-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OSJHxuB0RSE3+lPrcildf5RAuIRxS1hIV73KR4Qr5WOfDgqB0iZ6O92mIG6pr5ha BXUx0ESBfCQ1A304dcaXOQ== 0000827187-04-000030.txt : 20040720 0000827187-04-000030.hdr.sgml : 20040720 20040720162313 ACCESSION NUMBER: 0000827187-04-000030 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040720 ITEM INFORMATION: FILED AS OF DATE: 20040720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SELECT COMFORT CORP CENTRAL INDEX KEY: 0000827187 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 410157886 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25121 FILM NUMBER: 04922266 BUSINESS ADDRESS: STREET 1: 6105 TRENTON LANE NORTH CITY: MINNEAPOLIS STATE: MN ZIP: 55442 BUSINESS PHONE: 7635517000 8-K 1 pr072004.txt 2004 2ND QUARTER EARNINGS RELEASE UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): JULY 20, 2004 SELECT COMFORT CORPORATION (Exact name of registrant as specified in its charter) MINNESOTA (State or other jurisdiction of incorporation or organization) 0-25121 41-1597886 (Commission File No.) (IRS Employer Identification No.) 6105 TRENTON LANE NORTH, MINNEAPOLIS, MINNESOTA 55442 (Address of principal executive offices) (Zip Code) (763) 551-7000 (Registrant's telephone number, including area code) ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 20, 2004, Select Comfort Corporation issued a press release announcing results for the second quarter ended July 3, 2004. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Current Report on Form 8-K, including the attached press release, is being furnished, and not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, or into any report or other filing under the Securities Exchange Act of 1934, as amended, except as otherwise expressly stated in any such filing. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SELECT COMFORT CORPORATION (Registrant) Dated: July 20, 2004 By: /s/Mark A. Kimball ------------------------------------- Title: Senior Vice President --------------------------- INDEX TO EXHIBITS The exhibit listed in this index is being furnished pursuant to Item 12 of Form 8-K and shall not be deemed "filed" for purposes of the Securities Exchange Act of 1934, as amended, or 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. EXHIBIT NO. DESCRIPTION OF EXHIBIT 99.1 Press Release, dated July 20, 2004 2 EX-99 2 pr072004ex99.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE CONTACT: Mark Kimball (763) 551-7070 Select Comfort Corporation mark.kimball@selectcomfort.com SELECT COMFORT CORPORATION REPORTS SECOND QUARTER EARNINGS PER SHARE OF $0.15 NET INCOME IS $5.9 MILLION ON SALES OF $124.7 MILLION MINNEAPOLIS, MINN. (July 20, 2004) - Select Comfort Corporation (NASDAQ: SCSS), the nation's leading bed retailer and creator of the Sleep Number(R) bed, today announced results for the second quarter ended July 3, 2004. The company reported its 12th consecutive quarterly profit with net income of $5.9 million, or $0.15 per diluted share, compared with net income of $4.8 million, or $0.12 per share in the second quarter of 2003. Second quarter 2004 net sales increased 22 percent to $124.7 million, versus second quarter 2003 net sales of $102.0 million. Same-store sales increased 14 percent. "We were pleased with the continued profit leverage in our business during the second quarter, which is traditionally a seasonally slower period," said Bill McLaughlin, chairman and chief executive officer. "We experienced double-digit revenue gains across all channels and strong earnings growth, and also made continued advancements during the quarter to drive our long-term growth. These included updating our product line and technology for further competitive advantage, strengthening our balance sheet and generating solid free cash flow, executing an agreement with Radisson Hotels, and opening 12 new stores. We remain confident in our strategies to achieve our long-term potential through 15 to 25 percent annual sales growth and 30 percent annual earnings growth." OUTLOOK FOR THE SECOND HALF OF 2004 For the balance of fiscal 2004, Select Comfort will focus on the execution of the company's four strategic priorities: + Increase brand and product awareness - Increase marketing spending approximately 30 percent over prior year. - Expand advertising in New York to support new store openings. + Expand profitable distribution - Open nine new stores which will result in 30 opened in 2004. 