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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sleep Number Corporation Com USD0.01 | NASDAQ:SCSS | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.50 | 31.41 | 35.46 | 0 | 01:00:00 |
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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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1001 Third Avenue South
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Minneapolis, Minnesota
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55404
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(Address of principal executive offices)
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(Zip Code)
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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
|
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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Emerging growth company
o
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Page
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Item 1.
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Financial Statements
(unaudited)
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2017 |
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December 31,
2016 |
||||
Assets
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
29,914
|
|
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$
|
11,609
|
|
Accounts receivable, net of allowance for doubtful accounts of $694 and $884, respectively
|
21,107
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|
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19,705
|
|
||
Inventories
|
79,217
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|
|
75,026
|
|
||
Prepaid expenses
|
10,208
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|
|
8,705
|
|
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Other current assets
|
23,803
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|
|
23,282
|
|
||
Total current assets
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164,249
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138,327
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|||
Non-current assets:
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Property and equipment, net
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206,690
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208,367
|
|
||
Goodwill and intangible assets, net
|
78,133
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80,817
|
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||
Deferred income taxes
|
938
|
|
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4,667
|
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||
Other non-current assets
|
28,898
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24,988
|
|
||
Total assets
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$
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478,908
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$
|
457,166
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Liabilities and Shareholders’ Equity
|
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Current liabilities:
|
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Accounts payable
|
$
|
136,628
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|
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$
|
105,375
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Customer prepayments
|
39,929
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|
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26,207
|
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Accrued sales returns
|
18,448
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15,222
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Compensation and benefits
|
34,683
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19,455
|
|
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Taxes and withholding
|
24,041
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23,430
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Other current liabilities
|
44,708
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35,628
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Total current liabilities
|
298,437
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225,317
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Non-current liabilities:
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Other non-current liabilities
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76,174
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71,529
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Total liabilities
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374,611
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296,846
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Shareholders’ equity:
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Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding
|
—
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—
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||
Common stock, $0.01 par value; 142,500 shares authorized, 39,819 and 43,569 shares issued and outstanding, respectively
|
398
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|
|
436
|
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||
Additional paid-in capital
|
—
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—
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Retained earnings
|
103,899
|
|
|
159,884
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Total shareholders’ equity
|
104,297
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|
160,320
|
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Total liabilities and shareholders’ equity
|
$
|
478,908
|
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$
|
457,166
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
2017 |
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October 1,
2016 |
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September 30,
2017 |
|
October 1,
2016 |
||||||||
Net sales
|
$
|
402,646
|
|
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$
|
367,988
|
|
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$
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1,081,218
|
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$
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997,846
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Cost of sales
|
149,181
