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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MINNESOTA
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41-1597886
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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9800 59
th
Avenue North
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Minneapolis, Minnesota
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55442
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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The NASDAQ Stock Market LLC
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(NASDAQ Global Select Market)
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Securities registered pursuant to Section 12(g) of the Act:
None
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Large accelerated filer
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ý
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Accelerated filer
o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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The Classic Series offers Sleep Number adjustability starting at $799 for a queen mattress. The series includes the Sleep Number c2 and c4 beds.
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•
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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.
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•
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The Memory Foam Series is breathable and contouring. The series includes the Sleep Number m7 bed.
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•
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The Innovation Series is the ultimate in individualized comfort and temperature-balancing innovation. The series includes the Sleep Number i8 and i10 beds.
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•
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Self-adjusting comfort throughout the night. As sleep positions change during the night, Responsive Air technology will adjust the bed’s comfort in real time via the two air chambers inside the mattress.
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•
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Foot-warming feature to fall asleep faster. It’s clinically proven that people fall asleep faster when their feet are warmed. SleepIQ technology knows the sleepers’ bedtime routines and warms the foot of the bed automatically before bedtime with Rapid Sleep Onset technology.
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•
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Auto Snore detection and adjustment. Responding to SleepIQ biometrics, the 360 Smart Bed will automatically adjust to each sleeper’s ideal position.
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•
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Smart alarm feature will awaken sleepers at the optimal moment. SleepIQ technology knows each sleeper's desired wake-up window and an alarm will sound when they are in their lightest stage of sleep during this window.
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•
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Political instability resulting in disruption of trade;
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•
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Existing or potential duties, tariffs or quotas on certain types of goods that may be imported into the United States;
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•
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Disruptions in transportation due to acts of terrorism, shipping delays, foreign or domestic dock strikes, customs inspections or other factors;
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•
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Foreign currency fluctuations; and
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•
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Economic uncertainties, including inflation.
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Retail
Stores
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Retail
Stores
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Retail
Stores
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Alabama
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8
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Maine
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2
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Oklahoma
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4
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Alaska
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1
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Maryland
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12
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Oregon
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6
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Arizona
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9
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Massachusetts
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10
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Pennsylvania
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20
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Arkansas
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4
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Michigan
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15
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Rhode Island
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1
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California
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64
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Minnesota
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14
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South Carolina
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7
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Colorado
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13
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Mississippi
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5
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South Dakota
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2
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Connecticut
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6
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Missouri
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13
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Tennessee
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11
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Delaware
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2
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Montana
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4
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Texas
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49
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Florida
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38
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Nebraska
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3
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Utah
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4
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Georgia
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20
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Nevada
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5
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Vermont
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1
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Idaho
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3
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New Hampshire
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4
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Virginia
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18
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Illinois
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20
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New Jersey
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15
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Washington
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13
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Indiana
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11
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New Mexico
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4
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West Virginia
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2
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Iowa
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8
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New York
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17
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Wisconsin
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11
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Kansas
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7
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North Carolina
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14
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Wyoming
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1
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Kentucky
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8
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North Dakota
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4
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Louisiana
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8
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Ohio
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19
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Total
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540
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First
Quarter
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Second
Quarter
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Third
Quarter
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Fourth
Quarter
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||||||||
Fiscal 2016
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High
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$
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21.24
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$
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24.68
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$
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27.68
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$
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24.33
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Low
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15.58
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19.17
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21.31
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18.55
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Fiscal 2015
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High
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$
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34.62
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$
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34.50
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$
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30.79
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$
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25.50
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Low
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26.43
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29.11
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21.34
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20.63
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Fiscal Period
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Total
Number of Shares
Purchased
(1)(2)
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Average
Price Paid
per Share
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Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
(1)
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Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
(3)
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October 2, 2016 through October 29, 2016
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387,378
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$
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20.40
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387,181
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$
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267,102,000
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October 30, 2016 through November 26, 2016
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359,486
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21.14
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356,952
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259,557,000
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November 27, 2016 through December 31, 2016
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632,844
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23.02
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632,340
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245,000,000
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Total
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1,379,708
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$
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21.79
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1,376,473
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$
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245,000,000
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(1)
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Under the current Board-approved
$300 million
share repurchase program, we repurchased
1,376,473
shares of our common stock at a cost of