1 - Establish new retail partnerships to begin selling Sleep Number(R) beds in selected furniture retailers in Alaska and Hawaii for the first time. - Begin executing Radisson partnership with delivery of initial orders. + Continue product innovation - Introduce the newly improved Sleep Number(R)5000 bed - the company's most popular model -- early in third quarter. - Launch the new Sleep Number(R)3000 by the end of 2004. - Focus on unit sales growth. + Strengthen financial position - Leverage the company's advantaged business model to generate cash and fund growth. - Install new systems solutions for lead management and initial home delivery automation. For the third quarter of 2004, the company expects to generate revenue of $144 million to $149 million and earnings per share in the range of $0.22 to $0.25, with same-store sales growth of 15 to 20 percent. CONFERENCE CALL ANNOUNCEMENT Select Comfort will hold a conference call to discuss its second quarter results on July 20, 2004, at 4:00 p.m. Central Time. A simultaneous webcast of the call will be available in the Investor Relations section of www.selectcomfort.com. A digital replay of the conference call will be accessible beginning at approximately 6:00 p.m. Central Time on July 20, 2004, through 5:00 p.m. Central Time on July 27, 2004. To access the replay, please call 402-220-3774 (U.S. and International). An archived replay of the conference call may also be accessed after approximately 7:00 p.m. Central Time on July 20, 2004 at www.selectcomfort.com. ABOUT SELECT COMFORT Founded in 1987, Select Comfort Corporation is the nation's leading bed retailer(1), holding 26 U.S. issued or pending patents for its personalized sleep products. The company designs, manufactures and markets a line of adjustable-firmness mattresses featuring air-chamber technology, branded the Sleep Number(R) bed, as well as foundations and sleep accessories. Select Comfort's products are sold through its 360 retail stores located nationwide, including 13 leased departments in Bed Bath & Beyond stores; through selected bedding retailers; through its national direct marketing operations; and on the Internet at www.selectcomfort.com. ### 2 Statements used in this press release that relate to future plans, events, financial results or performance are forward-looking statements that are subject to certain risks and uncertainties including, among others, such factors as general and industry economic trends, uncertainties arising from global events, consumer confidence, effectiveness of our advertising and promotional efforts, our ability to secure suitable retail locations, our ability to attract and retain qualified sales professionals and other key employees, consumer acceptance of our products and product innovation, our ability to continue to expand and improve our product line, industry competition, warranty expenses, California wage and hour litigation, our dependence on significant suppliers, and the vulnerability of any suppliers to recessionary pressures, labor negotiations, liquidity concerns or other factors, increasing government regulations, including possible new flammability standards for the bedding industry, as well as the risk factors listed from time to time in the company's filings with the SEC, including the company's Annual Report on Form 10-K and other periodic reports filed with the SEC. The company has no obligation to publicly update or revise any of the forward-looking statements that may be in this news release. (1) TOP 25 BEDDING RETAILERS, FURNITURE TODAY, MAY 24, 2004 3 SELECT COMFORT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------ ------------------------------ JULY 3, JUNE 28, JULY 3, JUNE 28, 2004 2003 2004 2003 -------------- ------------- -------------- -------------- Net sales $ 124,720 $ 101,993 $ 264,683 $ 203,951 Cost of sales 47,806 38,920 101,735 76,977 -------------- ------------- -------------- -------------- Gross profit 76,914 63,073 162,948 126,974 -------------- ------------- -------------- -------------- Operating expenses: Sales and marketing 57,638 46,284 121,358 95,201 General and administrative 10,050 9,209 20,684 17,510 Store closings and asset impairments - (15) - 59 -------------- ------------- -------------- -------------- Total operating expenses 67,688 55,478 142,042 112,770 -------------- ------------- -------------- -------------- Operating income 9,226 7,595 20,906 14,204 -------------- ------------- -------------- -------------- Other income (expense): Interest income 340 137 652 250 Interest expense - (53) - (141) Other, net - - - 24 -------------- ------------- -------------- -------------- Other income (expense), net 340 84 652 133 -------------- ------------- -------------- -------------- Income before income taxes 9,566 7,679 21,558 14,337 Income tax expense 3,683 2,918 8,300 5,448 -------------- ------------- -------------- -------------- Net income $ 5,883 $ 4,761 $ 13,258 $ 8,889 ============== ============= ============== ============== Net income per share - basic $ 0.16 $ 0.15 $ 0.37 $ 0.28 ============== ============= ============== ============== Weighted