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): MAY 16, 2002
SELECT COMFORT CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 0-25121 41-1597886
(State of Incorporation) (Commission File (IRS Employer
Number) Identification No.)
6105 TRENTON LANE NORTH
MINNEAPOLIS, MINNESOTA 55442
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (763) 551-7000
ITEM 9. REGULATION FD DISCLOSURE.
On May 15, 2002, the registrant presented the following information at the
Select Comfort Corporation Annual Meeting of Shareholders:
Slide 1
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TURN AROUND COMPLETE - SEIZING THE GROWTH OPPORTUNITY
o Return to profitability
o Reestablished balance sheet strength
o Initiated programs for growth
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Slide 2
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STRATEGIES - ESTABLISHED IN 2000 AND WORKING
Four strategies to capture profit and growth opportunity
1. Continuing cost control
2. Building awareness
3. Expanding distribution
4. Re-emphasizing innovation
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Slide 3
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EXECUTING TO PLAN. . . DELIVERING RESULTS
o Closed 40 stores, office and plant
[graphic omitted]
o Staffing reduced - G&A, selling structure
o Returns and promotional costs reduced
o Product quality improvements
BREAK-EVEN REDUCED BY 20%
BREAKEVEN 2000 BREAKEVEN 2002
Annual Units (000's) 280 210
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Slide 4
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EXECUTING TO PLAN -- DELIVERING REAL GROWTH
o Awareness
- Sleep Number(R) brand introduced
o Distribution SALES TREND BUILDING
- Retail execution improved [graphic omitted]
- Factory Direct introduced
- Website improved
- QVC and Wholesale
launched
o Product Innovation
- Quality
- Performance
- New features
Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02
Net Sales (in Millions) $65.5 $62.7 $64.1 $69.3 $81.1
% +/- (14.1)% 1.5% -5.7% 8.2% 24.0%
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Slide 5
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SOLID FINANCIAL BASE AND FOUNDATION OF CONSISTENT PERFORMANCE
RETURN TO PROFIT REBUILT CASH POSITION
[graphic omitted] [graphic omitted]
(in Millions) Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02
Net Income ($9.8) ($3.5) $0.2 $1.1 $3.2
(in Millions) Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02
Cash $4.5 $8.8 $15.4 $16.4 $25.6
EBITDA ($7.2) ($0.9) $3.0 $3.9 $5.9
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Slide 6
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DELIVERING RESULTS AND BUILDING MOMENTUM
First quarter 2002:
o 24% sales increase - growth in all channels
o $13+ million improvement to $3.2 million net income
o $1.4 million net income - rolling 12 months
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Slide 7
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BUILD ON GROWTH - LEVERAGE OUR PROFIT MODEL IN 2002
o Marketing/Media Media spend +16%
National TV media +68%
o Product improvement Mix improvement, ASP +11%
Gross margin 67%, +4ppts
o Distribution expansion 100+ store remodels
Market expansion
Wholesale - QVC, Benchmark,
SleepTrain
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Slide 8
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SALES GROWTH POTENTIAL - 15% TO 25% ANNUALLY
o Industry growth 5%+
o Share growth - double share by 2005
- Marketing/Awareness building
- Product introduction/innovation
- Distribution expansion
o Additional opportunities
- Product expansion
- International expansion
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Slide 9
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TARGET: NET INCOME 5-7% OF NET SALES BY 2005
JULY-DEC 2005
2001 TARGET
------------ ------------
% of Net Sales
Gross Margin 67.0 60 - 67
Operating Margin 1.7 8 - 12
Net Income 1.0 5 - 7
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The information presented at the Annual Meeting of Shareholders is also
available at the investor relations section of the registrant's web site at
selectcomfort.com. The information included in this report that relates to
future plans, events, goals, or targeted 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,
consumer confidence, effectiveness and efficiency of our advertising and
promotional efforts, consumer acceptance of our products and sleep technology,
industry competition, our dependence on significant suppliers, including United
Parcel Service (UPS) for delivery of our sleep systems and Conseco Finance for
extension of consumer credit, and the vulnerability of any such suppliers to
recessionary pressures, labor negotiations, liquidity concerns or other factors,
the potential dilution from the issuance of additional shares from financings
completed in 2001 and our ability to maintain compliance with listing
requirements of NASDAQ, as well as the risk factors listed from time to time in
the company's filings with the Securities and Exchange Commission, including the
company's Annual Report on Form 10-K and other reports filed with the Securities
and Exchange Commission. The registrant has no obligation to publicly update or
revise any of the forward-looking statements that may be included in this
report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SELECT COMFORT CORPORATION
(Registrant)
Dated: May 16, 2002 By /s/ Mark A. Kimball
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Title: Senior Vice President
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