Sleep Number (SNBR) 8-K Select Comfort Reports Fourth-quarter and Full-year 2013 Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Select Comfort Reports Fourth-quarter and Full-year 2013 Results

• Generates Fourth-quarter Net Sales of $231 Million, a 5% Year-over-year increase

• Reports Fourth-quarter EPS of $0.12 and Full-year EPS of $1.08 on a GAAP basis

• Provides 2014 outlook

MINNEAPOLIS - (Feb. 5, 2014) - Select Comfort Corporation (NASDAQ: SCSS) today reported fourth-quarter and full-year 2013 results for the period ended Dec. 28, 2013.

Fourth-quarter Financial Summary

• Net sales increased 5% to $231 million, compared to $221 million in the fourth quarter of 2012.

• Company-controlled comparable sales were flat year-over-year.

• Operating income was $9.7 million, compared with $19.4 million in the fourth quarter of 2012.

• Earnings per diluted share were $0.12, compared with $0.22 in the prior year.

• During the quarter, the company opened 28 new stores and closed 11.

Full-year 2013 Financial Summary

• Net sales increased 3% to $960 million, up from $935 million in 2012.

• Company-controlled comparable sales declined 4% year-over-year.

• Earnings per diluted share on a GAAP basis were $1.08, compared to $1.37 per diluted share in 2012. Adjusted earnings per diluted share (excluding CEO transition benefit/costs) were $1.07 compared with $1.43 for the prior year.

• The company opened 71 new stores and closed 41 in 2013, ending the year at 440 stores, a 7% increase versus year-end 2012.

“While we made important progress on strengthening our strategic differentiators and delivered five percent year-over-year sales growth, our financial performance in the fourth quarter did not meet our expectations,” said Shelly Ibach, president and CEO, Select Comfort. “As we look to 2014, we are cautiously optimistic about the combined impact of what we believe are fundamental product innovations and the most-tested, new advertising campaign in our history.”

Cash from operating activities was $88 million for full-year 2013 compared to $101 million in 2012. Capital expenditures for full-year 2013 increased to $77 million as compared to $52 million in 2012, driven by increased investment in stores and information systems. During the fourth quarter, the company returned $10 million to shareholders through the repurchase of 0.5 million shares of its common stock, bringing full-year share repurchases to $40 million, or 1.8 million shares. As of the end of the quarter, cash, cash equivalents and marketable-debt securities totaled $145 million, and the company had no borrowings under its revolving credit facility.

Financial Outlook

The company expects full-year 2014 earnings per diluted share to approximate full-year 2013 adjusted earnings per diluted share of $1.07. This outlook assumes mid- to high-single-digit total revenue growth and the addition of 20 to 30 net new stores during the year.

The company currently anticipates that 2014 capital expenditures will be $70-$80 million, including investments in new, relocated and remodeled stores, as well as information technology.

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 2 of 9

Conference Call Information

Management will host its regularly scheduled conference call to discuss the company’s results at 5 p.m. EST (4 p.m. CST; 2 p.m. PST) today. To listen to the call, please dial (800) 593-9959 (international participants dial (517) 308-9340) and reference the passcode “Sleep.” To access the webcast, please visit the investor relations area of the Sleep Number website at http://www.sleepnumber.com/eng/aboutus/InvestorRelations.cfm. The webcast replay will remain available for approximately 60 days.

About Select Comfort Corporation

Select Comfort Corporation is leading the industry in delivering an unparalleled sleep experience by offering consumers high-quality, innovative and individualized sleep solutions and services, which include a complete line of SLEEP NUMBER^® beds and bedding. The company is the exclusive manufacturer, marketer, retailer and servicer of the revolutionary Sleep Number bed, which allows individuals to adjust the firmness and support of each side at the touch of a button. The company offers further individualization through its solutions-focused line of Sleep Number pillows, sheets and other bedding products. As the only national specialty-mattress retailer, consumers can take advantage of an enhanced mattress-buying experience at one of the 440 SLEEP NUMBER^® stores across the country, online at SleepNumber.com, or via phone at (800) Sleep Number or (800) 753-3768.