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135,645
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404,675
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385,168
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|
||||
Gross profit
|
253,465
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232,343
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676,543
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612,678
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||||
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Operating expenses:
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|||||||
Sales and marketing
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174,800
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158,024
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488,564
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443,477
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|
||||
General and administrative
|
32,645
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28,278
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95,233
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86,202
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Research and development
|
6,991
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6,997
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20,950
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21,661
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Total operating expenses
|
214,436
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193,299
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604,747
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551,340
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|
||||
Operating income
|
39,029
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39,044
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|
71,796
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|
61,338
|
|
||||
Other expense, net
|
(248
|
)
|
|
(255
|
)
|
|
(668
|
)
|
|
(581
|
)
|
||||
Income before income taxes
|
38,781
|
|
|
38,789
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|
71,128
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60,757
|
|
||||
Income tax expense
|
13,178
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13,044
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21,842
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20,627
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|
||||
Net income
|
$
|
25,603
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$
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25,745
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$
|
49,286
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$
|
40,130
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||||||||
Basic net income per share:
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||||||
Net income per share – basic
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$
|
0.63
|
|
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$
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0.56
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$
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1.18
|
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$
|
0.86
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Weighted-average shares – basic
|
40,755
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45,621
|
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41,740
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46,705
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||||
Diluted net income per share:
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||||||
Net income per share – diluted
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$
|
0.62
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$
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0.56
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$
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1.16
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$
|
0.85
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Weighted-average shares – diluted
|
41,515
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|
46,350
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|
42,559
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|
|
47,413
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Three Months Ended
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Nine Months Ended
|
||||||||||||
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September 30,
2017 |
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October 1,
2016 |
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September 30,
2017 |
|
October 1,
2016 |
||||||||
Net income
|
$
|
25,603
|
|
|
$
|
25,745
|
|
|
$
|
49,286
|
|
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$
|
40,130
|
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Other comprehensive income – unrealized gain on available-for-sale marketable debt securities, net of income tax
|
—
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—
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—
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|
14
|
|
||||
Comprehensive income
|
$
|
25,603
|
|
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$
|
25,745
|
|
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$
|
49,286
|
|
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$
|
40,144
|
|
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Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
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Total
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|||||||||||
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Shares
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Amount
|
|
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|
||||||||||||
Balance at December 31, 2016
|
43,569
|
|
|
$
|
436
|
|
|
$
|
—
|
|
|
$
|
159,884
|
|
|
$
|
160,320
|
|
Net income
|
—
|
|
|
—
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|
|
—
|
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|
49,286
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|
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49,286
|
|
||||
Exercise of common stock options
|
212
|
|
|
2
|
|
|
3,038
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|
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—
|
|
|
3,040
|
|
||||
Stock-based compensation
|
587