$30 million
(based on trade dates) during the three months ended
December 31, 2016
.
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(2)
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In connection with the vesting of employee restricted stock grants, we also repurchased
3,235
shares of our common stock at a cost of
$68,000
during the three months ended
December 31, 2016
.
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(3)
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There is no expiration date governing the period over which we can repurchase shares under our Board-approved share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.
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12/31/2011
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12/29/2012
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12/28/2013
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1/3/2015
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1/2/2016
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12/31/2016
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Select Comfort Corporation
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$
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100
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$
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113
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$
|
98
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$
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124
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$
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99
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$
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104
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S&P 400 Specialty Stores Index
|
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100
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122
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|
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184
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230
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170
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202
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The NASDAQ Stock Market (U.S.) Index
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100
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115
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164
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188
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202
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220
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Year
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||||||||||||||||||
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2016
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2015
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2014
(1)
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2013
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2012
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Consolidated Statements of Operations Data:
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Net sales
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$
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1,311,291
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$
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1,213,699
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$
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1,156,757
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$
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960,171
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$
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934,978
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Gross profit
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810,160
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740,751
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706,850
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601,755
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596,546
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|||||
Operating expenses:
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Sales and marketing
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595,845
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550,475
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512,007
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439,156
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398,205
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|||||
General and administrative
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109,674
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99,209
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84,864
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62,967
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66,765
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|||||
Research and development
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27,991
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15,971
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|
|
8,233
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|
|
9,478
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|
|
6,194
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|||||
Other
(2)
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—
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—
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—
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(534
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)
|
|
5,595
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|
|||||
Operating income
|
76,650
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|
|
75,096
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|
|
101,746
|
|
|
90,688
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|
|
119,787
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|
|||||
Net income
|
$
|
51,417
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|
|
$
|
50,519
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|
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$
|
67,974
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|
|
$
|
60,081
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|
|
$
|
78,094
|
|
Net income per share:
|
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||||||||||
Basic
|
$
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1.11
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$
|
0.99
|
|
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$
|
1.27
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|
|
$
|
1.10
|
|
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$
|
1.41
|
|
Diluted
|
$
|
1.10
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$
|
0.97
|
|
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$
|
1.25
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$
|
1.08
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|
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$
|
1.37
|
|
Shares used in calculation of net income per share:
|
|
|
|
|
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||||||||||
Basic
|
46,154
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|
51,252
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|
|
53,452
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|
|
54,866
|
|
|
55,516
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|
|||||
Diluted
|
46,902
|
|
|
52,101
|
|
|
54,193
|
|
|
55,803
|
|
|
57,076
|
|
|||||
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||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
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|
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|
||||||||||
Cash, cash equivalents and marketable debt securities
|
$
|
11,609
|
|
|
$
|
36,114
|
|
|
$
|
166,045
|
|
|
$
|
145,014
|
|
|
$
|
177,821
|
|
Total assets
|
457,166
|
|
|
500,897
|
|
|
474,187
|
|
|
381,765
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|
|
342,021
|
|
|||||
Total shareholders’ equity
|
160,320
|
|
|
222,339
|
|
|
256,907
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|
|
225,220
|
|
|
193,697
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|
|||||
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||||||||||
Selected Operating Data:
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|
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||||||||||
Stores open at period-end
|
540
|
|
|
488
|
|
|
463
|
|
|
440
|
|
|
410
|
|
|||||
Stores opened during period
|
72
|
|
|
38
|
|
|
57
|
|
|
71
|
|
|
57
|
|
|||||
Stores closed during period
|
20
|
|
|
13
|
|
|
34
|
|
|
41
|
|
|
28
|
|
|||||
Average revenue per store (000’s)
(3)
|
$
|
2,364
|
|
|
$
|
2,377
|
|
|
$
|
2,327
|
|
|
$
|
2,093
|
|
|
$
|
2,164
|
|
Percentage of stores with more than $1.0 million in net sales
(3)
|
98
|
%
|
|
99
|
%
|
|
98
|
%
|
|
96
|
%
|
|
98
|
%
|
|||||
Percentage of stores with more than $2.0 million in net sales
(3)
|
61
|
%
|
|
62
|
%
|
|
59
|
%
|
|
46
|
%
|
|
49
|
%
|
|||||
Average revenue per mattress unit - Company-Controlled channel
(4)
|
$
|
4,046
|
|
|
$
|
4,028
|
|
|
$
|
3,671
|
|
|
$
|
3,245
|
|
|
$
|
3,050
|
|
Company-Controlled comparable-sales increase (decrease)
(5)
|
1
|
%
|
|
3
|
%
|
|
12
|
%
|
|
(4
|
)%
|
|
23
|
%
|
|||||
Total retail square footage (at period-end) (000's)
|
1,399
|
|
|
1,214
|
|
|
1,106
|
|
|
949
|
|
|
759
|
|
|||||
Average square footage per store open during period
(3)
|
2,538
|
|
|
2,445
|
|
|
2,302
|
|
|
1,985
|
|
|
1,670
|
|
|||||
Net sales per square foot
(3)
|
$
|
937
|
|
|
$
|
980
|
|
|
$
|
1,025
|
|
|
$
|
1,077
|
|
|
$
|
1,324
|
|
Average store age (in months at period-end)
|
93
|
|
|
99
|
|
|
97
|
|
|
102
|
|
|
113
|
|
|||||
Earnings before interest, depreciation and amortization (Adjusted EBITDA)
(6)
|
$
|
145,689
|
|
|
$
|
133,057
|
|
|
$
|
148,223
|
|
|
$
|
125,020
|
|
|
$
|
150,285
|
|
Free cash flows
(6)
|
$
|
93,793
|
|
|
$
|
22,356
|
|
|
$
|
67,874
|
|
|
$
|
11,294
|
|
|
$
|
49,033
|
|
Return on Invested Capital (ROIC)
(6)
|
12.2
|
%
|
|
11.2
|
%
|
|
15.1
|
%
|
|
15.1
|
%
|
|
21.5
|
%
|
(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, 2015 or 2016.
|
(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
459
,
442
,
396
,
359
and
348
for
2016
,
2015
,
2014
,
2013
and
2012
, 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
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net income
|
|
$
|
51,417
|
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
$
|
60,081
|
|
|
$
|
78,094
|
|
Income tax expense
|
|
24,516
|
|
|
24,911
|
|
|
34,134
|
|
|
30,930
|
|
|
41,911
|
|
|||||
Interest expense
|
|
811
|
|
|
160
|
|
|
53
|
|
|
51
|
|
|
91
|
|
|||||
Depreciation and amortization
|
|
56,910
|
|
|
46,916
|
|
|
38,767
|
|
|
29,599
|
|
|
19,735
|
|
|||||
Stock-based compensation
|
|
11,961
|
|
|
10,290
|
|
|
6,798
|
|
|
4,232
|
|
|
10,306
|
|
|||||
Asset impairments
|
|
74
|
|
|
261
|
|
|
497
|
|
|
127
|
|
|
148
|
|
|||||
Adjusted EBITDA
|
|
$
|
145,689
|
|
|
$
|
133,057
|
|
|
$
|
148,223
|
|
|
$
|
125,020
|
|
|
$
|
150,285
|
|
|
|
Year
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net cash provided by operating activities
|
|
$
|
151,645
|
|
|
$
|
107,942
|
|
|
$
|
144,468
|
|
|
$
|
88,105
|
|
|
$
|
100,626
|
|
Less: Purchases of property and equipment
|
|
(57,852
|
)
|
|
(85,586
|
)
|
|
(76,594
|
)
|
|
(76,811
|
)
|
|
(51,593
|
)
|
|||||
Free cash flow
|
|
$
|
93,793
|
|
|
$
|
22,356
|
|
|
$
|
67,874
|
|
|
$
|
11,294
|
|
|
$
|
49,033
|
|
|
|
Year
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net operating profit after taxes (NOPAT)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
|
$
|
76,650
|
|
|
$
|
75,096
|
|
|
$
|
101,746
|
|
|
$
|
90,688
|
|
|
$
|
119,787
|
|
Add: Rent expense
(1)
|
|
67,416
|
|
|
62,369
|
|
|
57,605
|
|
|
50,289
|
|
|
48,543
|
|
|||||
Add: Interest income
|
|
94
|
|
|
494
|
|
|
415
|
|
|
375
|
|
|
310
|
|
|||||
Less: Depreciation on capitalized operating leases
(2)
|
|
(17,185
|
)
|
|
(16,203
|
)
|
|
(14,265
|
)
|
|
(13,095
|
)
|
|
(12,072
|
)
|
|||||
Less: Income taxes
(3)
|
|
(41,933
|
)
|
|
(40,384
|
)
|
|
(48,900
|
)
|
|
(43,827
|
)
|
|
(54,358
|
)
|
|||||
NOPAT
|
|
$
|
85,042
|
|
|
$
|
81,372
|
|
|
$
|
96,601
|
|
|
$
|
84,430
|
|
|
$
|
102,210
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average invested capital
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity
|
|
$
|
160,320
|
|
|
$
|
222,339
|
|
|
$
|
256,907
|
|
|
$
|
225,220
|
|
|
$
|
193,697
|
|
Less: Cash greater than target
(4)
|
|
—
|
|
|
—
|
|
|
(37,319
|
)
|
|
(29,622
|
)
|
|
(62,627
|
)
|
|||||
Add: Long-term debt
(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
112
|
|
|||||
Add: Capitalized operating lease obligations
(6)
|
|
539,328
|
|
|
498,952
|
|
|
460,840
|
|
|
402,312
|
|
|
388,344
|
|
|||||
Total invested capital at end of period
|
|
$
|
699,648
|
|
|
$
|
721,291
|
|
|
$
|
680,428
|
|
|
$
|
597,912
|
|
|
$
|
519,526
|
|
Average invested capital
(7)
|
|
$
|
699,576
|
|
|
$
|
726,756
|
|
|
$
|
639,118
|
|
|
$
|
560,133
|
|
|
$
|
475,159
|
|
Return on invested capital (ROIC)
(8)
|
|
12.2
|
%
|
|
11.2
|
%
|
|
15.1
|
%
|
|
15.1
|
%
|
|
21.5
|
%
|
•
|
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;
|
•
|
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;
|
•
|
Pending or unforeseen litigation and the potential for adverse publicity associated with litigation;
|
•
|
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;
|
•
|
The vulnerability of our management information systems to attacks by hackers or other cyber threats that could compromise the security of our systems or disrupt our business;
|
•
|
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 of quarter 2015, we replaced our nearly 20-year-old legacy computer systems with a new vertically integrated Enterprise Resource Planning (ERP) system. We completed our ERP implementation by the end of the first quarter of 2016. Implementation issues negatively affected fourth-quarter 2015 net sales and profits, and to a lesser degree, first-quarter and second-quarter 2016 net sales and profits. The new operating platform enables operational efficiencies, improved customer convenience and supports the growth of our business.
