Attached files
| file | filename |
|---|---|
| 8-K - SELECT COMFORT CORP 8-K 2-9-2011 - Sleep Number Corp | form8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
|
Media Contact:
|
Investor Contact:
|
|
Gabby Nelson
|
Hunter Saklad
|
|
(763) 551-7460
|
(763) 551-7498
|
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gabby.nelson@selectcomfort.com
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investorrelations@selectcomfort.com
|
SELECT COMFORT ANNOUNCES FOURTH QUARTER
AND FULL-YEAR 2010 RESULTS
Company Reports Fourth Quarter Net Income per Share of $0.13; Operating Income Increases 53 percent; Same-store Sales Up 12 percent; Provides 2011 Earnings Guidance
MINNEAPOLIS – (Feb. 9, 2011) – Select Comfort Corporation (NASDAQ: SCSS) today reported fourth quarter and fiscal 2010 results for the period ended Jan. 1, 2011. Net sales for the quarter totaled $148.7 million, an increase of 9 percent on same-store growth of 12 percent, compared to $136.5 million in the prior-year period. The company reported fourth quarter net income of $7.1 million, or $0.13 per diluted share, compared to net income of $35.3 million, or $0.69 per diluted share, in the prior-year period. On a comparable basis, excluding a valuation adjustment for income taxes, net income per diluted share would have been $0.08 in the fourth quarter of 2009.
Net sales for 2010 totaled $606 million, an increase of 11 percent as compared to $544 million in the prior-year period. The company reported net income of $31.6 million, or $0.57 per diluted share in 2010, compared to net income of $35.6 million, or $0.77 per diluted share, in the prior-year period. On a comparable basis, excluding a valuation adjustment for income taxes and costs associated with a terminated financing transaction, net income per diluted share would have been $0.24 in 2009.
“Our fourth quarter and full-year performance demonstrate consistent execution against a focused set of priorities as well as solid progress against our profit and sales-growth goals,” said Bill McLaughlin, president and CEO, Select Comfort Corporation. “We are particularly pleased we have continued to increase profit margins and grow faster than the industry as we lapped tougher year-over-year comparisons.”
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 2 of 11
“As we move into 2011, we’re confident we’ve built a solid financial and operational platform from which to accelerate growth and improve market share,” McLaughlin continued. “Our strategies reflect this position as we increase investments to drive greater awareness and consideration for the Sleep Number brand and stores.”
Fourth Quarter and Full-year Summary
During the fourth quarter, net sales increased by 9 percent as compared to the year-ago period. The increase in sales was driven by a 12 percent increase in same-store sales, offset by the impact of the closure of 24 stores during 2010. Operating income improved by 53 percent to $11.5 million and the operating margin improved 220 basis points to 7.7 percent.
Gross profit margins increased 10 basis points from 62.9 percent in the prior-year period to 63 percent in fourth-quarter 2010. The increase reflects a relatively stable cost structure and channel mix versus 2009.
Sales and marketing costs in the fourth quarter of 2010 increased by 6 percent to $68.6 million, representing 46.1 percent of net sales. This compares to $64.8 million, or 47.5 percent of net sales in the prior-year period. Media investments in the fourth quarter totaled $18.5 million, 15 percent higher than a year ago. General and administrative expenses equaled $13.2 million, or 8.9 percent of net sales. This compares to $12.7 million, or 9.3 percent of net sales, in the fourth quarter of 2009.
Cash flows from operating activities were $71 million for full-year 2010. This compares to $67 million, including a $26 million tax refund, for full-year 2009. As of year-end 2010, cash and cash equivalents totaled $81 million as compared to $18 million at 2009 year-end. During the year, the company had no borrowings under its revolving credit agreement.
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 3 of 11
Fiscal 2011 Outlook
The company expects to increase net income per share in 2011 by 20 to 30 percent to between $0.68 and $0.74 per diluted share. This outlook assumes modest improvement in macro-economic trends and same-store growth in the upper single digits as the company increases investments against programs designed to expand market share. The company’s long-term expectation is for net income per share growth of between 15 and 20 percent per year.
