Select Comfort Corporation (NASDAQ:SCSS) today reported fourth-quarter and full-year 2014 results for the period ended Jan. 3, 2015. Net sales increased 40% in the quarter, with 22% comparable sales growth and 10 percentage points (ppt.) of growth from the extra week in the fourth quarter. Fourth-quarter earnings of $0.35 per diluted share increased 192% compared to the prior year, including $0.06 related to the additional week in the quarter.
“Our fourth-quarter and full-year 2014 results reflect a strong consumer response to the combination of proprietary sleep innovations, effective marketing and exclusive distribution,” said Shelly Ibach, president and CEO of Select Comfort. “Our consumer-driven innovation strategy, advantaged business model and capital discipline position the company to deliver sustainable profitable growth and more than double earnings per share to $2.75 by fiscal 2019.”
Fourth Quarter Statement of Operations Overview
- Net sales increased 40% to $322 million, compared to $231 million in the fourth quarter of 2013. Comparable sales increased 22%, new stores added 9 ppt. of growth, and the additional week in the fourth quarter added 10 ppt. of growth.
- Gross profit increased 38% to $194 million. Gross margin was 60.4% compared to 60.9% last year, reflecting a higher mix of our new FlexFit™ adjustable bases and demand-driven logistics costs.
- Operating expenses totaled $167 million, or 51.7% of net sales, compared to $131 million, or 56.7% of net sales, for the same period last year. The year-over-year expense increase included variable expenses on higher sales, spending to support growth initiatives, and expenses related to the additional week in the fourth quarter, partly offset by a $3.5 million legal settlement benefit.
- Operating income totaled $28 million, compared to $10 million in the prior year.
- Earnings per diluted share were $0.35, a 192% increase over the prior year. Excluding the benefit of $0.06 related to the additional week in the quarter and $0.04 related to a favorable legal settlement, earnings per diluted share grew 108%.
Full-year Statement of Operations Review
- Net sales in 2014 were $1.16 billion, an increase of 20%, including 12% from comparable stores, compared to $960 million in 2013.
- Earnings per diluted share increased 16% to $1.25, compared to $1.08 in 2013.
Cash Flows and Balance Sheet Review
- Net cash provided by operating activities was $144 million for full-year 2014, compared to $88 million for the prior year.
- Capital expenditures for 2014 were $77 million, consistent with the prior year.
- The company repurchased $15 million, or 0.6 million shares, of its common stock in the fourth quarter. Since reinitiating share repurchases in April 2012, the company has repurchased 5.1 million shares at an average cost of $22.40 per share, returning $115 million or 124% of free cash flows to shareholders.
- As of the end of the quarter, the company had cash, cash equivalents and marketable debt securities, less customer prepayments, of $137 million.
Financial Outlook
The company expects full-year 2015
earnings per diluted share of $1.30 on a GAAP basis. This outlook
includes $11 million (pre-tax), or $0.13 per diluted share, of estimated
launch costs related to the company’s ERP (Enterprise Resource Planning)
system planned for implementation in the fourth quarter of 2015. The
outlook implies earnings per share growth of 20% excluding the impacts
of the extra week in 2014 and the 2015 ERP launch costs. The outlook
assumes high-single-digit total net sales growth and a 6% increase in
store count in 2015. The company anticipates 2015 capital expenditures
will be approximately $80 million, including investments in information
technology and new, relocated and remodeled stores.
The company has also established a long-range target of $2.75 earnings per diluted share for 2019, with returns on invested capital expected in the mid-teens.
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.
Investor Presentation
The company has posted its updated
Investor Presentation on the investor relations area of the Sleep Number
website at http://www.sleepnumber.com/eng/aboutus/InvestorRelations.cfm.
About Select Comfort Corporation
SLEEP NUMBER, a sleep
innovation leader, delivers unparalleled sleep experiences by offering
high-quality, innovative sleep products and services. The company is the
exclusive designer, manufacturer, marketer, retailer and servicer of a
complete line of Sleep Number® beds. Only the Sleep Number
bed offers SleepIQ®
technology – proprietary sensor technology that works directly with
the bed’s DualAir™ feature to track and monitor each individual’s sleep.
