
|
202
|
|
|
(258
|
)
|
|
84
|
|
|||
|
|
13,769
|
|
|
489
|
|
|
2,037
|
|
|||
Income tax expense
|
|
$
|
24,911
|
|
|
$
|
34,134
|
|
|
$
|
30,930
|
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Statutory federal income tax
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
|
3.0
|
|
|
2.5
|
|
|
3.0
|
|
Non-taxable acquisition-related transactions
|
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
Manufacturing deduction
|
|
(1.7
|
)
|
|
(3.3
|
)
|
|
(3.2
|
)
|
Changes in unrecognized tax benefits
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
Other
|
|
(1.0
|
)
|
|
(1.1
|
)
|
|
(1.1
|
)
|
Effective income tax rate
|
|
33.0
|
%
|
|
33.4
|
%
|
|
34.0
|
%
|
|
|
2015
|
|
2014
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Current:
|
|
|
|
|
||||
Warranty and returns liabilities
|
|
$
|
8,985
|
|
|
$
|
5,753
|
|
Compensation and benefits
|
|
2,323
|
|
|
1,545
|
|
||
Deferred rent and lease incentives
|
|
1,117
|
|
|
991
|
|
||
Other
|
|
3,653
|
|
|
709
|
|
||
Long-term:
|
|
|
|
|
|
|||
Stock-based compensation
|
|
8,756
|
|
|
6,843
|
|
||
Deferred rent and lease incentives
|
|
5,860
|
|
|
5,527
|
|
||
Warranty liabilities
|
|
1,832
|
|
|
1,051
|
|
||
Net operating loss and capital loss carryforwards
|
|
7,290
|
|
|
649
|
|
||
Total gross deferred tax assets
|
|
39,816
|
|
|
23,068
|
|
||
Valuation allowance
|
|
(1,441
|
)
|
|
(552
|
)
|
||
Total deferred tax assets after valuation allowance
|
|
38,375
|
|
|
22,516
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Long-term:
|
|
|
|
|
||||
Property and equipment
|
|
26,330
|
|
|
9,873
|
|
||
Other
|
|
9,009
|
|
|
424
|
|
||
Total gross deferred tax liabilities
|
|
35,339
|
|
|
10,297
|
|
||
Net deferred tax assets
|
|
$
|
3,036
|
|
|
$
|
12,219
|
|
|
|
Federal and State Tax
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Beginning balance
|
|
$
|
742
|
|
|
$
|
474
|
|
|
$
|
213
|
|
Increases related to current-year tax positions
|
|
1,277
|
|
|
172
|
|
|
149
|
|
|||
Increases related to prior-year tax positions
|
|
113
|
|
|
110
|
|
|
112
|
|
|||
Decreases related to prior-year tax positions
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Lapse of statute of limitations
|
|
(55
|
)
|
|
(14
|
)
|
|
—
|
|
|||
Settlements with taxing authorities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
|
$
|
2,077
|
|
|
$
|
742
|
|
|
$
|
474
|
|
2015
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fiscal
Year
|
||||||||||
Net sales
|
|
$
|
349,809
|
|
|
$
|
275,289
|
|
|
$
|
373,919
|
|
|
$
|
214,682
|
|
|
$
|
1,213,699
|
|
Gross profit
|
|
215,833
|
|
|
170,539
|
|
|
233,636
|
|
|
120,743
|
|
|
740,751
|
|
|||||
Operating income (loss)
|
|
43,725
|
|
|
16,629
|
|
|
45,399
|
|
|
(30,657
|
)
|
|
75,096
|
|
|||||
Net income (loss)
|
|
28,799
|
|
|
11,038
|
|
|
31,854
|
|
|
(21,172
|
)
|
|
50,519
|
|
|||||
Net income (loss) per share – diluted
|
|
0.54
|
|
|
0.21
|
|
|
0.62
|
|
|
(0.42
|
)
|
|
0.97
|
|
2014
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fiscal
Year
|
||||||||||
Net sales
|
|
$
|
276,412
|
|
|
$
|
234,763
|
|
|
$
|
323,366
|
|
|
$
|
322,216
|
|
|
$
|
1,156,757
|
|
Gross profit
|
|
171,383
|
|
|
142,397
|
|
|
198,584
|
|
|
194,486
|
|
|
706,850
|
|
|||||
Operating income
|
|
25,802
|
|
|
12,711
|
|
|
35,346
|
|
|
27,887
|
|
|
101,746
|
|
|||||
Net income
|
|
16,992
|
|
|
8,481
|
|
|
23,554
|
|
|
18,947
|
|
|
67,974
|
|
|||||
Net income per share – diluted
|
|
0.31
|
|
|
0.16
|
|
|
0.44
|
|
|
0.35
|
|
|
1.25
|
|
1.