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|
|
6
|
|
|
11,803
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|
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—
|
|
|
11,809
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|
||||
Repurchases of common stock
|
(4,549
|
)
|
|
(46
|
)
|
|
(14,841
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)
|
|
(105,271
|
)
|
|
(120,158
|
)
|
||||
Balance at September 30, 2017
|
39,819
|
|
|
$
|
398
|
|
|
$
|
—
|
|
|
$
|
103,899
|
|
|
$
|
104,297
|
|
|
Nine Months Ended
|
||||||
|
September 30,
2017 |
|
October 1,
2016 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
49,286
|
|
|
$
|
40,130
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
Depreciation and amortization
|
46,000
|
|
|
42,555
|
|
||
Stock-based compensation
|
11,809
|
|
|
9,272
|
|
||
Net loss on disposals and impairments of assets
|
229
|
|
|
9
|
|
||
Excess tax benefits from stock-based compensation
|
—
|
|
|
(516
|
)
|
||
Deferred income taxes
|
3,729
|
|
|
(673
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|||
Accounts receivable
|
(1,402
|
)
|
|
5,271
|
|
||
Inventories
|
(4,191
|
)
|
|
15,991
|
|
||
Income taxes
|
(147
|
)
|
|
30,386
|
|
||
Prepaid expenses and other assets
|
(1,713
|
)
|
|
(3,458
|
)
|
||
Accounts payable
|
33,325
|
|
|
(1,043
|
)
|
||
Customer prepayments
|
13,722
|
|
|
(23,125
|
)
|
||
Accrued compensation and benefits
|
15,277
|
|
|
12,441
|
|
||
Other taxes and withholding
|
758
|
|
|
7,494
|
|
||
Other accruals and liabilities
|
9,372
|
|
|
10,527
|
|
||
Net cash provided by operating activities
|
176,054
|
|
|
145,261
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(37,613
|
)
|
|
(38,769
|
)
|
||
Decrease in restricted cash
|
3,150
|
|
|
—
|
|
||
Proceeds from sales of property and equipment
|
36
|
|
|
67
|
|
||
Proceeds from marketable debt securities
|
—
|
|
|
15,090
|
|
||
Investments in marketable debt securities
|
—
|
|
|
(5,968
|
)
|
||
Net cash used in investing activities
|
(34,427
|
)
|
|
(29,580
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Repurchases of common stock
|
(120,158
|
)
|
|
(96,410
|
)
|
||
Net (decrease) increase in short-term borrowings
|
(6,194
|
)
|
|
3,062
|
|
||
Proceeds from issuance of common stock
|
3,040
|
|
|
1,949
|
|
||
Debt issuance costs
|
(10
|
)
|
|
(409
|
)
|
||
Excess tax benefits from stock-based compensation
|
—
|
|
|
516
|
|
||
Net cash used in financing activities
|
(123,322
|
)
|
|
(91,292
|
)
|
||
|
|
|
|
||||
Net increase in cash and cash equivalents
|
18,305
|
|
|
24,389
|
|
||
Cash and cash equivalents, at beginning of period
|
11,609
|
|
|
20,994
|
|
||
Cash and cash equivalents, at end of period
|
$
|
29,914
|
|
|
$
|
45,383
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
$
|
4,292
|
|
|
$
|
7,973
|
|
Work in progress
|
223
|
|
|
72
|
|
||
Finished goods
|
74,702
|
|
|
66,981
|
|
||
|
$
|
79,217
|
|
|
$
|
75,026
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Developed technologies
|
$
|
18,851
|
|
|
$
|
6,160
|
|
|
$
|
18,851
|
|
|
$
|
4,524
|
|
Customer relationships
|
2,413
|
|
|
2,413
|
|
|
2,413
|
|
|
1,365
|
|
||||
Trade names/trademarks
|
101
|
|
|
101
|
|
|
101
|
|
|
101
|
|
||||
|
$
|
21,365
|
|
|
$
|
8,674
|
|
|
$
|
21,365
|
|
|
$
|
5,990
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Amount repurchased under Board-approved share repurchase program
|
|
$
|
40,000
|
|
|
$
|
25,000
|
|
|
$
|
115,000
|
|
|
$
|
95,000
|
|
Amount repurchased in connection with the vesting of employee restricted stock grants
|
|
64
|
|
|
259
|
|
|
5,158
|
|
|
1,410
|
|
||||
Total amount repurchased
|
|
$
|
40,064
|
|
|
$
|
25,259
|
|
|
$
|
120,158
|
|
|
$
|
96,410
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Stock awards
|
|
$
|
3,339
|
|
|
$
|
1,121
|
|
|
$
|
10,059
|
|
|
$
|
7,533
|
|
Stock options
|
|
594
|
|
|
545
|
|
|
1,750
|
|
|
1,739
|
|
||||
Total stock-based compensation expense
|
|
3,933
|
|
|
1,666
|
|
|
11,809
|
|
|
9,272
|
|
||||
Income tax benefit
|
|
1,314
|
|
|
556
|
|
|
3,968
|
|
|
3,180
|
|
||||
Total stock-based compensation expense, net of tax
|
|
$
|
2,619
|
|
|
$
|
1,110
|
|
|
$
|
7,841
|
|
|
$
|
6,092
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Interest expense
|
$
|
(278
|
)
|
|
$
|
(267
|
)
|
|
$
|
(748
|
)
|
|
$
|
(624
|
)
|
Interest income
|
30
|
|
|
12
|
|
|
80
|
|
|
43
|
|
||||
Other expense, net
|
$
|
(248
|
)
|
|
$
|
(255
|
)
|
|
$
|
(668
|
)
|
|
$
|
(581
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Net income
|
$
|
25,603
|
|
|
$
|
25,745
|
|
|
$
|
49,286
|
|
|
$
|
40,130
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic weighted-average shares outstanding
|
40,755
|
|
|
45,621
|
|
|
41,740
|
|
|
46,705
|
|
||||
Dilutive effect of stock-based awards
|
760
|
|
|
729
|
|
|
819
|
|
|
708
|
|
||||
Diluted weighted-average shares outstanding
|
41,515
|
|
|
46,350
|
|
|
42,559
|
|
|
47,413
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per share – basic
|
$
|
0.63
|
|
|
$
|
0.56
|
|
|
$
|
1.18
|
|
|
$
|
0.86
|
|
Net income per share – diluted
|
$
|
0.62
|
|
|
$
|
0.56
|
|
|
$
|
1.16
|
|
|
$
|
0.85
|
|
|
Nine Months Ended
|
||||||
|
September 30,
2017 |
|
October 1,
2016 |
||||
Balance at beginning of year
|
$
|
15,222
|
|
|
$
|
20,562
|
|
Additions that reduce net sales
|
55,720
|
|
|
54,588
|
|
||
Deductions from reserves
|
(52,494
|
)
|
|
(57,112
|
)
|
||
Balance at end of period
|
$
|
18,448
|
|
|
$
|
18,038
|
|
|
Nine Months Ended
|
||||||
|
September 30,
2017 |
|
October 1,
2016 |
||||
Balance at beginning of year
|
$
|
8,633
|
|
|
$
|
10,028
|
|
Additions charged to costs and expenses for current-year sales
|
8,627
|
|
|
7,014
|
|
||
Deductions from reserves
|
(6,625
|
)
|
|
(7,976
|
)
|
||
Changes in liability for pre-existing warranties during the current year, including expirations
|
(708
|
)
|
|
(976
|
)
|
||
Balance at end of period
|
$
|
9,927
|
|
|
$
|
8,090
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Risk Factors
|
•
|
Company Overview
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Non-GAAP Data
|
•
|
Off-Balance-Sheet Arrangements and Contractual Obligations
|
•
|
Critical Accounting Policies
|
•
|
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;
|
•
|
The potential for claims that our products, processes or trademarks infringe the intellectual property rights of others;
|
•
|
Availability of attractive and cost-effective consumer credit options;
|
•
|
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, including the potential for shortages in supply;
|
•
|
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.