average shares - basic 36,547 32,018 36,304 31,449 ============== ============= ============== ============== Net income per share - diluted $ 0.15 $ 0.12 $ 0.33 $ 0.23 ============== ============= ============== ============== Weighted average shares - diluted 40,236 38,778 40,101 38,492 ============== ============= ============== ============== RECONCILIATION OF EPS INFORMATION: Net income $ 5,883 $ 4,761 $ 13,258 $ 8,889 Add: Interest expense on convertible debt - 27 - 81 -------------- ------------- -------------- -------------- Net income available to common shareholders $ 5,883 $ 4,788 $ 13,258 $ 8,970 ============== ============= ============== ============== Weighted average shares outstanding 36,547 32,018 36,304 31,449 Effect of dilutive securities: Options 2,334 2,613 2,427 2,481 Warrants 1,355 3,787 1,370 4,019 Convertible debt - 360 - 543 -------------- ------------- -------------- -------------- Dilutive weighted average shares outstanding 40,236 38,778 40,101 38,492 ============== ============= ============== ==============
4 SELECT COMFORT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) (UNAUDITED) JULY 3, JANUARY 3, 2004 2004 ----------------- ----------------- ASSETS Current assets: Cash and cash equivalents $ 29,167 $ 24,725 Marketable securities - current 14,127 49,322 Accounts receivable, net of allowance for doubtful accounts of $704 and $619, respectively 9,133 6,823 Inventories 14,312 12,381 Prepaid expenses 7,776 5,244 Deferred tax assets 6,672 6,039 ----------------- ----------------- Total current assets 81,187 104,534 Marketable securities - non-current 44,778 1,071 Property and equipment, net 40,114 36,134 Deferred tax assets 6,298 5,620 Other assets 3,650 3,343 ----------------- ----------------- Total assets $ 176,027 $ 150,702 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 21,962 $ 14,773 Customer prepayments 6,952 5,970 Accruals: Sales returns 4,053 3,469 Compensation and benefits 11,918 16,579 Taxes and withholding 3,095 3,661 Other 5,379 6,110 ----------------- ----------------- Total current liabilities 53,359 50,562 Accrued warranty costs 1,905 2,557 Other liabilities 5,174 4,821 ----------------- ----------------- Total liabilities 60,438 57,940 ----------------- ----------------- Shareholders' equity: Undesignated preferred stock; 5,000,000 shares authorized, no shares issued and outstanding - - Common stock, $.01 par value; 95,000,000 shares authorized, 36,671,441 and 35,769,606 shares issued and outstanding, respectively 367 358 Additional paid-in capital 114,742 104,085 Unearned compensation (1,974) (877) Accumulated deficit 2,454 (10,804) ----------------- ----------------- Total shareholders' equity 115,589 92,762 ----------------- ----------------- Total liabilities and shareholders' equity $ 176,027 $ 150,702 ================= =================
5 SELECT COMFORT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) SIX MONTHS ENDED ------------------------------------- JULY 3, JUNE 28, 2004 2003 ----------------- ----------------- Cash flows from operating activities: Net income $ 13,258 $ 8,889 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,741 5,155 Amortization of debt discount and deferred finance fees - 130 Non-cash compensation 183 30 Loss on disposal of assets and impaired assets - 59 Deferred tax (benefit) expense (1,311) 4,806 Change in operating assets and liabilities: Accounts receivable (2,310) (2,900) Inventories (1,931) (1,866) Prepaid expenses (2,532) 424 Other assets (324) (10) Accounts payable 7,189 4,147 Accrued sales returns 584 174 Accrued compensation and benefits (4,661) (3,152) Accrued taxes and withholding 4,177 (233) Customer prepayments 982 2,417 Other accruals and liabilities (1,030) 227 ----------------- ----------------- Net cash provided by operating activities 19,015 18,297 ----------------- ----------------- Cash flows from investing activities: Purchases of property and equipment (10,704) (10,313) Investments in marketable securities (54,768) (17,706) Proceeds from maturity of marketable securities 46,256 14,717 ----------------- ----------------- Net cash used in investing activities (19,216) (13,302) ----------------- ----------------- Cash flows from financing activities: Principal payments on long-term debt - (11) Repurchase of common stock (240) (1,834) Proceeds from issuance of common stock 4,883 2,376 ----------------- ----------------- Net cash provided by financing activities 4,643 531 ----------------- ----------------- Increase in cash and cash equivalents 4,442 5,526 Cash and cash equivalents, at beginning of period 24,725 27,176 ----------------- ----------------- Cash and cash equivalents, at end of period $ 29,167 $ 32,702 ================= =================
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