|
•
|
Net sales for
2016
increased
8%
to
$1.31 billion
, compared with
$1.21 billion
in the prior year. Company-Controlled comparable sales increased
1%
and sales from
52
net new stores opened in the past 12 months added 7 percentage points (ppt.) of growth in 2016.
|
•
|
On a trailing twelve-month basis, sales per store (for stores open at least one year) of
$2.4 million
were consistent with the prior-year comparable period.
|
•
|
Operating income for
2016
increased
2%
to
$77 million
, or
5.8%
of net sales, compared with
$75 million
, or
6.2%
of net sales, for the same period one year ago. The increase in operating income was attributable to: (i) the
8% increase in net sales and a 0.8
|
•
|
Net income
increased
2%
to
$51.4 million
, or
$1.10
per diluted share, compared with net income of
$50.5 million
, or
$0.97
per diluted share in
2015
.
|
•
|
We achieved a return on invested capital (ROIC) of
12.2%
in
2016
.
|
•
|
Cash provided by operating activities in
2016
totaled
$152 million
, compared with
$108 million
for the prior year. With the completion of our ERP implementation, investing activities for 2016 decreased to $58 million of property and equipment purchases, compared with $86 million in 2015.
|
•
|
At
December 31, 2016
, cash, cash equivalents and marketable debt securities totaled
$12 million
compared with
$36 million
at
January 2, 2016
, and we had no borrowings under our $150 million revolving credit facility.
|
•
|
In
2016
, we repurchased
5.9 million
shares of our common stock under our Board-approved share repurchase program at a cost of
$125 million
(
$21.02
per share). Effective as of July 3, 2016, our Board approved an increase in our total remaining share repurchase authorization to
$300 million
. As of
December 31, 2016
, the remaining authorization under our Board-approved share repurchase program was
$245 million
.
|
|
|
2016
|
|
2015
|
|
2014
|
|||
Company-Controlled channel
|
|
97.7
|
%
|
|
97.6
|
%
|
|
97.3
|
%
|
Wholesale/Other channel
|
|
2.3
|
%
|
|
2.4
|
%
|
|
2.7
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Net Sales Increase/(Decrease)
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Retail comparable-store sales
(1)
|
|
0
|
%
|
|
3
|
%
|
|
12
|
%
|
Online and Phone
(1)
|
|
25
|
%
|
|
(4
|
%)
|
|
9
|
%
|
Company-Controlled comparable sales change
(1)
|
|
1
|
%
|
|
3
|
%
|
|
12
|
%
|
Net opened/closed stores and 53
rd
week in 2014
|
|
7
|
%
|
|
2
|
%
|
|
10
|
%
|
Total Company-Controlled channel
|
|
8
|
%
|
|
5
|
%
|
|
22
|
%
|
Wholesale/Other channel
|
|
5
|
%
|
|
(9
|
%)
|
|
(13
|
%)
|
Total net sales change
|
|
8
|
%
|
|
5
|
%
|
|
20
|
%
|
|
|
2016
|
|
2015
|
|
2014
(3)
|
||||||
Average sales per store
(1)
($ in thousands)
|
|
$
|
2,364
|
|
|
$
|
2,377
|
|
|
$
|
2,327
|
|
Average sales per square foot
(1)
|
|
$
|
937
|
|
|
$
|
980
|
|
|
$
|
1,025
|
|
Stores > $1 million in net sales
(1)
|
|
98
|
%
|
|
99
|
%
|
|
98
|
%
|
|||
Stores > $2 million in net sales
(1)
|
|
61
|
%
|
|
62
|
%
|
|
59
|
%
|
|||
Average revenue per mattress unit – Company-Controlled channel
(2)
|
|
$
|
4,046
|
|
|
$
|
4,028
|
|
|
$
|
3,671
|
|
|
|
2016
|
|
2015
|
|
2014
|
|||
Beginning of period
|
|
488
|
|
|
463
|
|
|
440
|
|
Opened
|
|
72
|
|
|
38
|
|
|
57
|
|
Closed
|
|
(20
|
)
|
|
(13
|
)
|
|
(34
|
)
|
End of period
|
|
540
|
|
|
488
|
|
|
463
|
|
|
|
2016
|
|
2015
|
||||
Total cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
151.6
|
|
|
$
|
107.9
|
|
Investing activities
|
|
(42.7
|
)
|
|
(44.3
|
)
|
||
Financing activities
|
|
(118.4
|
)
|
|
(94.7
|
)
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(9.4
|
)
|
|
$
|
(31.0
|
)
|
|
|
Payments Due by Period
(1)
|
||||||||||||||||||
|
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
> 5 Years
|
||||||||||
Operating leases
(2)
|
|
$
|
392,397
|
|
|
$
|
66,493
|
|
|
$
|
108,286
|
|
|
$
|
80,379
|
|
|
$
|
137,239
|
|
Purchase commitments
|
|
5,500
|
|
|
5,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
397,897
|
|
|
$
|
71,993
|
|
|
$
|
108,286
|
|
|
$
|
80,379
|
|
|
$
|
137,239
|
|
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 December 31, 2016, would have affected net income by approximately $801,000 in 2016. |
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results
Differ From Assumptions |
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 December 31, 2016, would have affected net income by approximately $578,000 in 2016.
|
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 December 31, 2016 would have affected net income by approximately $1.0 million in 2016. |
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,609
|
|
|
$
|
20,994
|
|
Marketable debt securities – current
|
—
|
|
|
6,567
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $884 and $1,039, respectively
|
19,705
|
|
|
29,002
|
|
||
Inventories
|
75,026
|
|
|
86,600
|
|
||
Income taxes receivable
|
—
|
|
|
15,284
|
|
||
Prepaid expenses
|
8,705
|
|
|
10,207
|
|
||
Other current assets
|
23,282
|
|
|
13,737
|
|
||
Total current assets
|
138,327
|
|
|
182,391
|
|
||
|
|
|
|
||||
Non-current assets:
|
|
|
|
|
|||
Marketable debt securities – non-current
|
—
|
|
|
8,553
|
|
||
Property and equipment, net
|
208,367
|
|
|
204,376
|
|
||
Goodwill and intangible assets, net
|
80,817
|
|
|
83,344
|
|
||
Deferred income taxes
|
4,667
|
|
|
3,036
|
|
||
Other non-current assets
|
24,988
|
|
|
19,197
|
|
||
Total assets
|
$
|
457,166
|
|
|
$
|
500,897
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
105,375
|
|
|
$
|
103,941
|
|
Customer prepayments
|
26,207
|
|
|
51,473
|
|
||
Accrued sales returns
|
15,222
|
|
|
20,562
|
|
||
Compensation and benefits
|
19,455
|
|
|
15,670
|
|
||
Taxes and withholding
|
23,430
|
|
|
9,856
|
|
||
Other current liabilities
|
35,628
|
|
|
23,447
|
|
||
Total current liabilities
|
225,317
|
|
|
224,949
|
|
||
|
|
|
|
||||
Non-current liabilities:
|
|
|
|
|
|||
Other non-current liabilities
|
71,529
|
|
|
53,609
|
|
||
Total liabilities
|
296,846
|
|
|
278,558
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 142,500 shares authorized, 43,569 and 49,402 shares issued and outstanding, respectively
|
436
|
|
|
494
|
|
||
Additional paid-in capital
|
—
|
|
|
—
|
|
||
Retained earnings
|
159,884
|
|
|
221,859
|
|
||
Accumulated other comprehensive loss
|
—
|
|
|
(14
|
)
|
||
Total shareholders’ equity
|
160,320
|
|
|
222,339
|
|
||
Total liabilities and shareholders’ equity
|
$
|
457,166
|
|
|
$
|
500,897