The company ended 2010 with 386 stores, and expects to end 2011 with approximately 380 stores after the consolidation of planned store openings and closings. The company anticipates that 2011 capital expenditures will be approximately $25 million to $30 million, reflecting a total of 40 to 50 store actions, mainly relating to remodels and relocations, along with an initial investment to upgrade marketing and customer-management systems.
Conference Call
Management will host its regularly scheduled conference call to discuss the company’s results at 5 p.m. Eastern Time (4 p.m. Central; 2 p.m. Pacific) on Wednesday, Feb. 9, 2011. 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 Select Comfort website.
A replay will remain available until midnight Central Time, Feb. 18, 2011, by dialing (203) 369-1424. The webcast replay will remain available in the investor relations area of the company’s website for approximately 60 days.
About Select Comfort Corporation
Founded more than 20 years ago and based in Minneapolis, Select Comfort Corporation designs, manufactures, markets and supports a line of adjustable-firmness mattresses featuring air-chamber technology, branded the Sleep Number® bed, as well as foundations and bedding accessories. SELECT COMFORT® products are sold through its 386 company-owned stores located across the United States; select bedding retailers; direct-marketing operations; and online at www.sleepnumber.com.
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 4 of 11
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 our marketing messages; the efficiency of our advertising and promotional efforts; consumer acceptance of our products, product quality, innovation and brand image; availability of attractive and cost-effective consumer credit options; execution of our retail store distribution strategy, including our ability to cost-effectively close under-performing store locations; 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; industry competition; our ability to continue to improve our product line; warranty expenses; risks of pending and potentially unforeseen litigation; increasing government regulations, including flammability standards for the bedding industry and safety standards for consumer products, which have or will add product cost pressures and have or will require implementation of systems and manufacturing process changes to ensure compliance; the adequacy of our management information systems to meet the evolving needs of our business and evolving regulatory standards applicable to data privacy and security; our 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 our filings with the Securities and Exchange Commission (SEC), 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 in this news release.
# # #
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 5 of 11
SELECT COMFORT CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited – in thousands, except per share amounts)
|
Three Months Ended
|
||||||||||||||||
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January 1,
|
% of
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January 2,
|
% of
|
|||||||||||||
|
2011
|
Net Sales
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2010
|
Net Sales
|
|||||||||||||
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Net sales
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$ | 148,668 | 100.0 | % | $ | 136,471 | 100.0 | % | ||||||||
|
Cost of sales
|
54,943 | 37.0 | % | 50,690 | 37.1 | % | ||||||||||
|
Gross profit
|
93,725 | 63.0 | % | 85,781 | 62.9 | % | ||||||||||
|
Operating expenses:
|
||||||||||||||||
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Sales and marketing
|
68,576 | 46.1 | % | 64,827 | 47.5 | % | ||||||||||
|
General and administrative
|
13,203 | 8.9 | % | 12,704 | 9.3 | % | ||||||||||
|
Research and development
|
426 | 0.3 | % | 573 | 0.4 | % | ||||||||||
|
Asset impairment charges
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43 | 0.0 | % | 198 | 0.1 | % | ||||||||||
|
Total operating expenses
|
82,248 | 55.3 | % | 78,302 | 57.4 | % | ||||||||||
|