|
Select Comfort Corporation 2004 Stock Incentive Plan (Amended and Restated as of January 1, 2007)
|
2.
|
Form of Nonstatutory Stock Option Award Agreement under the 2004 Stock Incentive Plan
|
3.
|
Form of Restricted Stock Award Agreement under the 2004 Stock Incentive Plan
|
4.
|
Form of Performance Stock Award Agreement under the 2004 Stock Incentive Plan
|
5.
|
Form of Nonstatutory Stock Option Award Agreement (Subject to Performance Adjustment) under the 2004 Stock Incentive Plan
|
6.
|
Select Comfort Corporation Amended and Restated 2010 Omnibus Incentive Plan
|
7.
|
Form of Nonstatutory Stock Option Award Agreement under the 2010 Omnibus Incentive Plan
|
8.
|
Form of Restricted Stock Award Agreement under the 2010 Omnibus Incentive Plan
|
9.
|
Form of Performance Stock Award Agreement under the 2010 Omnibus Incentive Plan
|
10.
|
Select Comfort Executive Investment Plan (December 1, 2014 Restatement)
|
11.
|
Employment Offer Letter from Select Comfort Corporation to Shelly R. Ibach dated February 9, 2007
|
12.
|
Employment Offer Letter from Select Comfort Corporation to David R. Callen dated March 14, 2014
|
13.
|
Employment Offer Letter from Select Comfort Corporation to Kathryn V. Roedel dated March 8, 2005
|
14.
|
Employment Offer Letter from Select Comfort Corporation to Mark A. Kimball dated April 22, 1999
|
15.
|
Select Comfort Corporation Executive Physical Plan
|
16.
|
Summary of Executive Tax and Financial Planning Program
|
17.
|
Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
18.
|
First Amendment to Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
19.
|
Summary of Non-Employee Director Compens
ation
|
|
|
SELECT COMFORT CORPORATION
|
|
||
|
|
(Registrant)
|
|
||
|
|
|
|
||
Dated:
|
March 1, 2016
|
By:
|
|
/s/ Shelly R. Ibach
|
|
|
|
|
|
Shelly R. Ibach
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ David R. Callen
|
|
|
|
|
|
David R. Callen
|
|
|
|
|
|
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 29, 2106
|
Jean-Michel Valette
|
|
|
|
|
|
|
|
|
|
/s/ Shelly R. Ibach
|
|
Director
|
|
February 29, 2016
|
Shelly R. Ibach
|
|
|
|
|
|
|
|
|
|
/s/ Daniel I. Alegre
|
|
Director
|
|
February 29, 2016
|
Daniel I. Alegre
|
|
|
|
|
|
|
|
|
|
/s/ Stephen L. Gulis, Jr.