Forward-looking Statements

Statements used in this news release relating to future plans, events, financial results or performance are forward-looking statements subject to certain risks and uncertainties including, among others, such factors as general and industry economic trends; consumer confidence; the effectiveness of the company’s marketing messages; the efficiency of its advertising and promotional efforts; consumer acceptance of its products, product quality, innovation and brand image; availability of attractive and cost-effective consumer credit options; execution of the company’s retail store distribution strategy; the company’s dependence on significant suppliers, and its ability to maintain relationships with key suppliers, including several sole-source suppliers; the vulnerability of key suppliers to recessionary pressures, labor negotiations, liquidity concerns or other factors; rising commodity costs and other inflationary pressures; industry competition; the company’s ability to continue to improve its product line; warranty expenses; risks of pending and potentially unforeseen litigation; increasing government regulations, which have added or will add cost pressures and process changes to ensure compliance; the adequacy of the company’s management information systems to meet the evolving needs of its business and evolving regulatory standards applicable to data privacy and security; the company’s ability to attract and retain senior leadership and other key employees, including qualified sales professionals; and uncertainties arising from global events, such as terrorist attacks or a pandemic outbreak, or the threat of such events. Additional information concerning these and other risks and uncertainties is contained in the company’s filings with the Securities and Exchange Commission (SEC), including the 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 in this news release.

# # #

Investor Contact: Dave Schwantes; (763) 551-7498; investorrelations@selectcomfort.com

Media Contact: Becky Dvorak; (763) 551-6862; publicrelations@selectcomfort.com

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 3 of 9

SELECT COMFORT CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited - in thousands, except per share amounts)

	Three Months Ended
	December 28, 2013		% of Net Sales		December 29, 2012		% of Net Sales
Net sales	$	230,854	100.0	%	$	220,559	100.0	%
Cost of sales	90,333		39.1	%	80,612		36.5	%
Gross profit	140,521		60.9	%	139,947		63.5	%
Operating expenses:
Sales and marketing	112,679		48.8	%	102,062		46.3	%
General and administrative	16,150		7.0	%	16,532		7.5	%
Research and development	2,003		0.9	%	1,906		0.9	%
Asset impairment charges	34		0.0	%	33		0.0	%
Total operating expenses	130,866		56.7	%	120,533		54.6	%
Operating income	9,655		4.2	%	19,414		8.8	%
Other income, net	80		0.0	%	90		0.0	%
Income before income taxes	9,735		4.2	%	19,504		8.8	%
Income tax expense	3,310		1.4	%	7,009		3.2	%
Net income	$	6,425	2.8	%	$	12,495	5.7	%
Net income per share – basic	$	0.12			$	0.23
Net income per share – diluted	$	0.12			$	0.22
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding	54,497				55,261
Effect of dilutive securities:
Options	452				1,050
Restricted shares	371				449
Diluted weighted-average shares outstanding	55,320				56,760

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 4 of 9

SELECT COMFORT CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share amounts)

	Twelve Months Ended
	December 28, 2013			% of Net Sales		December 29, 2012		% of Net Sales
Net sales	$	960,171		100.0	%	$	934,978	100.0	%
Cost of sales	358,416			37.3	%	338,432		36.2	%
Gross profit	601,755			62.7	%	596,546		63.8	%
Operating expenses:
Sales and marketing	439,156			45.7	%	398,205		42.6	%
General and administrative	62,840			6.5	%	66,617		7.1	%
Research and development	9,478			1.0	%	6,194		0.7	%
CEO transition (benefit) costs	(534		)	(0.1	)%	5,595		0.6	%
Asset impairment charges	127			0.0	%	148		0.0	%
Total operating expenses	511,067			53.2	%	476,759		51.0	%
Operating income	90,688			9.4	%	119,787		12.8	%
Other income, net	323			0.0	%	218		0.0	%
Income before income taxes	91,011			9.5	%	120,005		12.8	%
Income tax expense	30,930			3.2	%	41,911		4.5	%
Net income	$	60,081		6.3	%	$	78,094	8.4	%
Net income per share – basic	$	1.10				$	1.41
Net income per share – diluted	$	1.08				$	1.37
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding	54,866					55,516
Effect of dilutive securities:
Options	554					1,059
Restricted shares	383					501
Diluted weighted-average shares outstanding	55,803					57,076