|
•
|
Net sales for the
three months ended
September 30, 2017
increased
9%
to
$403 million
, compared with
$368 million
for the same period one year ago. Net sales for the
three months ended
September 30, 2017
were affected by: (i) an approximately $25 million shift in sales from our second quarter to our third quarter as a result of a delay in deliveries and shipments related to an inventory shortage from one of our new suppliers (this delay has been resolved and we don't expect a shortage in the future), and (ii) temporary disruptions from hurricanes during our Labor Day sales event that reduced third quarter net sales by an estimated $12 to $15 million.
|
•
|
The
9%
sales
increase
was driven by 6 percentage points (ppt.) of growth from sales generated by
26
net new stores opened in the past 12 months and a
5%
comparable sales
increase
in our Company-Controlled channel, partially offset by a decrease in our Wholesale/Other channel sales.
|
•
|
Sales per store (for stores open at least one year) on a trailing twelve-month basis for the period ended
September 30, 2017
were
$2.4 million
, up 5% from
$2.2 million
in the prior-year comparable period.
|
•
|
In May 2017, we began selling our Sleep Number 360™ i7 and i10 smart beds. The Sleep Number 360 smart bed won 13 awards at CES, including being named the Best of Innovation Honoree in the Home Appliance category. We plan to launch a third smart bed model (the p6) in the fourth quarter, and remain on track to complete the phased implementation of our 360 smart bed line by the first half of next year.
|
•
|
Operating income for the quarter totaled
$39 million
, consistent with the same period one year ago. Our operating income rate decreased to
9.7%
of net sales, compared with
10.6%
of net sales for the same period last year. The decrease in operating income rate primarily resulted from transition costs associated with the launch of our Sleep Number 360 smart beds and the evolution of our supply chain.
|
•
|
Net income for the quarter was
$25.6 million
, or
$0.62
per diluted share, compared with
$25.7 million
, or
$0.56
per diluted share, for the same period one year ago.
|
•
|
Cash provided by operating activities totaled
$176 million
for the
nine months ended
September 30, 2017
, compared with
$145 million
for the same period one year ago. Investing activities for the current-year period included
$38 million
of property and equipment purchases, compared with
$39 million
for the same period last year.
|
•
|
At
September 30, 2017
, cash and cash equivalents totaled
$30 million
and we ended the quarter with no borrowings under our $153 million revolving credit facility. We utilize our credit facility to meet our seasonal working capital requirements.