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
$
|
1,311,291
|
|
|
$
|
1,213,699
|
|
|
$
|
1,156,757
|
|
Cost of sales
|
501,131
|
|
|
472,948
|
|
|
449,907
|
|
|||
Gross profit
|
810,160
|
|
|
740,751
|
|
|
706,850
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Sales and marketing
|
595,845
|
|
|
550,475
|
|
|
512,007
|
|
|||
General and administrative
|
109,674
|
|
|
99,209
|
|
|
84,864
|
|
|||
Research and development
|
27,991
|
|
|
15,971
|
|
|
8,233
|
|
|||
Total operating expenses
|
733,510
|
|
|
665,655
|
|
|
605,104
|
|
|||
Operating income
|
76,650
|
|
|
75,096
|
|
|
101,746
|
|
|||
Other (expense) income, net
|
(717
|
)
|
|
334
|
|
|
362
|
|
|||
Income before income taxes
|
75,933
|
|
|
75,430
|
|
|
102,108
|
|
|||
Income tax expense
|
24,516
|
|
|
24,911
|
|
|
34,134
|
|
|||
Net income
|
$
|
51,417
|
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
|
|
|
|
|
||||||
Basic net income per share:
|
|
|
|
|
|
|
|
|
|||
Net income per share – basic
|
$
|
1.11
|
|
|
$
|
0.99
|
|
|
$
|
1.27
|
|
Weighted-average shares – basic
|
46,154
|
|
|
51,252
|
|
|
53,452
|
|
|||
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|||
Net income per share – diluted
|
$
|
1.10
|
|
|
$
|
0.97
|
|
|
$
|
1.25
|
|
Weighted-average shares – diluted
|
46,902
|
|
|
52,101
|
|
|
54,193
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
|
$
|
51,417
|
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
Other comprehensive income (loss) – unrealized gain (loss) on available-for-sale marketable debt securities, net of income tax
|
|
14
|
|
|
20
|
|
|
(47
|
)
|
|||
Comprehensive income
|
|
$
|
51,431
|
|
|
$
|
50,539
|
|
|
$
|
67,927
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
|
Total
|
|||||||||||||
Shares
|
|
Amount
|
||||||||||||||||||||
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
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
51,417
|
|
|
—
|
|
|
51,417
|
|
|||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unrealized gain on available-for-sale marketable debt securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|||||
Exercise of common stock options
|
188
|
|
|
2
|
|
|
2,296
|
|
|
—
|
|
|
—
|
|
|
2,298
|
|
|||||
Tax effect from stock-based compensation
|
—
|
|
|
—
|
|
|
(1,016
|
)
|
|
—
|
|
|
—
|
|
|
(1,016
|
)
|
|||||
Stock-based compensation
|
11
|
|
|
—
|
|
|
11,961
|
|
|
—
|
|
|
—
|
|
|
11,961
|
|
|||||
Repurchases of common stock
|
(6,032
|
)
|
|
(60
|
)
|
|
(13,241
|
)
|
|
(113,392
|
)
|
|
—
|
|
|
(126,693
|
)
|
|||||
Balance at December 31, 2016
|
43,569
|
|
|
$
|
436
|
|
|
$
|
—
|
|
|
$
|
159,884
|
|
|
$
|
—
|
|
|
$
|
160,320
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
51,417
|
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
57,172
|
|
|
47,630
|
|
|
39,809
|
|
|||
Stock-based compensation
|
11,961
|
|
|
10,290
|
|
|
6,798
|
|
|||
Net loss on disposals and impairments of assets
|
27
|
|
|
190
|
|
|
492
|
|
|||
Excess tax benefits from stock-based compensation
|
(517
|
)
|
|
(2,182
|
)
|
|
(1,163
|
)
|
|||
Deferred income taxes
|
(1,640
|
)
|
|
11,924
|
|
|
(311
|
)
|
|||
Gain on sale of non-marketable equity securities
|
—
|
|
|
(6,891
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of effect of acquisition:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
9,297
|
|
|
(9,259
|
)
|
|
(4,717
|
)
|
|||
Inventories
|
11,574
|
|
|
(33,065
|
)
|
|
(13,383
|
)
|
|||
Income taxes
|
25,119
|
|
|
(13,943
|
)
|
|
(4,314
|
)
|
|||
Prepaid expenses and other assets
|
(2,195
|
)
|
|
8,680
|
|
|
(9,973
|
)
|
|||
Accounts payable
|
(4,965
|
)
|
|
19,130
|
|
|
14,340
|
|
|||
Customer prepayments
|
(25,266
|
)
|
|
22,735
|
|
|
13,334
|
|
|||
Accrued compensation and benefits
|
2,808
|
|
|
(17,493
|
)
|
|
17,735
|
|
|||
Other taxes and withholding
|
2,723
|
|
|
135
|
|
|
2,584
|
|
|||
Other accruals and liabilities
|
14,130
|
|
|
19,542
|
|
|
15,263
|
|
|||
Net cash provided by operating activities
|
151,645
|
|
|
107,942
|
|
|
144,468
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(57,852
|
)
|
|
(85,586
|
)
|
|
(76,594
|
)
|
|||
Proceeds from marketable debt securities
|
21,053
|
|
|
127,664
|
|
|
54,506
|
|
|||
Investments in marketable debt securities
|
(5,968
|
)
|
|
(29,299
|
)
|
|
(90,349
|
)
|
|||
Proceeds from sales of property and equipment
|
92
|
|
|
72
|
|
|
5
|
|
|||
Acquisition of business
|
—
|
|
|
(70,018
|
)
|
|
—
|
|
|||
Proceeds from (investment in) non-marketable equity securities
|
—
|
|
|
12,891
|
|
|
(1,500
|
)
|
|||
Increase in restricted cash
|
—
|
|
|
—
|
|
|
(500
|
)
|
|||
Net cash used in investing activities
|
(42,675
|
)
|
|
(44,276
|
)
|
|
(114,432
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||
Repurchases of common stock
|
(126,693
|
)
|
|
(100,201
|
)
|
|
(46,492
|
)
|
|||
Net increase in short-term borrowings
|
5,932
|
|
|
1,097
|
|
|
6,192
|
|
|||
Proceeds from issuance of common stock
|
2,298
|
|
|
2,976
|
|
|
2,873
|
|
|||
Excess tax benefits from stock-based compensation
|
517
|
|
|
2,182
|
|
|
1,163
|
|
|||
Debt issuance costs
|
(409
|
)
|
|
(721
|
)
|
|
—
|
|
|||
Net cash used in financing activities
|
(118,355
|
)
|
|
(94,667
|
)
|
|
(36,264
|
)
|
|||
|
|
|
|
|
|
||||||
Net decrease in cash and cash equivalents
|
(9,385
|
)
|
|
(31,001
|
)
|
|
(6,228
|
)
|
|||
Cash and cash equivalents, at beginning of period
|
20,994
|
|
|
51,995
|
|
|
58,223
|
|
|||
Cash and cash equivalents, at end of period
|
$
|
11,609
|
|
|
$
|
20,994
|
|
|
$
|
51,995
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||||||
Income taxes (received) paid
|
$
|
(653
|
)
|
|
$
|
26,681
|
|
|
$
|
38,474
|
|
Interest paid
|
$
|
608
|
|
|
$
|
96
|
|
|
$
|
49
|
|
Purchases of property and equipment included in accounts payable
|
$
|
5,517
|
|
|
$
|
5,051
|
|
|
$
|
5,802
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
10,028
|
|
|
$
|
5,824
|
|
|
$
|
4,153
|
|
Additions charged to costs and expenses for current-year sales
|
9,034
|
|
|
9,368
|
|
|
9,437
|
|
|||
Deductions from reserves
|
(10,016
|
)
|
|
(6,486
|
)
|
|
(8,118
|
)
|
|||
Changes in liability for pre-existing warranties during the current year, including expirations
|
(413
|
)
|
|
1,322
|
|
|
352
|
|
|||
Balance at end of period
|
$
|
8,633
|
|
|
$
|
10,028
|
|
|
$
|
5,824
|
|
•
|
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; and
|
•
|
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, websites, 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.