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 5 of 9

SELECT COMFORT CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share amounts)

subject to reclassification

	December 28, 2013		December 29, 2012
Assets
Current assets:
Cash and cash equivalents	$	58,223	$	87,915
Marketable debt securities – current	52,159		51,264
Accounts receivable, net of allowance for doubtful accounts of $425 and $348, respectively	14,979		16,613
Inventories	40,152		35,564
Prepaid expenses	9,216		4,299
Deferred income taxes	6,936		5,401
Other current assets	7,874		9,522
Total current assets	189,539		210,578
Non-current assets:
Marketable debt securities – non-current	34,632		38,642
Property and equipment, net	129,542		79,356
Goodwill and intangible assets, net	16,823		2,881
Deferred income taxes	4,943		8,511
Other assets	6,286		2,053
Total assets	$	381,765	$	342,021
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	73,391	$	67,703
Customer prepayments	15,392		15,194
Accrued sales returns	9,433		5,330
Compensation and benefits	15,242		21,597
Taxes and withholding	12,517		9,282
Other current liabilities	11,207		13,955
Total current liabilities	137,182		133,061
Non-current liabilities:
Warranty liabilities	1,567		1,457
Other long-term liabilities	17,796		13,806
Total non-current liabilities	19,363		15,263
Total liabilities	156,545		148,324
Shareholders’ equity:
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.01 par value; 142,500 shares authorized, 54,901 and 55,903 shares issued and outstanding, respectively	549		559
Additional paid-in capital	5,382		33,923
Retained earnings	219,276		159,195
Accumulated other comprehensive income	13		20
Total shareholders’ equity	225,220		193,697
Total liabilities and shareholders’ equity	$	381,765	$	342,021

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 6 of 9

SELECT COMFORT CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

subject to reclassification

	Twelve Months Ended
	December 28, 2013			December 29, 2012
Cash flows from operating activities:
Net income	$	60,081		$	78,094
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	30,811			20,401
Stock-based compensation	4,232			10,306
Net loss on disposals and impairments of assets	24			115
Excess tax benefits from stock-based compensation	(3,831		)	(6,446		)
Deferred income taxes	2,037			3,499
Changes in operating assets and liabilities, net of effect of acquisition:
Accounts receivable	1,993			(2,705		)
Inventories	(3,910		)	(10,713		)
Income taxes	4,395			4,299
Prepaid expenses and other assets	(3,169		)	(2,382		)
Accounts payable	(3,477		)	7,114
Customer prepayments	198			1,665
Accrued compensation and benefits	(5,202		)	(8,108		)
Other taxes and withholding	(153		)	765
Warranty liabilities	(1,236		)	(1,454		)
Other accruals and liabilities	5,312			6,176
Net cash provided by operating activities	88,105			100,626
Cash flows from investing activities:
Purchases of property and equipment	(76,811		)	(51,593		)
Proceeds from sales of property and equipment	117			45
Investments in marketable debt securities	(44,170		)	(86,803		)
Proceeds from maturities of marketable debt securities	53,565			26,249
Acquisition of business	(15,500		)	—
Investment in non-marketable equity securities	(4,500		)	—
Net cash used in investing activities	(87,299		)	(112,102		)
Cash flows from financing activities:
Net (decrease) increase in short-term borrowings	(223		)	6,494
Repurchases of common stock	(42,072		)	(34,892		)
Proceeds from issuance of common stock	7,966			5,138
Excess tax benefits from stock-based compensation	3,831			6,446
Debt issuance costs	—			(50		)
Net cash used in financing activities	(30,498		)	(16,864		)
Net decrease in cash and cash equivalents	(29,692		)	(28,340		)
Cash and cash equivalents, at beginning of period	87,915			116,255
Cash and cash equivalents, at end of period	$	58,223		$	87,915

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 7 of 9

SELECT COMFORT CORPORATION

AND SUBSIDIARIES

Supplemental Financial Information

(unaudited)