|
•
|
In the
third
quarter of
2017
, we repurchased
1.3 million
shares of our common stock under our Board-approved share repurchase program at a cost of
$40 million
(an average of
$31.18
per share). Effective as of October 1, 2017, our Board approved an increase in our total remaining share repurchase authorization to $500 million.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||||||||||||||
Net sales
|
|
$
|
402.6
|
|
|
100.0
|
%
|
|
$
|
368.0
|
|
|
100.0
|
%
|
|
$
|
1,081.2
|
|
|
100.0
|
%
|
|
$
|
997.8
|
|
|
100.0
|
%
|
Cost of sales
|
|
149.2
|
|
|
37.1
|
%
|
|
135.6
|
|
|
36.9
|
%
|
|
404.7
|
|
|
37.4
|
%
|
|
385.2
|
|
|
38.6
|
%
|
||||
Gross profit
|
|
253.5
|
|
|
62.9
|
%
|
|
232.3
|
|
|
63.1
|
%
|
|
676.5
|
|
|
62.6
|
%
|
|
612.7
|
|
|
61.4
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and marketing
|
|
174.8
|
|
|
43.4
|
%
|
|
158.0
|
|
|
42.9
|
%
|
|
488.6
|
|
|
45.2
|
%
|
|
443.5
|
|
|
44.4
|
%
|
||||
General and administrative
|
|
32.6
|
|
|
8.1
|
%
|
|
28.3
|
|
|
7.7
|
%
|
|
95.2
|
|
|
8.8
|
%
|
|
86.2
|
|
|
8.6
|
%
|
||||
Research and development
|
|
7.0
|
|
|
1.7
|
%
|
|
7.0
|
|
|
1.9
|
%
|
|
21.0
|
|
|
1.9
|
%
|
|
21.7
|
|
|
2.2
|
%
|
||||
Total operating expenses
|
|
214.4
|
|
|
53.3
|
%
|
|
193.3
|
|
|
52.5
|
%
|
|
604.7
|
|
|
55.9
|
%
|
|
551.3
|
|
|
55.3
|
%
|
||||
Operating income
|
|
39.0
|
|
|
9.7
|
%
|
|
39.0
|
|
|
10.6
|
%
|
|
71.8
|
|
|
6.6
|
%
|
|
61.3
|
|
|
6.1
|
%
|
||||
Other expense, net
|
|
(0.2
|
)
|
|
(0.1
|
%)
|
|
(0.3
|
)
|
|
(0.1
|
%)
|
|
(0.7
|
)
|
|
(0.1
|
%)
|
|
(0.6
|
)
|
|
(0.1
|
%)
|
||||
Income before income taxes
|
|
38.8
|
|
|
9.6
|
%
|
|
38.8
|
|
|
10.5
|
%
|
|
71.1
|
|
|
6.6
|
%
|
|
60.8
|
|
|
6.1
|
%
|
||||
Income tax expense
|
|
13.2
|
|
|
3.3
|
%
|
|
13.0
|
|
|
3.5
|
%
|
|
21.8
|
|
|
2.0
|
%
|
|
20.6
|
|
|
2.1
|
%
|
||||
Net income
|
|
$
|
25.6
|
|
|
6.4
|
%
|
|
$
|
25.7
|
|
|
7.0
|
%
|
|
$
|
49.3
|
|
|
4.6
|
%
|
|
$
|
40.1
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
0.63
|
|
|
|
|
|
$
|
0.56
|
|
|
|
|
$
|
1.18
|
|
|
|
|
$
|
0.86
|
|
|
|
|
||
Diluted
|
|
$
|
0.62
|
|
|
|
|
|
$
|
0.56
|
|
|
|
|
$
|
1.16
|
|
|
|
|
$
|
0.85
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
|
40.8
|
|
|
|
|
|
45.6
|
|
|
|
|
41.7
|
|
|
|
|
46.7
|
|
|
|
|
||||||
Diluted
|
|
41.5
|
|
|
|
|
|
46.4
|
|
|
|
|
42.6
|
|
|
|
|
47.4
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||
Company-Controlled channel
|
|
99.3
|
%
|
|
97.8
|
%
|
|
98.5
|
%
|
|
97.3
|
%
|
Wholesale/Other channel
|
|
0.7
|
%
|
|
2.2
|
%
|
|
1.5
|
%
|
|
2.7
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||
Sales change rates:
|
|
|
|
|
|
|
|
|
|
|
||
Retail comparable-store sales
(1)
|
|
5
|
%
|
|
(10
|
%)
|
|
1
|
%
|
|
(7
|
%)
|
Online and phone
|
|
9
|
%
|
|
23
|
%
|
|
17
|
%
|
|
10
|
%
|
Company-Controlled comparable sales change
|
|
5
|
%
|
|
(8
|
%)
|
|
2
|
%
|
|
(6
|
%)
|
Net opened/closed stores
|
|
6
|
%
|
|
7
|
%
|
|
8
|
%
|
|
6
|
%
|
Total Company-Controlled channel