|
|
As Adjusted
|
|
|
As Reported
|
|||
Current assets:
|
|
|
|
||||
Deferred income taxes
|
$
|
—
|
|
|
$
|
15,535
|
|
Non-current assets:
|
|
|
|
||||
Deferred income taxes
|
$
|
3,036
|
|
|
$
|
—
|
|
Non-current liabilities:
|
|
|
|
||||
Deferred income taxes
|
$
|
—
|
|
|
$
|
12,499
|
|
|
|
||
Accounts receivable
|
$
|
105
|
|
Prepaid expenses
|
98
|
|
|
Property and equipment
|
91
|
|
|
Deferred income taxes
|
2,754
|
|
|
Goodwill
|
55,083
|
|
|
Intangible assets
|
13,619
|
|
|
Total assets acquired
|
71,750
|
|
|
Accounts payable
|
269
|
|
|
Compensation and benefits
|
322
|
|
|
Other non-current 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 2, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Corporate bonds
|
$
|
7,532
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
7,513
|
|
U.S. Agency bonds
|
2,497
|
|
|
—
|
|
|
(1
|
)
|
|
2,496
|
|
||||
Municipal bonds
|
5,114
|
|
|
—
|
|
|
(3
|
)
|
|
5,111
|
|
||||
|
$
|
15,143
|
|
|
$
|
—
|
|
|
$
|
(23
|
)
|
|
$
|
15,120
|
|
|
|
|
January 2, 2016
|
||||||||
|
|
|
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Marketable debt securities – current (due in less than one year)
|
|
|
|
|
$
|
6,575
|
|
|
$
|
6,567
|
|
Marketable debt securities – non-current (due in one to two years)
|
|
|
|
|
8,568
|
|
|
8,553
|
|
||
|
|
|
|
|
$
|
15,143
|
|
|
$
|
15,120
|
|
|
December 31,
2016 |
|
January 2,
2016 |
||||
Raw materials
|
$
|
7,973
|
|
|
$
|
9,349
|
|
Work in progress
|
72
|
|
|
48
|
|
||
Finished goods
|
66,981
|
|
|
77,203
|
|
||
|
$
|
75,026
|
|
|
$
|
86,600
|
|
|
|
December 31,
2016 |
|
January 2,
2016 |
||||
Land
|
|
$
|
1,999
|
|
|
$
|
1,999
|
|
Leasehold improvements
|
|
97,600
|
|
|
91,184
|
|
||
Furniture and equipment
|
|
81,541
|
|
|
68,276
|
|
||
Production machinery, computer equipment and software
|
|
209,900
|
|
|
191,482
|
|
||
Property under capital lease
|
|
—
|
|
|
1,077
|
|
||
Construction in progress
|
|
13,823
|
|
|
3,540
|
|
||
Less: Accumulated depreciation and amortization
|
|
(196,496
|
)
|
|
(153,182
|
)
|
||
|
|
$
|
208,367
|
|
|
$
|
204,376
|
|
|
Twelve Months Ended
|
|
Twelve Months Ended
|
|||||||||||||
|
December 31, 2016
|
|
January 2, 2016
|
|||||||||||||
|
Goodwill
|
|
Indefinite-Lived
Trade Name/ Trademarks |
|
Goodwill
|
|
Indefinite-Lived
Trade Name/ Trademarks |
|||||||||
Beginning balance
|
$
|
64,046
|
|
|
$
|
1,396
|
|
|
$
|
8,963
|
|
|
$
|
1,396
|
|
|
SleepIQ LABS
|
—
|
|
|
—
|
|
|
55,083
|
|
|
—
|
|
|||||
Ending balance
|
$
|
64,046
|
|
|
$
|
1,396
|
|
|
$
|
64,046
|
|
|
$
|
1,396
|
|
|
December 31, 2016
|
|
January 2, 2016
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Developed technologies
(1)
|
$
|
18,851
|
|
|
$
|
4,524
|
|
|
$
|
18,851
|
|
|
$
|
2,342
|
|
Customer relationships
|
2,413
|
|
|
1,365
|
|
|
2,413
|
|
|
1,020
|
|
||||
Trade names/trademarks
|
101
|
|
|
101
|
|
|
101
|
|
|
101
|
|
||||
|
$
|
21,365
|
|
|
$
|
5,990
|
|
|
$
|
21,365
|
|
|
$
|
3,463
|
|
Facility Rents:
|
|
2016
|
|
2015
|
|
2014
|
||||||
Minimum rents
|
|
$
|
59,002
|
|
|
$
|
52,650
|
|
|
$
|
47,754
|
|
Contingent rents
|
|
3,099
|
|
|
5,168
|
|
|
6,241
|
|
|||
Total
|
|
$
|
62,101
|
|
|
$
|
57,818
|
|
|
$
|
53,995
|
|
|
|
|
|
|
|
|
||||||
Equipment Rents
|
|
$
|
5,316
|
|
|
$
|
4,362
|
|
|
$
|
3,609
|
|
2017
|
|
$
|
66,493
|
|
2018
|
|
58,964
|
|
|
2019
|
|
49,322
|
|
|
2020
|
|
42,862
|
|
|
2021
|
|
37,517
|
|
|
Thereafter
|
|
137,239
|
|
|
Total future minimum lease payments
|
|
$
|
392,397
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Stock options
|
|
$
|
2,281
|
|
|
$
|
2,634
|
|
|
$
|
2,125
|
|
Stock awards
|
|
9,680
|
|
|
7,656
|
|
|
4,673
|
|
|||
Total stock-based compensation expense
(1)
|
|
11,961
|
|
|
10,290
|
|
|
6,798
|
|
|||
Income tax benefit
|
|
3,947
|
|
|
3,413
|
|
|
2,284
|
|
|||
Total stock-based compensation expense, net of tax
|
|
$
|
8,014
|
|
|
$
|
6,877
|
|
|
$
|
4,514
|
|
|
|
Stock
Options
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
Balance at January 2, 2016
|
|
1,388
|
|
|
$
|
18.44
|
|
|
5.3
|
|
$
|
7,366
|
|
Granted
|
|
299
|
|
|
19.19
|
|
|
|
|
|
|
||
Exercised
|
|
(188
|
)
|
|
12.21
|
|
|
|
|
|
|
||
Canceled/Forfeited
|
|
(145
|
)
|
|
25.71
|
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
1,354
|
|
|
$
|
18.70
|
|
|
5.9
|
|
$
|
7,541
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2016
|
|
927
|
|
|
$
|
17.40
|
|
|
4.6
|
|
$
|
6,264
|
|
|
|
|
|
|
|
|
|
|
|||||
Vested and expected to vest at December 31, 2016
|
|
1,315
|
|
|
$
|
18.61
|
|
|
5.9
|
|
$
|
7,442
|
|
(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.