Operating income
|
11,477 | 7.7 | % | 7,479 | 5.5 | % | ||||||||||
|
Interest expense / other
|
(67 | ) | 0.0 | % | (1,032 | ) | (0.8 | %) | ||||||||
|
Income before income taxes
|
11,410 | 7.7 | % | 6,447 | 4.7 | % | ||||||||||
|
Income tax expense (benefit)
|
4,292 | 2.9 | % | (28,862 | ) | (21.1 | %) | |||||||||
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Net income
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$ | 7,118 | 4.8 | % | $ | 35,309 | 25.9 | % | ||||||||
|
Net income per share – basic
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$ | 0.13 | $ | 0.73 | ||||||||||||
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Net income per share – diluted
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$ | 0.13 | $ | 0.69 | ||||||||||||
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Reconciliation of weighted-average shares outstanding:
|
||||||||||||||||
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Basic weighted-average shares outstanding
|
54,367 | 48,375 | ||||||||||||||
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Effect of dilutive securities:
|
||||||||||||||||
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Options
|
656 | 1,502 | ||||||||||||||
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Restricted shares
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465 | 468 | ||||||||||||||
|
Warrants
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- | 692 | ||||||||||||||
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Diluted weighted-average shares outstanding
|
55,488 | 51,037 | ||||||||||||||
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 6 of 11
SELECT COMFORT CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share amounts)
|
Twelve Months Ended
|
||||||||||||||||
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January 1,
|
% of
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January 2,
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% of
|
|||||||||||||
|
2011
|
Net Sales
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2010
|
Net Sales
|
|||||||||||||
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Net sales
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$ | 605,676 | 100.0 | % | $ | 544,202 | 100.0 | % | ||||||||
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Cost of sales
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227,413 | 37.5 | % | 208,742 | 38.4 | % | ||||||||||
|
Gross profit
|
378,263 | 62.5 | % | 335,460 | 61.6 | % | ||||||||||
|
Operating expenses:
|
||||||||||||||||
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Sales and marketing
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269,901 | 44.6 | % | 259,244 | 47.6 | % | ||||||||||
|
General and administrative
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53,572 | 8.8 | % | 49,560 | 9.1 | % | ||||||||||
|
Research and development
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2,147 | 0.4 | % | 1,973 | 0.4 | % | ||||||||||
|
Asset impairment charges
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260 | 0.0 | % | 686 | 0.1 | % | ||||||||||
|
Terminated equity financing costs
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- | 0.0 | % | 3,324 | 0.6 | % | ||||||||||
|
Total operating expenses
|
325,880 | 53.8 | % | 314,787 | 57.8 | % | ||||||||||
|
Operating income
|
52,383 | 8.6 | % | 20,673 | 3.8 | % | ||||||||||
|
Interest expense / other
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(1,893 | ) | (0.3 | %) | (5,983 | ) | (1.1 | %) | ||||||||
|
Income before income taxes
|
50,490 | 8.3 | % | 14,690 | 2.7 | % | ||||||||||
|
Income tax expense (benefit)
|
18,922 | 3.1 | % | (20,862 | ) | (3.8 | %) | |||||||||
|
Net income
|
$ | 31,568 | 5.2 | % | $ | 35,552 | 6.5 | % | ||||||||
|
Net income per share – basic
|
$ | 0.58 | $ | 0.78 | ||||||||||||
|
Net income per share – diluted
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$ | 0.57 | $ | 0.77 | ||||||||||||
|
Reconciliation of weighted-average shares outstanding:
|
||||||||||||||||
|
Basic weighted-average shares outstanding
|
54,005 | 45,682 | ||||||||||||||