SleepIQ technology communicates how you slept and what adjustments you
can make to optimize your sleep and improve your daily life. Sleep
Number also offers a full line of exclusive sleep products including
FlextFit™ adjustable bases and Sleep Number® pillows, sheets
and other bedding products. Consumers also benefit from a unique,
value-added retail experience at one of the more than 460 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 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; 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; pending and
unforeseen litigation and the potential for adverse publicity associated
with litigation; 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; the vulnerability of key suppliers to recessionary pressures,
labor negotiations, liquidity concerns or other factors; rising
commodity costs and other inflationary pressures; risks inherent in
global sourcing activities; risks of disruption in the operation of
either of our two primary manufacturing facilities; increasing
government regulations, which have added or will add cost pressures and
process changes to ensure compliance; the adequacy of our management
information systems to meet the evolving needs of our business and to
protect sensitive data from potential cyber threats; the costs,
distractions and potential disruptions to our business related to
upgrading our management information systems; 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. 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.
SELECT COMFORT CORPORATION | ||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(unaudited – in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
January 3, | % of | December 28, | % of | |||||||||||||
2015 | Net Sales | 2013 | Net Sales | |||||||||||||
Net sales | $ | 322,216 | 100.0 | % | $ | 230,854 | 100.0 | % | ||||||||
Cost of sales | 127,730 | 39.6 | % | 90,333 | 39.1 | % | ||||||||||
Gross profit | 194,486 | 60.4 | % | 140,521 | 60.9 | % | ||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 142,410 | 44.2 | % | 112,679 | 48.8 | % | ||||||||||
General and administrative | 21,681 | 6.7 | % | 16,184 | 7.0 | % | ||||||||||
Research and development | 2,508 | 0.8 | % | 2,003 | 0.9 | % | ||||||||||
Total operating expenses | 166,599 | 51.7 | % | 130,866 | 56.7 | % | ||||||||||
Operating income | 27,887 | 8.7 | % | 9,655 | 4.2 | % | ||||||||||
Other income, net | 86 | 0.0 | % | 80 | 0.0 | % | ||||||||||
Income before income taxes | 27,973 | 8.7 | % | 9,735 | 4.2 | % | ||||||||||
Income tax expense | 9,026 | 2.8 | % | 3,310 | 1.4 | % | ||||||||||
Net income | $ | 18,947 | 5.9 | % | $ | 6,425 | 2.8 | % | ||||||||
Net income per share – basic | $ | 0.36 | $ | 0.12 | ||||||||||||
Net income per share – diluted | $ | 0.35 | $ | 0.12 | ||||||||||||
Reconciliation of weighted-average shares outstanding: | ||||||||||||||||
Basic weighted-average shares outstanding | 52,825 | 54,497 | ||||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Options | 420 | 452 | ||||||||||||||
Restricted shares | 426 | 371 | ||||||||||||||
Diluted weighted-average shares outstanding | 53,671 | 55,320 | ||||||||||||||
SELECT COMFORT CORPORATION | ||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Twelve Months Ended | ||||||||||||||||
January 3, | % of | December 28, | % of | |||||||||||||
2015 | Net Sales | 2013 | Net Sales | |||||||||||||
Net sales | $ | 1,156,757 | 100.0 | % | $ | 960,171 | 100.0 | % | ||||||||
Cost of sales | 449,907 | 38.9 | % | 358,416 | 37.3 | % | ||||||||||
Gross profit | 706,850 | 61.1 | % | 601,755 | 62.7 | % | ||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 512,007 | 44.3 | % | 439,156 | 45.7 | % | ||||||||||
General and administrative | 84,864 | 7.3 | % | 62,433 | 6.5 | % | ||||||||||
Research and development | 8,233 | 0.7 | % | 9,478 | 1.0 | % | ||||||||||
Total operating expenses | 605,104 | 52.3 | % | 511,067 | 53.2 | % | ||||||||||