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Weighted-average grant date fair value of stock options granted
|
|
$
|
8.85
|
|
|
$
|
15.94
|
|
|
$
|
9.33
|
|
Total intrinsic value (at exercise) of stock options exercised
|
|
$
|
2,088
|
|
|
$
|
4,592
|
|
|
$
|
2,478
|
|
Valuation Assumptions
|
|
2016
|
|
2015
|
|
2014
|
|
Expected dividend yield
|
|
0
|
%
|
|
NA
|
|
NA
|
Expected volatility
|
|
50
|
%
|
|
NA
|
|
NA
|
Risk-free interest rate
|
|
1.8
|
%
|
|
NA
|
|
NA
|
Valuation Assumptions
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected dividend yield
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility
|
|
50
|
%
|
|
54
|
%
|
|
58
|
%
|
Risk-free interest rate
|
|
1.4
|
%
|
|
1.6
|
%
|
|
1.8
|
%
|
Expected term (in years)
|
|
5.2
|
|
|
5.2
|
|
|
5.3
|
|
|
|
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 2, 2016
|
|
454
|
|
|
$23.14
|
|
710
|
|
|
$22.01
|
||
Granted
|
|
289
|
|
|
19.78
|
|
|
347
|
|
|
18.84
|
|
Vested
|
|
(189
|
)
|
|
24.55
|
|
|
(52
|
)
|
|
24.57
|
|
Canceled/Forfeited
|
|
(24
|
)
|
|
21.34
|
|
|
(106
|
)
|
|
20.24
|
|
Outstanding at December 31, 2016
|
|
530
|
|
|
$20.83
|
|
899
|
|
|
$20.87
|
||
|
|
|
|
|
|
|
|
|
Valuation Assumptions
|
|
2016
|
|
2015
|
|
2014
|
Expected dividend yield
|
|
NA
|
|
NA
|
|
0%
|
Expected volatility
|
|
NA
|
|
NA
|
|
58%
|
Risk-free interest rate
|
|
NA
|
|
NA
|
|
0.9%
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Amount repurchased under Board-approved share repurchase program
|
|
$
|
125,000
|
|
|
$
|
98,446
|
|
|
$
|
45,044
|
|
Amount repurchased in connection with the vesting of employee restricted stock grants
|
|
1,693
|
|
|
1,755
|
|
|
1,448
|
|
|||
Total amount repurchased
|
|
$
|
126,693
|
|
|
$
|
100,201
|
|
|
$
|
46,492
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
51,417
|
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
|
|
|
|
|
||||||
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Basic weighted-average shares outstanding
|
46,154
|
|
|
51,252
|
|
|
53,452
|
|
|||
Dilutive effect of stock-based awards
|
748
|
|
|
849
|
|
|
741
|
|
|||
Diluted weighted-average shares outstanding
|
46,902
|
|
|
52,101
|
|
|
54,193
|
|
|||
|
|
|
|
|
|
||||||
Net income per share – basic
|
$
|
1.11
|
|
|
$
|
0.99
|
|
|
$
|
1.27
|
|
Net income per share – diluted
|
$
|
1.10
|
|
|
$
|
0.97
|
|
|
$
|
1.25
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Interest expense
|
(811
|
)
|
|
(160
|
)
|
|
(53
|
)
|
|||
Interest income
|
$
|
94
|
|
|
$
|
494
|
|
|
415
|
|
|
Other (expense) income, net
|
$
|
(717
|
)
|
|
$
|
334
|
|
|
$
|
362
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
21,634
|
|
|
$
|
7,272
|
|
|
$
|
29,484
|
|
State
|
|
5,289
|
|
|
3,870
|
|
|
4,161
|
|
|||
|
|
26,923
|
|
|
11,142
|
|
|
33,645
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
(105
|
)
|
|
13,567
|
|
|
747
|
|
|||
State
|
|
(2,302
|
)
|
|
202
|
|
|
(258
|
)
|
|||
|
|
(2,407
|
)
|
|
13,769
|
|
|
489
|
|
|||
Income tax expense
|
|
$
|
24,516
|
|
|
$
|
24,911
|
|
|
$
|
34,134
|
|
|
|
2016
|
|
2015
|
|
2014
|
|||
Statutory federal income tax
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
|
2.6
|
|
|
3.0
|
|
|
2.5
|
|
Manufacturing deduction
|
|
(3.3
|
)
|
|
(1.7
|
)
|
|
(3.3
|
)
|
Changes in unrecognized tax benefits
|
|
1.2
|
|
|
0.3
|
|
|
0.3
|
|
Non-taxable acquisition-related transactions
|
|
—
|
|
|
(2.6
|
)
|
|
—
|
|
Other
|
|
(3.2
|
)
|
|
(1.0
|
)
|
|
(1.1
|
)
|
Effective income tax rate
|
|
32.3
|
%
|
|
33.0
|
%
|
|
33.4
|
%
|
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Stock-based compensation
|
|
$
|
9,834
|
|
|
$
|
8,756
|
|
Deferred rent and lease incentives
|
|
8,388
|
|
|
6,977
|
|
||
Warranty and returns liabilities
|
|
7,948
|
|
|
10,817
|
|
||
Net operating loss carryforwards and credits
|
|
6,368
|
|
|
7,847
|
|
||
Compensation and benefits
|
|
4,115
|
|
|
3,788
|
|
||
Other
|
|
5,264
|
|
|
4,561
|
|
||
Total gross deferred tax assets
|
|
41,917
|
|
|
42,746
|
|
||
Valuation allowance
|
|
(620
|
)
|
|
(1,441
|
)
|
||
Total deferred tax assets after valuation allowance
|
|
41,297
|
|
|
41,305
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Property and equipment
|
|
27,049
|
|
|
26,330
|
|
||
Deferred revenue
|
|
3,279
|
|
|
5,598
|
|
||
Other
|
|
6,302
|
|
|
6,341
|
|
||
Total gross deferred tax liabilities
|
|
36,630
|
|
|
38,269
|
|
||
Net deferred tax assets
|
|
$
|
4,667
|
|
|
$
|
3,036
|
|
|
|
Federal and State Tax
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning balance
|
|
$
|
2,077
|
|
|
$
|
742
|
|
|
$
|
474
|
|
Increases related to current-year tax positions
|
|
326
|
|
|
1,277
|
|
|
172
|
|
|||
Increases related to prior-year tax positions
|
|
1,594
|
|
|
113
|
|
|
110
|
|
|||
Lapse of statute of limitations
|
|
(333
|
)
|
|
(55
|
)
|
|
(14
|
)
|
|||
Settlements with taxing authorities
|
|
(204
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
|
$
|
3,460
|
|
|
$
|
2,077
|
|
|
$
|
742
|
|
2016
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fiscal
Year
|
||||||||||
Net sales
|
|
$
|
352,980
|
|
|
$
|
276,878
|
|
|
$
|
367,988
|
|
|
$
|
313,445
|
|
|
$
|
1,311,291
|
|
Gross profit
|
|
209,074
|
|
|
171,261
|
|
|
232,343
|
|
|
197,482
|
|
|
810,160
|
|
|||||
Operating income
|
|
19,898
|
|
|
2,396
|
|
|
39,044
|
|
|
15,312
|
|
|
76,650
|
|
|||||
Net income
|
|
12,969
|
|
|
1,416
|
|
|
25,745
|
|
|
11,287
|
|
|
51,417
|
|
|||||
Net income per share – diluted
|
|
$
|
0.27
|
|
|
$
|
0.03
|
|
|
$
|
0.56
|
|
|
$
|
0.25
|
|
|
$
|
1.10
|
|
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
|
|
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 Mark A. Kimball dated April 22, 1999
|
14.
