8-K

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):  January 13, 2010

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.)

9800 59th Avenue North, Minneapolis, Minnesota 55442

(Address of principal executive offices)          (Zip Code)

(763) 551-7000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 7.01.  REGULATION FD DISCLOSURE.

On January 13, 2010, Select Comfort Corporation presented at the 12th Annual ICR XChange conference held in Dana Point, California.  The information presented at this conference is furnished as Exhibit 99.1 to this Current Report on Form 8-K.  The presentation will be posted in the Investor Relations section of www.selectcomfort.com.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(c) Exhibits.

Exhibit 99.1 ICR XChange Conference Presentation, dated January 13, 2010.

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:  January 13, 2010	By:	/s/ Mark A. Kimball
	Name:	Mark A. Kimball
	Title:	Senior Vice President

INDEX TO EXHIBITS

The exhibit listed in this index is being furnished pursuant to Item 7.01 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 ICR XChange Conference Presentation, dated January 13, 2010.

2

EX-99.1

Exhibit 99.1

Select Comfort

12th Annual ICR XChange

January 13, 2010

2

Forward Looking Statements

Statements used in this presentation 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 fund our operations through
cash flow from operations or availability under our bank line of credit or other sources, and the cost of credit or
other capital resources necessary to finance operations; the risk of non-compliance with financial covenants
under our bank line of credit, and the potential need to obtain additional capital through the issuance of debt
or equity securities; our ability to attract and retain qualified sales professionals and other key employees;
consumer acceptance of our products, product quality, innovation and brand image; our ability to continue to
expand and improve our product line; industry competition; warranty expenses; risks of pending or potential
litigation; our dependence on significant suppliers, and the vulnerability of any suppliers to commodity
shortages, inflationary pressures, labor negotiations, liquidity concerns or other factors; rising commodity
costs; the capability of our information systems to meet our business requirements and our ability to upgrade
our systems on a cost-effective basis without disruptions to our business; and increasing government
regulations, including new flammability standards for the bedding industry, which have added product cost
pressures and have required implementation of systems and manufacturing process changes to ensure
compliance. Additional information concerning these and other risks and uncertainties is contained in our
filings with the Securities and Exchange Commission, including our 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 today’s presentation.

3

Second largest U.S. mattress retailer and specialty bedding
company, with clear competitive advantages.

5% market share (revenue) with 10%-15% share in lead markets

Restructuring of business substantially complete - significant
improvement in cash flow and profitability achieved and projected

ØRestored positive cash flow

ØDebt free compared to $79 million outstanding just 12 months ago

ØGrowth in gross margin through efficiencies, in-store “trade up”

ØReturned to positive same store growth in Q3 2009 (9%)

Highly leverageable profit model that has produced strong cash flow

ØExcellent gross margins

ØMinimal inventory

ØSelf-fund growth, negative working capital

Leader in personalized comfort air segment and positioned for
market share gains and operating margin improvement

Ø2010 emphasis shifts back to growth

ØEconomic recovery at some point important opportunity

Investment Highlights

4

–Ability to customize to sleep partners’
individual sleep numbers

–Dynamic system can be adjusted for life
changes (pregnancy, weight change, etc.)

Proven benefits

–20+ years proven technology

–Third-party studies show improved sleep
quality and reduced back pain

–9 out of 10 couples prefer different
firmness settings

Innerspring Mattress

Sleep Number Bed

Differentiated Product that Satisfies Consumer Needs

Sleep Number Bed Series & Models

Classic Series

c2

$999

c3

$1,249

c4

$1,499

Performance Series

p5

$1,999

p6

$2,499

p7

$2,599

Innovation Series

i8

$2,999

i9

$3,999

i10

$4,299

Clinically proven product, affordable for a broad range of consumers

Durable and competitive value

–Queen-sized sets list from $999
to $4,299

–20-year limited warranty

–Promotional activity features
$699 mattress-only value

5

Strong “Sleep Number” Brand Equity…Young Brand With
Opportunity to Grow

Sleep Number Brand Awareness

Marketing has historically driven awareness and consideration of new technology

Sleep Number → individualized comfort

Couples no longer need to compromise

Multi-channel call to action:800#, web, retail stores

6

Customer contact at
sale, delivery, and
service

Advantaged Business Model

Design

Selling

Referral

Cash-Advantaged

Full control of the
customer experience

Immediate input into
quality and product
design

Air segment experience
and share, along with
vertical integration, are
significant barriers to
entry

Minimal inventory
requirements

Negative working
capital model

New store payback <
2 years

Significant leverage
potential

Cash and profit leverage, provides direct customer feedback

7

YoY Growth

7%

5%

(2%)

16%

6%

7%

9%

8%

2%

0%

3%

8%

8%

9%

5%

5%

8%

11%

9%

5%

0%

4%

8%

12%

12%

5%

1%

(9%)

(13%)

7%

10%

Consistent Industry Growth until 2008

Source: ISPA reports

Recession

The mattress industry has shown consistent long-term revenue growth,
particularly during post-recessionary periods