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Effect of dilutive securities:
|
||||||||||||||||
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Options
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817 | 219 | ||||||||||||||
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Restricted shares
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442 | 269 | ||||||||||||||
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Warrants
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- | 28 | ||||||||||||||
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Diluted weighted-average shares outstanding
|
55,264 | 46,198 | ||||||||||||||
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 7 of 11
SELECT COMFORT CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share amounts)
subject to reclassification
|
January 1,
|
January 2,
|
|||||||
|
2011
|
2010
|
|||||||
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Assets
|
||||||||
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Current assets:
|
||||||||
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Cash and cash equivalents
|
$ | 81,361 | $ | 17,717 | ||||
|
Accounts receivable, net of allowance for doubtful accounts of $302 and $379, respectively
|
4,564 | 5,094 | ||||||
|
Inventories
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19,647 | 15,646 | ||||||
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Income taxes receivable
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- | 3,893 | ||||||
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Prepaid expenses
|
6,388 | 5,879 | ||||||
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Deferred income taxes
|
4,297 | 5,153 | ||||||
|
Other current assets
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652 | 720 | ||||||
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Total current assets
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116,909 | 54,102 | ||||||
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Property and equipment, net
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32,953 | 37,682 | ||||||
|
Deferred income taxes
|
15,965 | 19,071 | ||||||
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Other assets
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4,130 | 7,385 | ||||||
|
Total assets
|
$ | 169,957 | $ | 118,240 | ||||
|
Liabilities and Shareholders’ Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 42,025 | $ | 37,538 | ||||
|
Customer prepayments
|
12,944 | 11,237 | ||||||
|
Compensation and benefits
|
24,857 | 15,518 | ||||||
|
Taxes and withholding
|
5,359 | 4,528 | ||||||
|
Other current liabilities
|
11,671 | 10,716 | ||||||
|
Total current liabilities
|
96,856 | 79,537 | ||||||
|
Non-current liabilities:
|
||||||||
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Warranty liabilities
|
2,815 | 5,286 | ||||||
|
Other long-term liabilities
|
12,309 | 10,959 | ||||||
|
Total non-current liabilities
|
15,124 | 16,245 | ||||||
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Total liabilities
|
111,980 | 95,782 | ||||||
|
Shareholders’ equity:
|
||||||||
|
Undesignated preferred stock; 5,000 shares authorized,no shares issued and outstanding
|
- | - | ||||||
|
Common stock, $0.01 par value; 142,500 shares authorized, 55,455 and 54,310 shares issued and outstanding, respectively
|
555 | 543 | ||||||
|
Additional paid-in capital
|
36,799 | 32,860 | ||||||
|
Retained earnings (Accumulated deficit)
|
20,623 | (10,945 | ) | |||||
|
Total shareholders’ equity
|
57,977 | 22,458 | ||||||
|
Total liabilities and shareholders’ equity
|
$ | 169,957 | $ | 118,240 | ||||
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 8 of 11
SELECT COMFORT CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
subject to reclassification
|
Twelve Months Ended
|
||||||||
|
January 1,
|
January 2,
|
|||||||
|
2011
|
2010
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income
|
$ | 31,568 | $ | 35,552 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
14,626 | 19,054 | ||||||
|
Stock-based compensation
|
3,962 | 3,236 | ||||||
|