|
|
Director
|
|
February 28, 2016
|
Stephen L. Gulis, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Harrison
|
|
Director
|
|
March 1, 2016
|
Michael J. Harrison
|
|
|
|
|
|
|
|
|
|
/s/ David T. Kollat
|
|
Director
|
|
February 28, 2016
|
David T. Kollat
|
|
|
|
|
|
|
|
|
|
/s/ Brenda J. Lauderback
|
|
Director
|
|
February 25, 2016
|
Brenda J. Lauderback
|
|
|
|
|
|
|
|
|
|
/s/ Kathleen L. Nedorostek
|
|
Director
|
|
February 27, 2016
|
Kathleen L. Nedorostek
|
|
|
|
|
|
|
|
|
|
/s/ Michael A. Peel
|
|
Director
|
|
February 29, 2016
|
Michael A. Peel
|
|
|
|
|
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 September 9, 2015 between the Company and Truluck Industries, Inc.
|
|
Incorporated by reference to Exhibit 10.3 contained in Select Comfort's Quarterly Report on Form 10-Q for the quarter ended October 3, 2015 (File No. 0-25121)
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
10.09
|
|
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)
|
|
|
|
|
|
10.10
|
|
Second Amendment to Lease Agreement dated June 15, 2015 between the Company and CLFP - SLIC 8, L.P. (successor in interest to ProLogis Development Services Incorporated)
|
|
Incorporated by reference to Exhibit 10.4 contained in Select Comfort's Quarterly report on Form 10-Q for the quarter ended October 3, 2015 (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 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)
|
|
|
|
|
|
10.13
|
|
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)
|
|
|
|
|
|
10.14
|
|
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)
|
|
|
|
|
|
10.15
|
|
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)
|
|
|
|
|
|
10.16
|
|
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)
|
|
|
|
|
|
10.17
|
|
Select Comfort Corporation Amended and Restated 2010 Omnibus Incentive Plan
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed May 15, 2013 (File No. 0-25121)
|
|
|
|
|
|
10.18
|
|
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)
|
|
|
|
|
|
10.19
|
|
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)
|
|
|
|
|
|
10.20
|
|
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
|
10.21
|
|
Select Comfort Executive Investment Plan (December 1, 2014 Restatement)
|
|
Incorporated by reference to Exhibit 10.21 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 3, 2015 (File No. 0-25121)
|
|
|
|
|
|
10.22
|
|
Employment Offer Letter from Select Comfort Corporation to Shelly R. Ibach dated February 9, 2007
|
|
Incorporated by reference to Exhibit 10.30 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended December 29, 2012 (File No. 0-25121)
|
|
|
|
|
|
10.23
|
|
Employment Offer Letter from Select Comfort Corporation to David R. Callen dated March 14, 2014
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed March 20, 2014
|
|
|
|
|
|
10.24
|
|
Employment Offer Letter from Select Comfort Corporation 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)
|
|
|
|
|
|
10.25
|
|
Employment Offer Letter from Select Comfort Corporation 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)
|
|
|
|
|
|
10.26
|
|
Select Comfort Corporation Executive Physical Plan
|
|
Incorporated by reference to Exhibit 10.27 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 3, 2015 (File No. 0-25121)
|
|
|
|
|
|
10.27
|
|
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)
|
|
|
|
|
|
10.28
|
|
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)
|
|
|
|
|
|
10.29
|
|
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)
|
|
|
|
|
|
10.30
|
|
Summary of Non-Employee Director Compensation
|
|
Filed herewith
|
|
|
|
|
|
10.31
|
|
Master Supply Agreement dated July 16, 2013 between the Company and Supplier
(1)
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Quarterly Report on Form 10-Q for the quarter ended September 28, 2013 (File No. 0-25121)
|
|
|
|
|
|
10.32
|
|
Retailer Program Agreement effective as of January 1, 2014 by and between Synchrony Bank, Select Comfort Corporation and Select Comfort Retail Corporation
(1)
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Quarterly Report on Form 10-Q for the quarter ended June 28, 2014 (File No. 0-25121)
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
10.33
|
|
First Amendment to Retailer Program Agreement, dated effective as of October 1, 2014 by and between Synchrony Bank, 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 October 1, 2014 (File No. 0-25121)
|
|
|
|
|
|
10.34
|
|
Second Amendment to Retailer Program Agreement, dated November 4, 2015 by and between Synchrony Bank, Select Comfort Corporation and Select Comfort Retail Corporation
(1)
|
|
Incorporated by reference to Exhibit 10.5 contained in Select Comfort's Quarterly Report on Form 10-Q for the quarter ended October 3, 2015 (File No. 0-25121)
|
|
|
|
|
|
10.35
|
|
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)
|
|
|
|
|
|
10.36
|
|
Credit and Security Agreement dated September 9, 2015 among Select Comfort Corporation, KeyBank National Association and BMO Harris Bank, N.A.