	Three Months Ended						Twelve Months Ended
	December 28, 2013			December 29, 2012			December 28, 2013			December 29, 2012
Percent of sales:
Retail	89.5		%	88.7		%	89.2		%	89.2		%
Direct and E-Commerce	7.8		%	7.8		%	7.0		%	7.5		%
Wholesale/other	2.7		%	3.5		%	3.8		%	3.3		%
Total	100.0		%	100.0		%	100.0		%	100.0		%
Sales growth rates:
Retail comparable-store sales	0		%	12		%	(4		%)	24		%
Direct and E-Commerce	6		%	(3		%)	(5		%)	9		%
Company-Controlled comparable sales change	0		%	11		%	(4		%)	23		%
Net new/closed stores	6		%	6		%	6		%	3		%
Total Company-Controlled Channel	6		%	17		%	2		%	26		%
Wholesale/other	(20		%)	13		%	18		%	10		%
Total	5		%	17		%	3		%	26		%
Stores open:
Beginning of period	423			394			410			381
Opened	28			20			71			57
Closed	(11		)	(4		)	(41		)	(28		)
End of period	440			410			440			410
Other metrics:
Average sales per store ($ in 000's)1	$	2,093		$	2,164
Average sales per square foot1	$	1,077		$	1,324
Stores > $1 million net sales1	96		%	98		%
Stores > $2 million net sales1	46		%	49		%
Average net sales per mattress unit -   Company-Controlled Channel2	$	3,369		$	3,249		$	3,245		$	3,050
1 Trailing twelve months for stores open at least one year.
2 Represents Company-Controlled Channel total net sales divided by Company-Controlled Channel mattress units.

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 8 of 9

SELECT COMFORT CORPORATION AND SUBSIDIARIES

Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

(in thousands)

We define earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as net income plus: income tax expense, interest expense, depreciation and amortization, stock-based compensation and asset impairments. Management believes Adjusted EBITDA is a useful indicator of our financial performance and our ability to generate cash from operating activities. Our definition of Adjusted EBITDA may not be comparable to similarly titled definitions used by other companies. The table below reconciles Adjusted EBITDA, which is a non-GAAP financial measure, to the comparable GAAP financial measure:

	Three Months Ended				Trailing-Twelve Months Ended
	December 28, 2013		December 29, 2012		December 28, 2013		December 29, 2012
Net income	$	6,425	$	12,495	$	60,081	$	78,094
Income tax expense	3,310		7,009		30,930		41,911
Interest expense	10		12		51		91
Depreciation and amortization	8,320		5,653		29,599		19,735
Stock-based compensation	1,173		737		4,232		10,306
Asset impairments	34		33		127		148
Adjusted EBITDA	$	19,272	$	25,939	$	125,020	$	150,285

Note - Our Adjusted EBITDA calculation is considered a non-GAAP financial measure and is not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts.

GAAP - generally accepted accounting principles

Select Comfort Announces Fourth-quarter and Full-year 2013 Results – Page 9 of 9

SELECT COMFORT CORPORATION AND SUBSIDIARIES

Reported to Adjusted Statements of Operations Data Reconciliation

(in thousands, except per share amounts)

	Twelve Months Ended
	December 28, 2013							December 29, 2012
	As Reported		CEO Transition Benefit(1)			As Adjusted		As Reported		CEO Transition Costs(1)		As Adjusted
Operating income	$	90,688	$	(534	)	$	90,154	$	119,787	$	5,595	$	125,382
Other income, net	323		—			323		218		—		218
Income before income taxes	91,011		(534		)	90,477		120,005		5,595		125,600
Income tax expense(2)	30,930		(183		)	30,747		41,911		1,941		43,852
Net income	$	60,081	$	(351	)	$	59,730	$	78,094	$	3,654	$	81,748
Net income per share –
Basic	$	1.10	$	(0.01	)	$	1.09	$	1.41	$	0.07	$	1.47
Diluted	$	1.08	$	(0.01	)	$	1.07	$	1.37	$	0.06	$	1.43
Basic Shares	54,866		54,866			54,866		55,516		55,516		55,516
Diluted Shares	55,803		55,803			55,803		57,076		57,076		57,076

___________________

⁽¹⁾ 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 currently unvested stock awards, including performance-based stock awards. As a result of these modifications, we recorded incremental non-cash compensation of $5.6 million in fiscal year 2012. The performance-based stock awards are subject to applicable adjustments through 2014 based on actual performance versus performance targets. During the fiscal year ended December 28, 2013, we recorded a non-cash compensation benefit of $0.5 million resulting from performance-based stock award adjustments.

⁽²⁾ Reflects effective income tax rates, before discrete adjustments, of 34.2% for 2013 and 34.7% for 2012.

Note - Our "as adjusted" data is considered a non-GAAP financial measure and is not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates year-over-year comparisons for investors and financial analysts.

GAAP - generally accepted accounting principles