Operating income | 101,746 | 8.8 | % | 90,688 | 9.4 | % | ||||||||||
Other income, net | 362 | 0.0 | % | 323 | 0.0 | % | ||||||||||
Income before income taxes | 102,108 | 8.8 | % | 91,011 | 9.5 | % | ||||||||||
Income tax expense | 34,134 | 3.0 | % | 30,930 | 3.2 | % | ||||||||||
Net income | $ | 67,974 | 5.9 | % | $ | 60,081 | 6.3 | % | ||||||||
Net income per share – basic | $ | 1.27 | $ | 1.10 | ||||||||||||
Net income per share – diluted | $ | 1.25 | $ | 1.08 | ||||||||||||
Reconciliation of weighted-average shares outstanding: | ||||||||||||||||
Basic weighted-average shares outstanding | 53,452 | 54,866 | ||||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Options | 387 | 554 | ||||||||||||||
Restricted shares | 354 | 383 | ||||||||||||||
Diluted weighted-average shares outstanding | 54,193 | 55,803 | ||||||||||||||
SELECT COMFORT CORPORATION | |||||||||
AND SUBSIDIARIES | |||||||||
Consolidated Balance Sheets | |||||||||
(in thousands, except per share amounts) | |||||||||
subject to reclassification | |||||||||
January 3, | December 28, | ||||||||
2015 | 2013 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 51,995 | $ | 58,223 | |||||
Marketable debt securities – current | 69,609 | 52,159 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $739 and $425, respectively | 19,693 | 14,979 | |||||||
Inventories | 53,535 | 40,152 | |||||||
Prepaid expenses | 17,792 | 9,216 | |||||||
Deferred income taxes | 8,786 | 6,936 | |||||||
Other current assets | 11,185 | 7,874 | |||||||
Total current assets | 232,595 | 189,539 | |||||||
Non-current assets: | |||||||||
Marketable debt securities – non-current | 44,441 | 34,632 | |||||||
Property and equipment, net | 165,453 | 129,542 | |||||||
Goodwill and intangible assets, net | 15,986 | 16,823 | |||||||
Deferred income taxes | 3,433 | 4,943 | |||||||
Other assets | 12,279 | 6,286 | |||||||
Total assets | $ | 474,187 | $ | 381,765 | |||||
Liabilities and Shareholders’ Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 84,197 | $ | 73,391 | |||||
Customer prepayments | 28,726 | 15,392 | |||||||
Accrued sales returns | 15,262 | 9,433 | |||||||
Compensation and benefits | 33,066 | 15,242 | |||||||
Taxes and withholding | 10,207 | 12,517 | |||||||
Other current liabilities | 15,594 | 11,207 | |||||||
Total current liabilities | 187,052 | 137,182 | |||||||
Non-current liabilities: | |||||||||
Warranty liabilities | 2,722 | 1,567 | |||||||
Other long-term liabilities | 27,506 | 17,796 | |||||||
Total non-current liabilities | 30,228 | 19,363 | |||||||
Total liabilities | 217,280 | 156,545 | |||||||
Shareholders’ equity: | |||||||||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | - | - | |||||||
Common stock, $0.01 par value; 142,500 shares authorized, 52,798 and 54,901 shares issued and outstanding, respectively | 528 | 549 | |||||||
Additional paid-in capital | - | 5,382 | |||||||
Retained earnings | 256,413 | 219,276 | |||||||
Accumulated other comprehensive (loss) income | (34 | ) | 13 | ||||||
Total shareholders’ equity | 256,907 | 225,220 | |||||||
Total liabilities and shareholders’ equity | $ | 474,187 | $ | 381,765 | |||||
SELECT COMFORT CORPORATION | ||||||||||
AND SUBSIDIARIES | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
(in thousands) | ||||||||||
subject to reclassification | ||||||||||
Twelve Months Ended | ||||||||||
January 3, | December 28, | |||||||||
2015 | 2013 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 67,974 | $ | 60,081 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 39,809 | 30,811 | ||||||||
Stock-based compensation | 6,798 | 4,232 | ||||||||
Net loss on disposals and impairments of assets | 492 | 24 | ||||||||
Excess tax benefits from stock-based compensation | (1,163 | ) | (3,831 | ) | ||||||
Deferred income taxes | (311 | ) | 2,037 | |||||||
Changes in operating assets and liabilities, net of effect of acquisition: | ||||||||||
Accounts receivable | (4,717 | ) | 1,993 | |||||||