|
|
Incorporated by reference to Exhibit 10.2 contained in Select Comfort’s Quarterly Report on Form 10-Q for the quarter ended October 3, 2015 (File No. 0-25121)
|
|
|
|
|
|
10.37
|
|
Agreement and Plan of Merger dated September 9, 2015 by and among Select Comfort Corporation, SCC Subsidiary Corp., BAM Labs, Inc. and Shareholder Representative Services LLC
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort’s Quarterly Report on Form 10-Q for the quarter ended October 3, 2015 (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
|
|
|
|
|
|
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)
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
101
|
|
The following financial information from the Company's Annual Report on Form 10-K for the period ended January 2, 2016, filed with the SEC on March 1, 2016, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets as of January 2, 2016 and January 3, 2015; (ii) Consolidated Statements of Operations for the years ended January 2, 2016, January 3, 2015 and December 28, 2013; (iii) Consolidated Statements of Comprehensive Income for the years ended January 2, 2016, January 3, 2015 and December 28, 2013; (iv) Consolidated Statement of Shareholders' Equity for the years ended January 2, 2016, January 3, 2015 and December 28, 2013; (v) Consolidated Statements of Cash Flows for the years ended January 2, 2016, January 3, 2015 and December 28, 2013; and (vi) Notes to Consolidated Financial Statements.
|
|
Filed herewith
|
(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.
|
Description
|
|
2015
|
|
2014
|
|
2013
|
||||||
Allowance for doubtful accounts
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
739
|
|
|
$
|
425
|
|
|
$
|
348
|
|
Additions charged to costs and expenses
|
|
1,577
|
|
|
729
|
|
|
776
|
|
|||
Deductions from reserves
|
|
(1,277
|
)
|
|
(415
|
)
|
|
(699
|
)
|
|||
Balance at end of period
|
|
$
|
1,039
|
|
|
$
|
739
|
|
|
$
|
425
|
|
|
|
|
|
|
|
|
||||||
Accrued sales returns
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
15,262
|
|
|
$
|
9,433
|
|
|
$
|
5,330
|
|
Additions charged to costs and expenses
|
|
84,265
|
|
|
78,890
|
|
|
59,656
|
|
|||
Deductions from reserves
|
|
(78,965
|
)
|
|
(73,061
|
)
|
|
(55,553
|
)
|
|||
Balance at end of period
|
|
$
|
20,562
|
|
|
$
|
15,262
|
|
|
$
|
9,433
|
|
Name of Subsidiary
|
|
Organized
under the Laws of
|
|
|
|
Select Comfort Retail Corporation
|
|
Minnesota (USA)
|
|
|
|
SleepIQ LABS Inc.
|
|
Delaware (USA)
|
|
|
|
Select Comfort SC Corporation
|
|
Minnesota (USA)
|
|
|
|
Select Comfort Canada Holding Inc.
|
|
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:
|
March 1, 2016
|
|
|
|
|
|
|
|
|
|
/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:
|
March 1, 2016
|
|
|
|
|
|
|
|
|
|
/s/ David R. Callen
|
|
|
|
David R. Callen
|
|
|
|
Senior 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.
|
Date:
|
March 1, 2016
|
|
|
|
|
|
|
|
|
|
/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.
|
Date:
|
March 1, 2016
|
|
|
|
|
|
|
|
|
|
/s/ David R. Callen
|
|
|
|
David R. Callen
|
|
|
|
Senior Vice President and Chief Financial Officer
|