|
|
11
|
%
|
|
(1
|
%)
|
|
10
|
%
|
|
0
|
%
|
Wholesale/Other channel
|
|
(65
|
%)
|
|
(19
|
%)
|
|
(38
|
%)
|
|
3
|
%
|
Total net sales change
|
|
9
|
%
|
|
(2
|
%)
|
|
8
|
%
|
|
0
|
%
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Average sales per store
(1)
($ in thousands)
|
|
$
|
2,369
|
|
|
$
|
2,248
|
|
|
|
|
|
||||
Average sales per square foot
(1)
|
|
$
|
909
|
|
|
$
|
895
|
|
|
|
|
|
||||
Stores > $1 million in net sales
(1)
|
|
98
|
%
|
|
98
|
%
|
|
|
|
|
||||||
Stores > $2 million in net sales
(1)
|
|
59
|
%
|
|
54
|
%
|
|
|
|
|
||||||
Average revenue per mattress unit –
Company-Controlled channel
(2)
|
|
$
|
4,385
|
|
|
$
|
3,959
|
|
|
$
|
4,239
|
|
|
$
|
4,031
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||
Beginning of period
|
|
549
|
|
|
506
|
|
|
540
|
|
|
488
|
|
Opened
|
|
6
|
|
|
24
|
|
|
30
|
|
|
57
|
|
Closed
|
|
(2
|
)
|
|
(3
|
)
|
|
(17
|
)
|
|
(18
|
)
|
End of period
|
|
553
|
|
|
527
|
|
|
553
|
|
|
527
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
||||
Total cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
176.1
|
|
|
$
|
145.3
|
|
Investing activities
|
|
(34.4
|
)
|
|
(29.6
|
)
|
||
Financing activities
|
|
(123.3
|
)
|
|
(91.3
|
)
|
||
Net increase in cash and cash equivalents
|
|
$
|
18.3
|
|
|
$
|
24.4
|
|
|
|
Three Months Ended
|
|
Trailing-Twelve
Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Net income
|
|
$
|
25,603
|
|
|
$
|
25,745
|
|
|
$
|
60,573
|
|
|
$
|
18,958
|
|
Income tax expense
|
|
13,178
|
|
|
13,044
|
|
|
25,731
|
|
|
11,112
|
|
||||
Interest expense
|
|
278
|
|
|
267
|
|
|
935
|
|
|
721
|
|
||||
Depreciation and amortization
|
|
14,770
|
|
|
14,536
|
|
|
60,404
|
|
|
56,154
|
|
||||
Stock-based compensation
|
|
3,933
|
|
|
1,666
|
|
|
14,498
|
|
|
10,609
|
|
||||
Asset impairments
|
|
222
|
|
|
2
|
|
|
267
|
|
|
51
|
|
||||
Adjusted EBITDA
|
|
$
|
57,984
|
|
|
$
|
55,260
|
|
|
$
|
162,408
|
|
|
$
|
97,605
|
|
|
|
Nine Months Ended
|
|
Trailing-Twelve
Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
Net cash provided by operating activities
|
|
$
|
176,054
|
|
|
$
|
145,261
|
|
|
$
|
182,438
|
|
|
$
|
121,616
|
|
Subtract: Purchases of property and equipment
|
|
37,613
|
|
|
38,769
|
|
|
56,696
|
|
|
62,920
|
|
||||
Free cash flow
|
|
$
|
138,441
|
|
|
$
|
106,492
|
|
|
$
|
125,742
|
|
|
$
|
58,696
|
|
|
|
Trailing-Twelve
Months Ended
|
||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
||||
Net operating profit after taxes (NOPAT)
|
|
|
|
|
||||
Operating income
|
|
$
|
87,108
|
|
|
$
|
30,681
|
|
Add: Rent expense
(1)
|
|
72,260
|
|
|
64,994
|
|
||
Add: Interest income
|
|
129
|
|
|
109
|
|
||
Less: Depreciation on capitalized operating leases
(2)
|
|
(18,384
|
)
|
|
(16,953
|
)
|
||
Less: Income taxes
(3)
|
|
(46,004
|
)
|
|
(29,805
|
)
|
||
NOPAT
|
|
$
|
95,109
|
|
|
$
|
49,026
|
|
|
|
|
|
|
||||
Average invested capital
|
|
|
|
|
||||
Total equity
|
|
$
|
104,297
|
|
|
$
|
176,512
|
|