Inventories | (13,383 | ) | (3,910 | ) | ||||||
Income taxes | (4,314 | ) | 4,395 | |||||||
Prepaid expenses and other assets | (9,973 | ) | (3,169 | ) | ||||||
Accounts payable | 14,340 | (3,477 | ) | |||||||
Customer prepayments | 13,334 | 198 | ||||||||
Accrued compensation and benefits | 17,735 | (5,202 | ) | |||||||
Other taxes and withholding | 2,584 | (153 | ) | |||||||
Warranty liabilities | 1,671 | (1,236 | ) | |||||||
Other accruals and liabilities | 13,592 | 5,312 | ||||||||
Net cash provided by operating activities | 144,468 | 88,105 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property and equipment | (76,594 | ) | (76,811 | ) | ||||||
Proceeds from sales of property and equipment | 5 | 117 | ||||||||
Investments in marketable debt securities | (90,349 | ) | (44,170 | ) | ||||||
Proceeds from maturities of marketable debt securities | 54,506 | 53,565 | ||||||||
Acquisition of business | - | (15,500 | ) | |||||||
Investment in non-marketable equity securities | (1,500 | ) | (4,500 | ) | ||||||
Increase in restricted cash | (500 | ) | - | |||||||
Net cash used in investing activities | (114,432 | ) | (87,299 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Net increase (decrease) in short-term borrowings | 6,192 | (223 | ) | |||||||
Repurchases of common stock | (46,492 | ) | (42,072 | ) | ||||||
Proceeds from issuance of common stock | 2,873 | 7,966 | ||||||||
Excess tax benefits from stock-based compensation | 1,163 | 3,831 | ||||||||
Net cash used in financing activities | (36,264 | ) | (30,498 | ) | ||||||
Net decrease in cash and cash equivalents | (6,228 | ) | (29,692 | ) | ||||||
Cash and cash equivalents, at beginning of period | 58,223 | 87,915 | ||||||||
Cash and cash equivalents, at end of period | $ | 51,995 | $ | 58,223 | ||||||
SELECT COMFORT CORPORATION | ||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||
Supplemental Financial Information | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||
2015 | 2013 | 2015 | 2013 | |||||||||||||||||
Percent of sales: | ||||||||||||||||||||
Retail | 91.1 | % | 89.5 | % | 90.8 | % | 89.2 | % | ||||||||||||
Direct and E-Commerce | 7.1 | % | 7.8 | % | 6.5 | % | 7.0 | % | ||||||||||||
Wholesale/other | 1.8 | % | 2.7 | % | 2.7 | % | 3.8 | % | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
Sales change rates: | ||||||||||||||||||||
Retail comparable-store sales 3 | 23 | % | 0 | % | 12 | % | (4 | %) | ||||||||||||
Direct and E-Commerce 3 | 19 | % | 6 | % | 9 | % | (5 | %) | ||||||||||||
Company-Controlled comparable sales change 3 | 22 | % | 0 | % | 12 | % | (4 | %) | ||||||||||||
Net opened/closed stores and 53rd week | 19 | % | 6 | % | 10 | % | 6 | % | ||||||||||||
Total Company-Controlled Channel | 41 | % | 6 | % | 22 | % | 2 | % | ||||||||||||
Wholesale/other | (7 | %) | (20 | %) | (13 | %) | 18 | % | ||||||||||||
Total | 40 | % | 5 | % | 20 | % | 3 | % | ||||||||||||
Stores open: | ||||||||||||||||||||
Beginning of period | 460 | 423 | 440 | 410 | ||||||||||||||||
Opened | 11 | 28 | 57 | 71 | ||||||||||||||||
Closed | (8 | ) | (11 | ) | (34 | ) | (41 | ) | ||||||||||||
End of period | 463 | 440 | 463 | 440 | ||||||||||||||||
Other metrics: | ||||||||||||||||||||
Average sales per store ($ in 000's) 1, 3 | $ | 2,327 | $ | 2,093 | ||||||||||||||||
Average sales per square foot 1, 3 | $ | 1,025 | $ | 1,077 | ||||||||||||||||
Stores > $1 million net sales 1, 3 | 98 | % | 96 | % | ||||||||||||||||
Stores > $2 million net sales 1, 3 | 59 | % | 46 | % | ||||||||||||||||
Average revenue per mattress unit 2 | $ | 3,866 | $ | 3,369 | $ | 3,671 | $ | 3,245 | ||||||||||||
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.
3 Fiscal 2014
included 53 weeks, as compared to 52 weeks in fiscal 2013. The
additional week in 2014 was in the fiscal fourth quarter.
Company-Controlled comparable sales have been adjusted to remove the
estimated impact of the additional week on the three and twelve months
ended January 3, 2015.