Disposals and impairments of assets
|
251 | 683 | ||||||
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Excess tax benefits from stock-based compensation
|
(1,358 | ) | - | |||||
|
Deferred income taxes
|
2,352 | (18,209 | ) | |||||
|
Change in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
530 | (155 | ) | |||||
|
Inventories
|
(4,001 | ) | 3,029 | |||||
|
Income taxes
|
6,647 | 22,007 | ||||||
|
Prepaid expenses and other assets
|
1,579 | (1,776 | ) | |||||
|
Accounts payable
|
3,995 | 2,545 | ||||||
|
Customer prepayments
|
1,707 | (243 | ) | |||||
|
Accrued compensation and benefits
|
11,471 | 943 | ||||||
|
Other taxes and withholding
|
53 | 1,604 | ||||||
|
Warranty liabilities
|
(1,398 | ) | (906 | ) | ||||
|
Other accruals and liabilities
|
(765 | ) | (725 | ) | ||||
|
Net cash provided by operating activities
|
71,219 | 66,639 | ||||||
|
Cash flows from investing activities:
|
||||||||
|
Purchases of property and equipment
|
(7,349 | ) | (2,459 | ) | ||||
|
Proceeds from sales of property and equipment
|
10 | 15 | ||||||
|
Net cash used in investing activities
|
(7,339 | ) | (2,444 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Net decrease in short-term borrowings
|
(1,074 | ) | (84,756 | ) | ||||
|
Repurchases of common stock
|
(1,391 | ) | - | |||||
|
Proceeds from issuance of common stock
|
1,014 | 26,534 | ||||||
|
Excess tax benefits from stock-based compensation
|
1,358 | - | ||||||
|
Debt issuance costs
|
(143 | ) | (1,313 | ) | ||||
|
Net cash used in financing activities
|
(236 | ) | (59,535 | ) | ||||
|
Increase in cash and cash equivalents
|
63,644 | 4,660 | ||||||
|
Cash and cash equivalents, at beginning of period
|
17,717 | 13,057 | ||||||
|
Cash and cash equivalents, at end of period
|
$ | 81,361 | $ | 17,717 | ||||
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 9 of 11
SELECT COMFORT CORPORATION
AND SUBSIDIARIES
Supplemental Financial Information
(unaudited)
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
|
January 1,
|
January 2,
|
January 1,
|
January 2,
|
|||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Percent of sales:
|
||||||||||||||||
|
Retail
|
83.7 | % | 83.1 | % | 84.0 | % | 81.2 | % | ||||||||
|
Direct and E-Commerce
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10.3 | % | 11.9 | % | 10.8 | % | 11.5 | % | ||||||||
|
Wholesale
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6.0 | % | 5.0 | % | 5.2 | % | 7.3 | % | ||||||||
|
Total
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
|
Sales growth rates:
|
||||||||||||||||
|
Retail same-store sales
|
12 | % | 23 | % | 21 | % | 0 | % | ||||||||
|
Direct and E-Commerce
|
(6 | %) | (4 | %) | 5 | % | (26 | %) | ||||||||
|
Company-Controlled same-store sales change
|
10 | % | 19 | % | 19 | % | (4 | %) | ||||||||
|
Net closed stores/other
|
(2 | %) | (13 | %) | (5 | %) | (6 | %) | ||||||||
|
Total Company-Controlled Channels
|
8 | % | 6 | % | 14 | % | (10 | %) | ||||||||
|
Wholesale
|
32 | % | (18 | %) | (21 | %) | (19 | %) | ||||||||
|
Total
|
9 | % | 4 | % | 11 | % | (11 | %) | ||||||||
|
Stores open:
|
||||||||||||||||
|
Beginning of period
|
392 | 408 | 403 | 471 | ||||||||||||
|
Opened
|
5 | 2 | 7 | 4 | ||||||||||||
|
Closed
|
(11 | ) | (7 | ) | (24 | ) | (72 | ) | ||||||||
|
End of period
|
386 | 403 | 386 | 403 | ||||||||||||
|
Other metrics:
|
||||||||||||||||
|
Average sales per store ($ in 000's)1
|
$ | 1,295 | $ | 1,046 | ||||||||||||
|
Average sales per square foot1
|
$ | 873 | $ | 710 | ||||||||||||
|
Stores > $1 million net sales1
|
70 | % | 48 | % | ||||||||||||
|
Average mattress sales per mattress unit:
|
||||||||||||||||
|
Company-controlled channels - historical definition2
|
$ | 1,694 | $ | 1,755 | $ | 1,719 | $ | 1,743 | ||||||||
|
Company-controlled channels - new definition3
|
$ | 2,035 | $ | 1,983 | $ | 2,010 | $ | 1,973 | ||||||||
|
1
|
Trailing twelve months for stores open at least one year.
|
|
2
|
Historical definition excluded revenue from adjustable foundations.
|
|
3
|
Revised definition includes revenue from adjustable foundations which has become a more significant part of the mattress mix.