Less: Cash greater than target
(4)
|
|
—
|
|
|
—
|
|
||
Add: Long-term debt
(5)
|
|
—
|
|
|
—
|
|
||
Add: Capitalized operating lease obligations
(6)
|
|
578,080
|
|
|
519,952
|
|
||
Total invested capital at end of period
|
|
$
|
682,377
|
|
|
$
|
696,464
|
|
Average invested capital
(7)
|
|
$
|
689,467
|
|
|
$
|
714,956
|
|
Return on invested capital (ROIC)
(8)
|
|
13.8
|
%
|
|
6.9
|
%
|
(a) – (b)
|
Not applicable.
|
(c)
|
Issuer Purchases of Equity Securities
|
Fiscal Period
|
|
Total
Number
of Shares
Purchased
(1)(2)
|
|
Average
Price
Paid
per Share
|
|
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
(1)
|
|
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
(3)
|
||||||
July 2, 2017 through July 29, 2017
|
|
363,219
|
|
|
$
|
32.17
|
|
|
362,370
|
|
|
$
|
158,342,000
|
|
July 30, 2017 through August 26, 2017
|
|
384,548
|
|
|
32.31
|
|
|
384,237
|
|
|
145,926,000
|
|
||
August 27, 2017 through September 30, 2017
|
|
537,000
|
|
|
29.71
|
|
|
536,119
|
|
|
130,000,000
|
|
||
Total
|
|
1,284,767
|
|
|
$
|
31.18
|
|
|
1,282,726
|
|
|
$
|
130,000,000
|
|
|
(1)
|
Under the then current Board-approved $300 million share repurchase program, we repurchased
1,282,726
shares of our common stock at a cost of
$40 million
(based on trade dates) during the three months ended
September 30, 2017
.
|
(2)
|
In connection with the vesting of employee restricted stock grants, we also repurchased
2,041
shares of our common stock at a cost of
$64 thousand
during the three months ended
September 30, 2017
.
|
(3)
|
On October 17, 2017, we announced that our Board approved an increase in the total remaining share repurchase authorization to $500 million, effective as of the beginning of our 2017 fiscal fourth quarter. 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.
|
Exhibit
Number
|
|
Description
|
|
Method of Filing
|
31.1
|
|
|
Filed herewith
|
|
31.2
|
|
|
Filed herewith
|
|
32.1
|
|
|
Furnished herewith
|
|
32.2
|
|
|
Furnished herewith
|
|
101
|
|
The following financial information from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed with the SEC on October 27, 2017, formatted in eXtensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and October 1, 2016; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and October 1, 2016; (iv) Condensed Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 2017; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and October 1, 2016; and (vi) Notes to Condensed Consolidated Financial Statements.
|
|
Filed herewith
|
|
|
SELECT COMFORT CORPORATION
|
|
||
|
|
(Registrant)
|
|
||
|
|
|
|
||
Dated:
|
October 27, 2017
|
By:
|
|
/s/ Shelly R. Ibach
|
|
|
|
|
|
Shelly R. Ibach
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Robert J. Poirier
|
|
|
|
|
|
Robert J. Poirier
|
|
|
|
|
|
Chief Accounting Officer
|
|
|
|
|
|
(principal accounting officer)
|
|
1 Year Sleep Number Corporation Com USD0.01 Chart |
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