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 | |||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||
2015 | 2013 | 2015 | 2013 | |||||||||||||||
Net income | $ | 18,947 | $ | 6,425 | $ | 67,974 | $ | 60,081 | ||||||||||
Income tax expense | 9,026 | 3,310 | 34,134 | 30,930 | ||||||||||||||
Interest expense | 23 | 10 | 53 | 51 | ||||||||||||||
Depreciation and amortization | 9,992 | 8,320 | 38,767 | 29,599 | ||||||||||||||
Stock-based compensation | 2,504 | 1,173 | 6,798 | 4,232 | ||||||||||||||
Asset impairments | 378 | 34 | 497 | 127 | ||||||||||||||
Adjusted EBITDA | $ | 40,870 | $ | 19,272 | $ | 148,223 | $ | 125,020 | ||||||||||
Free Cash Flow | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
Three Months Ended | Trailing-Twelve Months Ended | |||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||
2015 | 2013 | 2015 | 2013 | |||||||||||||||
Net cash provided by operating activities | $ | 8,633 | $ | (1,977 | ) | $ | 144,468 | $ | 88,105 | |||||||||
Subtract: Purchases of property and equipment | 18,217 | 18,991 | 76,594 | 76,811 | ||||||||||||||
Free cash flow | $ | (9,584 | ) | $ | (20,968 | ) | $ | 67,874 | $ | 11,294 | ||||||||
Note - Our Adjusted EBITDA calculation and our "free cash flow" data are considered non-GAAP financial measures and are 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 CORPORATION AND SUBSIDIARIES
Calculation
of Return on Invested Capital (ROIC)
(in thousands)
ROIC is a financial measure that we use which quantifies the return we earn on our invested capital. We compute ROIC as outlined below. Management believes ROIC is a useful metric for investors and financial analysts. Our definition of ROIC may not be comparable to similarly titled definitions used by other companies. The tables below reconcile net operating profit after taxes (NOPAT) and total invested capital, which are non-GAAP financial measures, to the comparable GAAP financial measures:
Trailing-Twelve Months Ended | ||||||||||
January 3, | December 28, | |||||||||
2015 | 2013 | |||||||||
Net operating profit after taxes (NOPAT) | ||||||||||
Operating income | $ | 101,746 | $ | 90,688 | ||||||
Add: Rent expense 1 | 57,605 | 50,289 | ||||||||
Add: Interest income | 415 | 375 | ||||||||
Less: Depreciation on capitalized operating leases 2 | (14,265 | ) | (13,095 | ) | ||||||
Less: Income taxes 3 | (48,900 | ) | (43,827 | ) | ||||||
NOPAT | $ | 96,601 | $ | 84,430 | ||||||
Average invested capital | ||||||||||
Total equity | $ | 256,907 | $ | 225,220 | ||||||
Less: Cash greater than target 4 | (37,319 | ) | (29,622 | ) | ||||||
Add: Long-term debt 5 | - | 2 | ||||||||
Add: Capitalized operating lease obligations 6 | 460,840 | 402,312 | ||||||||
Total invested capital at end of period | $ | 680,428 | $ | 597,912 | ||||||
Average invested capital 7 | $ | 639,118 | $ | 560,133 | ||||||
Return on invested capital (ROIC) 8 | 15.1 | % | 15.1 | % | ||||||
1 Rent expense is added back to operating income to show the impact of owning versus leasing the related assets.
2 Depreciation is based on of the average of the last five fiscal quarters' ending capitalized operating lease obligations (see note 6) for the respective reporting periods with an assumed thirty-year useful life. This is subtracted from operating income to illustrate the impact of owning versus leasing the related assets.
3 Reflects annual effective income tax rates, before discrete adjustments, of 33.6% and 34.2% for 2014 and 2013, respectively.
4 Cash greater than target is defined as cash, cash equivalents and marketable debt securities, less customer prepayments, in excess of $100 million.
5 Long-term debt includes existing capital lease obligations.
6 A multiple of eight times annual rent expense is used as an estimate of capitalizing our operating lease obligations. The methodology utilized aligns with the methodology of a nationally recognized credit rating agency.
7 Average invested capital represents the average of the last five fiscal quarters' ending invested capital balances.
8 ROIC equals NOPAT divided by average invested capital.
Note - Our ROIC calculation and data are considered non-GAAP financial measures and are not in accordance with, or preferable to, 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
Contacts:
Investor Contact:
Dave
Schwantes, 763-551-7498
investorrelations@selectcomfort.com
or
Media
Contact:
Becky Dvorak, 763-551-6862
publicrelations@selectcomfort.com