|
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 10 of 11
SELECT COMFORT CORPORATION AND SUBSIDIARIES
Reported to Adjusted Statements of Operations Data Reconciliation
(in thousands, except per share amounts)
|
Three Months Ended January 2, 2010
|
Twelve Months Ended January 2, 2010
|
|||||||||||||||||||||||||||||||||||
|
As Reported
|
Normalize Income Tax Expense(1)
|
As Adjusted
|
As Reported Three Months Ended January 1, 2011
|
As Reported
|
Terminated Equity Financing Costs(2)
|
Normalize Income Tax Expense(1)
|
As Adjusted
|
As Reported Twelve Months Ended January 1, 2011
|
||||||||||||||||||||||||||||
|
Operating income
|
$ | 7,479 | $ | - | $ | 7,479 | $ | 11,477 | $ | 20,673 | $ | 3,324 | $ | - | $ | 23,997 | $ | 52,383 | ||||||||||||||||||
|
Interest expense / other
|
(1,032 | ) | - | (1,032 | ) | (67 | ) | (5,983 | ) | - | - | (5,983 | ) | (1,893 | ) | |||||||||||||||||||||
|
Income before income taxes
|
6,447 | - | 6,447 | 11,410 | 14,690 | 3,324 | - | 18,014 | 50,490 | |||||||||||||||||||||||||||
|
Income tax expense (benefit)
|
(28,862 | ) | 31,312 | 2,450 | 4,292 | (20,862 | ) | 1,263 | 26,444 | 6,845 | 18,922 | |||||||||||||||||||||||||
|
Net income (loss)
|
$ | 35,309 | $ | (31,312 | ) | $ | 3,997 | $ | 7,118 | $ | 35,552 | $ | 2,061 | $ | (26,444 | ) | $ | 11,169 | $ | 31,568 | ||||||||||||||||
|
Net income (loss) per share –
|
||||||||||||||||||||||||||||||||||||
|
Basic
|
$ | 0.73 | $ | (0.65 | ) | $ | 0.08 | $ | 0.13 | $ | 0.78 | $ | 0.05 | $ | (0.58 | ) | $ | 0.24 | $ | 0.58 | ||||||||||||||||
|
Diluted
|
$ | 0.69 | $ | (0.61 | ) | $ | 0.08 | $ | 0.13 | $ | 0.77 | $ | 0.04 | $ | (0.57 | ) | $ | 0.24 | $ | 0.57 | ||||||||||||||||
|
Basic Shares
|
48,375 | 48,375 | 48,375 | 54,367 | 45,682 | 45,682 | 45,682 | 45,682 | 54,005 | |||||||||||||||||||||||||||
|
Diluted Shares
|
51,037 | 51,037 | 51,037 | 55,488 | 46,198 | 46,198 | 46,198 | 46,198 | 55,264 | |||||||||||||||||||||||||||
(1)During the three and twelve months ended January 2, 2010 we adjusted the valuation allowance against deferred tax assets. As adjusted income tax expense for both periods is presented on a normalized basis using an effective tax rate of 38.0%
(2)During the twelve months ended January 2, 2010 we expensed direct, incremental costs incurred in connection with a terminated equity financing transaction
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
Select Comfort Announces Fourth Quarter and Full-Year 2010 Results – Page 11 of 11
SELECT COMFORT CORPORATION AND SUBSIDIARIES
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
(in thousands)
We define earnings before interest, taxes, depreciation and amortization (EBITDA) as net income plus: income tax expense, interest expense, depreciation and amortization, stock-based compensation and asset impairments consistent with the definition used in our debt covenant calculations. Management believes EBITDA is a useful indicator of the Company's financial performance. Our definition of EBITDA may not be comparable to similarly titled definitions used by other companies. The tables below reconcile EBITDA, which is a non-GAAP financial measure, to comparable GAAP financial measures:
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Three Months Ended
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Fiscal Years Ended | |||||||||||||||
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January 1,
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January 2,
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January 1,
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January 2,
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2011
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2010
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2011
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2010
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Net income
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$ | 7,118 | $ | 35,309 | $ | 31,568 | $ | 35,552 | ||||||||
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Income tax expense (benefit)
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4,292 | (28,862 | ) | 18,922 | (20,862 | ) | ||||||||||
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Interest expense
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87 | 1,031 | 1,951 | 5,996 | ||||||||||||
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Depreciation and amortization
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3,295 | 3,441 | 13,012 | 17,681 | ||||||||||||
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Stock-based compensation
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1,201 | 696 | 3,962 | 3,236 | ||||||||||||
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Asset impairments
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43 | 198 | 260 | 686 | ||||||||||||
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EBITDA
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$ | 16,036 | $ | 11,813 | $ | 69,675 | $ | 42,289 | ||||||||
Note - Our 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