Recession

Recession

Recession

8

Cost Restructuring Substantially Complete Following Period of
Industry Contraction…Positioned for Margin Expansion

$130 million of aggregate annualized
cost reductions realized from
initiatives executed in 2008 and 2009

–Manufacturing:

4Product redesign ($10M*)

4Shift/staffing reductions ($6M*)

4Closure of a warehouse and 3
hubs ($3M)

–Selling and Marketing:

4Store closures: 25 in 2008, 70 in
2009 ($26M), 408 total stores in
2009

4Media reduced: $18M in 2008,
$30M in 2009

4Other fixed and discretionary
>$20M

–General and Administrative:

4Headcount reduction: 16% in
2008, 22% in 2009 ($17M)

Summary P&L (Q3 YTD)

$30 million profit improvement on 14% revenue decline, breakeven lowered 30%

*Based on 2009 sales levels

9

Solid Balance Sheet to Support Operations and Future Growth

Summary Balance Sheet

*Includes net proceeds from Sterling Partners investment and net proceeds from a $20 million equity raise

Cost Structure aligned with no significant
need to add costs with growth

— Leverage stores as showrooms.

Stores draw from larger trade area,

sales/store increases with reduced

store count

— More efficient media to drive sales and

leverage bottom line

Cash needs limited

— New store - $300,000/store, <24 month

payback

— Negative working capital model generates

cash in growth environment

*Store profit excluding depreciation, national media and

field support

Business Model Supports Strong Margin and Cash Expansion
on Modest Sales Growth

11

Macro Headwinds Led to Lower Mattress Demand - Recent
Months Indicate Return to Industry Growth

Source:ISPA sales trends based on reporting company results (approximately 56% of U.S. mattress industry sales)

*Through November 2009

Housing

Decline

Banking

Crisis

2007

Mattress industry started declining in Q4 2007 - rate of decline has

improved in each sequential quarter of 2009

2009

2008

12

(1) Adjusted for deferred tax impairments in 2001 and 2002. Tax rate of 38%
used in 2001 and 2002.

(1)

(1)

Net Sales
($ in mm)

Operating
Profit % (1%) 6.3% 9.3% 8.9% 9.9% 9.0%

From 2002 to 2006, Select Comfort achieved significant organic growth

and earnings leverage

*EBITDA - - CapEx

Earnings Per Share/Free Cash Flow*

Select Comfort Delivered Profitable Growth Coming Out of The
Last Recession

13

Product and Marketing Strategies Refined to Manage Economic
Downturn and Take Advantage of Economic Recovery and Restore Growth

Value messaging

–Entry level queen sets below $1,000

–Promotion structure with entry level draw plus incentive to trade-up

–Renamed product line positioned around key price points

Back to Basics

–Focused on Sleep Number unique personal and dual comfort benefit

–80% baseline, every day message (Product Benefits)

–20% create urgency during key shopping periods (Value Message)

Product

–Introduced memory foam with Sleep Number

–Pillowology and other accessories to drive traffic (accessories 10% of sales and
growing)

Selling

–Quality experience and increased conversion of traffic

14

Increase operating margin while assuming continued macro
challenges - - opportunity to accelerate as recovery materializes

–Zero infrastructure growth, savings from annualization of cost takeouts

–Same store growth offset by annualization of 2009 store closures (68), 2010
planned closures (20-25) and Q3 2009 exit of retail partner locations

–Elimination of one-time consulting and financing costs ($6M) and interest expense

Advance core advantages, prepare to accelerate growth

–Continue value and media refinement and testing

–Product, personalization and customer experience

–Integrated sales process, digital strategy

–Market development program; profit maximization and sales growth

Debt free with positive cash balance for flexibility and future
expansion

2010 Initiatives

Improve Profitability, Position for Growth and Economic Recovery

15

Diverse, Experienced Management Team - Demonstrated
Turnaround and Growth Track Record

Name	Position	Previous Experience	# of Years with Select Comfort
Bill McLaughlin	President & CEO	PepsiCo/Frito Lay, Pillsbury	9
Jim Raabe	CFO	ValueRx, KPMG	12
Shelly Ibach	Sales	Macy’s/Marshall Fields	2
Tim Werner	Marketing	L. L. Bean	13
Kathy Roedel	Global Operations	General Electric	4
Wendy Schoppert	IT	US Bancorp, America West Airlines	4
Karen Richard	Human Resources	TCF Mortgage	13
Mark Kimball	Legal & Tax	Oppenheimer Wolff & Donnelly	10

16

Proven success with key strategic assets

–Unique product

–Strong brand

–Advantaged business model

–Growing industry

Unique time and opportunity for the company

–Restructured to essential core

–Raised capital

–Now able to build on 2009 success and refocus on accelerating profit
growth

–Positioned to take advantage of recovery when it comes

Summary

Positioned to Perform in New Economy

Q4 Release February 10, 2010

17