|
Select Comfort Corporation Executive Physical Plan
|
15.
|
Summary of Executive Tax and Financial Planning Program
|
16.
|
Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
17.
|
First Amendment to Amended and Restated Select Comfort Corporation Executive Severance Pay Plan
|
18.
|
Summary of Non-Employee Director Compens
ation
|
|
|
SELECT COMFORT CORPORATION
|
|
||
|
|
(Registrant)
|
|
||
|
|
|
|
||
Dated:
|
February 24, 2017
|
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 22, 2017
|
Jean-Michel Valette
|
|
|
|
|
|
|
|
|
|
/s/ Shelly R. Ibach
|
|
Director
|
|
February 22, 2017
|
Shelly R. Ibach
|
|
|
|
|
|
|
|
|
|
/s/ Daniel I. Alegre
|
|
Director
|
|
February 21, 2017
|
Daniel I. Alegre
|
|
|
|
|
|
|
|
|
|
/s/ Stephen L. Gulis, Jr.
|
|
Director
|
|
February 22, 2017
|
Stephen L. Gulis, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Harrison
|
|
Director
|
|
February 19, 2017
|
Michael J. Harrison
|
|
|
|
|
|
|
|
|
|
/s/ Brenda J. Lauderback
|
|
Director
|
|
February 18, 2017
|
Brenda J. Lauderback
|
|
|
|
|
|
|
|
|
|
/s/ Barbara R. Matas
|
|
Director
|
|
February 19, 2017
|
Barbara R. Matas
|
|
|
|
|
|
|
|
|
|
/s/ Kathleen L. Nedorostek
|
|
Director
|
|
February 19, 2017
|
Kathleen L. Nedorostek
|
|
|
|
|
|
|
|
|
|
/s/ Vicki A. O'Meara
|
|
Director
|
|
February 22, 2017
|
Vicki A. O'Meara
|
|
|
|
|
|
|
|
|
|
/s/ Michael A. Peel
|
|
Director
|
|
February 21, 2017
|
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
|
|
Lease Agreement between DCI 1001 Minneapolis Venture, LLC, as Landlord, and Select Comfort Corporation, as Tenant, dated October 21, 2016
|
|
Filed herewith
|
|
|
|
|
|
10.13
|
|
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)
|
|
|
|
|
|
10.14
|
|
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)
|
|
|
|
|
|
10.15
|
|
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)
|
|
|
|
|
|
10.16
|
|
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)
|
|
|
|
|
|
10.17
|
|
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)
|
|
|
|
|
|
10.18
|
|
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)
|
|
|
|
|
|
10.19
|
|
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)
|
|
|
|
|
|
10.20
|
|
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)
|
|
|
|
|
|
10.21
|
|
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
|
|
|
|
|
|
10.22
|
|
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)
|
|
|
|
|
|
10.23
|
|
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)
|
|
|
|
|
|
10.24
|
|
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
|
|
|
|
|
|
10.25
|
|
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
|
|
Filed herewith
|
|
|
|
|
|
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
|
|
Incorporated by reference to Exhibit 10.30 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 2, 2016 (File No. 0-25121)
|
|
|
|
|
|
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)
|
|
|
|
|
|
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)
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
Method of Filing
|
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
|
|
First Amendment Agreement to Credit and Security Agreement dated as of September 9, 2015 by and among Select Comfort Corporation, KeyBank National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and the other financial institutions from time to time party thereto
|
|
Incorporated by reference to Exhibit 10.1 contained in Select Comfort's Current Report on Form 8-K filed February 25, 2016 (File No. 0-25121)
|
|
|
|
|
|
21.1
|
|
Subsidiaries of the Company
|
|
Incorporated by reference to Exhibit 21.1 contained in Select Comfort's Annual Report on Form 10-K for the fiscal year ended January 2, 2016 (File No. 0-25121)
|
|
|
|
|
|
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 December 31, 2016, filed with the SEC on February 24, 2017, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets as of December 31, 2016 and January 2, 2016; (ii) Consolidated Statements of Operations for the years ended December 31, 2016, January 2, 2016 and January 3, 2015; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, January 2, 2016 and January 3, 2015; (iv) Consolidated Statements of Shareholders' Equity for the years ended December 31, 2016, January 2, 2016 and January 3, 2015; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2016, January 2, 2016 and January 3, 2015; 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
|
|
2016
|
|
2015
|
|
2014
|
||||||
Allowance for doubtful accounts
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
1,039
|
|
|
$
|
739
|
|
|
$
|
425
|
|
Additions charged to costs and expenses
|
|
1,224
|
|
|
1,577
|
|
|
729
|
|
|||
Deductions from reserves
|
|
(1,379
|
)
|
|
(1,277
|
)
|
|
(415
|
)
|
|||
Balance at end of period
|
|
$
|
884
|
|
|
$
|
1,039
|
|
|
$
|
739
|
|
|
|
|
|
|
|
|
||||||
Accrued sales returns
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
20,562
|
|
|
$
|
15,262
|
|
|
$
|
9,433
|
|
Additions charged to costs and expenses
|
|
71,958
|
|
|
84,265
|
|
|
78,890
|
|
|||
Deductions from reserves
|
|
(77,298
|
)
|
|
(78,965
|
)
|
|
(73,061
|
)
|
|||
Balance at end of period
|
|
$
|
15,222
|
|
|
$
|
20,562
|
|
|
$
|
15,262
|
|
(i)
|
all such work shall be done in accordance with a Work Letter and be made a part hereof and at Tenant's sole cost, risk, and expense and in accordance with all Legal Requirements, Insurance Requirements, Building Rules, and construction guidelines and standards of Landlord;
|
(ii)
|
all such work shall be performed in a good and workmanlike manner with labor and materials of such quality as Landlord may reasonably require;
|
(iii)
|
no such work shall be commenced until approved in writing by Landlord;
|
(iv)
|
all such work shall be performed in strict accordance with the plans and/or specifications previously approved by Landlord;
|
(v)
|
all such work shall be prosecuted diligently and continuously to completion;
|
(vi)
|
all such work shall be performed in a manner so as to minimize interference with the normal business operations of other tenants in the Building; the performance of Landlord's obligations under this Lease, any other lease for space in the Building, or any Financing Lien or Ground Lease covering or affecting all or any part of the Project; and any work being done in any other portion of the Project;
|
(vii)
|
Landlord may impose such conditions with respect to such work as Landlord deems reasonably appropriate, including, without limitation, (A) requiring Tenant to furnish Landlord with security for the payment of all costs to be incurred in connection with such work and (B) requiring Tenant or Tenant's contractor to maintain insurance against liabilities which may arise out of such work;
|
(viii)
|
such work shall be performed by contractors approved in writing by Landlord and, if requested by Landlord, any such contractor and all work to be performed by such contractor shall be fully bonded (with Landlord named as co-obligee) with companies and in amounts reasonably acceptable to Landlord in its sole discretion; and
|
(ix)
|
upon completion of any such work and upon Landlord's request, Tenant shall deliver to Landlord evidence of payment, contractors' affidavits, and full and final waivers of all liens for labor, services, or material.
|
1.
|
Definitions
.
For purposes of this Operating Expenses Exhibit, all terms defined in this Lease, or in other exhibits to this Lease, will be utilized herein without further definition. In addition, the following terms will, when delineated with initial capital letters, have the following respective definitions and meanings:
|
(e)
|
RU Factor.
The RU factor for the Premises will be a combined rate of 11.2578% as shown on Exhibit B-2.
|
2.
|
Payment
.
During the Lease Term, Tenant shall make a Monthly Operating Payment for the applicable period on the same day as Base Rent is due.
|
3.
|
Procedure
.
The following additional provisions shall apply to Paragraph 2 of this Operating Expense Exhibit:
|
4.
|
Tax Protests
.
Tenant is aware that the provisions of of the Minnesota Property Tax Code (that statute or any successor thereto being the “Protest Provision”) provides tenants with the right to protest ad valorem real estate taxes under certain circumstances. Because Tenant recognizes that (a) because of the size of the Building and the number of tenants who are or will be occupying space in the Building during the Lease Term, Tenant's share of any real estate tax increase will be relatively small and (b) the confusion which could result if several tenants filed a real estate tax protest with respect to the Building, Tenant waives its rights under the Protest Provision to the fullest extent allowed by law. In the event that Tenant's rights under the Protest Provision cannot be waived, Tenant agrees not to protest any valuation of the Building unless Tenant notifies Landlord in writing of Tenant's intent to do so and Landlord then fails to protest the valuation within thirty (30) days after Landlord receives Tenant's written notice. Tenant will have no standing to challenge the real estate taxes without obtaining Landlord’s written consent. In addition, if Tenant exercises the right to protest under the Protest Provision, Tenant shall pay all costs of such protest.
|
5.
|
Cap on Controllable Operating Expenses.
Operating expenses for controllable items (i.e. all expenses except taxes, insurance, utilities, electricity and any other item for which landlord does not have exclusive control to set pricing) shall not increase in any one calendar year by more than 4% (on a cumulative, compounding basis) over (i) the actual Operating Expenses incurred during any portion of such calendar year in which the Building is occupied to the extent ninety-five percent (95%) or more of the Rentable Square Feet within the Building or (ii) the Operating Expenses which would have been incurred had the Building been occupied to the extent of ninety-five percent (95%) of the Rentable Square Feet within the Building during the portion of that calendar year in
|
(a)
|
“Allowance”
means an amount not to exceed seventy-five dollars and fifty cents ($75.50) per square foot (“Tenant Improvement Allowance”) plus $1,100,000 to cover costs of common area improvements (e.g. food service, fitness and common area restroom improvements) requested by Tenant and shown on Tenant's approved plans, which shall be available to reimburse Tenant for the actual, documented cost of design and construction of the Improvements.
|
(b)
|
“
Basic Construction
of the Building” means the interior structure of the Building and all other improvements, fixtures, and facilities which are owned by Landlord and which are a part of the Building, as these exist on the date of this Lease.
|
(c)
|
“
Change Costs
” means all costs or expenses attributable to any change in the Construction Plans requested or approved by Tenant, including (i) any cost caused by direction of Tenant to omit any item of Work contained in the Construction Plans as previously approved by Tenant, (ii) any additional architectural or engineering services or Landlord requested modifications after approval of Construction Plans, (iii) any changes to materials in the process of fabrication, (iv) the cancellation or modification of supply or fabricating contracts, (v) the removal or alteration of any Work or any plans completed or in process as previously approved by Tenant, or (vi) any Tenant's Delays affecting the completion of the Work. Notwithstanding the foregoing, Tenant will not be responsible to reimburse Landlord for any costs that exceed the Tenant Improvement Allowance which are not previously approved by Tenant in writing, or any costs incurred due to Landlord delays or contractor mistakes.
|
(d)
|
“
Contractor
” means the contractor or contractors engaged by Landlord, as approved by Tenant pursuant to the Request For Proposal process (“RFP”), to perform the Work. Landlord agrees to work with Tenant during the RFP process in the selection of the contractor, or contractors to perform the build out work as approved by the parties.
|
(f)
|
“
Cost of the Work
” means the cost of (i) all materials and labor to be added to the Basic Construction of the Premises and common area improvements in order to complete the installation of the Initial Improvements in accordance with the Construction Plans and (ii) having the Space Plan and the Construction Plans prepared.
|
(g)
|
“
Space Plan
” means the set of design drawings that have been (i) prepared by Tenant’s Architect, (ii) approved by both Landlord and Tenant, and (iii) specifies the Tenant improvements to the Premises as requested by Tenant to be completed by Landlord pursuant to the terms and conditions of the Lease and this Exhibit E.
|
(h)
|
“
Architect
” means the Tenant’s Architect, to perform the functions of the Space Planner with respect to the Initial Improvements.
|
(i)
|
“
Tenant's Costs
” means that portion of the Cost of the Work in excess of the Tenant Improvement Allowance.
|
(j)
|
“
Tenant Delays
” means a delay in the completion of the Work as the probable result of (i) any failure by Tenant to approve the Construction Plans when due, (ii) any failure of Tenant to furnish Tenant's electrical, mechanical, and/or structural requirements when due, (iii) any change by Tenant in the Construction Plans as approved by Tenant, or any state of facts which gives rise to a change referred to in the definition of Change Costs or any changes resulting in a Change Cost as directly caused by Tenant, (iv) any other act or omission of Tenant, or a Tenant Related Party, including any violation of the provisions of the Lease or any delay in giving authorizations or approvals pursuant to this Work Letter, or (v) any other cause except a cause arising directly from a delay by Landlord or a Landlord Related Party. Tenant and Landlord agree to establish a mutually acceptable schedule of due dates for submission of plans and the required approval time frames to be attached to this Exhibit E as Exhibit E-1 as soon as reasonably available.
|
(k)
|
“
Work
” means all materials and labor to be added to the Basic Construction of the improvements in order to complete the installation of the Initial Improvements within the Premises for Tenant in accordance with the approved Construction Plans, including any modifications to the Building, any electrical or plumbing work required to meet Tenant's electrical and plumbing requirements, and any special air conditioning work required to be performed in the Premises.
|
(l)
|
“Working Days
” means all days of the week other than Saturday, Sunday, and legal holidays.
|
Name:
|
Spencer E. Mullee, DCI Technology Services, LLC
|
Address:
|
331 2nd Avenue South, Suite 100
|
|
Minneapolis, MN 55401
|
Phone:
|
612.424.8485
|
Name:
|
Mark E. Battis, Select Comfort Corporation
|
Address:
|
9800 59
th
Avenue North
|
|
Minneapolis, MN 55442
|
Phone:
|
763-551-6149
|
1.
|
Possession of the Premises was delivered to Tenant on: ___________________.
|
2.
|
The Rentable Square Footage of the Premises is: _____________________.
|
3.
|
The Rent Commencement Date is: ____________________.
|
4.
|
The First Lease Year is: _________________.
|
5.
|
The expiration of the Lease Term shall be: _____________________.
|
6
|
Tenant’s Proportionate Share is:
.
|
◦
|
CEO eligible for up to $15,000 per fiscal year of executive tax and financial planning services.
|
◦
|
Senior Vice Presidents eligible for up to $8,000 per fiscal year of executive tax and financial planning services.
|
◦
|
Reimbursable services include tax preparation and planning, financial planning, estate planning, employer stock & stock option planning and related legal fees. Money management fees and brokerage fees are not reimbursable.
|
◦
|
All amounts will be considered taxable wages to executives and will not be “grossed up” for any resulting taxes.
|
◦
|
Services must be performed, invoiced and turned in prior to the last payroll in the fiscal year of services provided.
|
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 24, 2017
|
|
|
|
|
|
|
|
|
|
/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 24, 2017
|
|
|
|
|
|
|
|
|
|
/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:
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
/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:
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
/s/ David R. Callen
|
|
|
|
David R. Callen
|
|
|
|
Senior Vice President and Chief Financial Officer
|