Select Comfort Corp. –

MINNEAPOLIS – Select Comfort Corp., a nationwide retailer of air mattresses and sleep products, went public December 4, offering 4 million shares at $17 apiece. The stock priced at the high end of the company’s $15 to $17 filing range.

The initial public offering, underwritten by Hambrecht & Quist, BancBoston Robertson Stephens, Piper Jaffray Inc. and Charles Schwab & Co. Inc., left 18.1 million shares outstanding.

The company’s largest investor, St. Paul Venture Capital, held on to all of its shares, giving the firm a 28.3% ownership position after the offering. Consumer Venture Partners, Macke L.P. and H&Q Select Comfort Investors, an affiliate of Hambrecht & Quist, all retained their entire stake in the company.

Selling shareholders, who together sold 1.2 million shares, included Apex Investment Fund and The Productivity Fund II, which jointly unloaded 281,795 of their 1,331,909 shares. General Electric Capital Corp. sold 82,590 of its 1,315,096 shares; Norwest Venture Capital, 113,783 of its 1,084,763 shares; Cherry Tree Ventures IV, 116,359 of its 828,690 shares; Alex. Brown & Sons Employees Venture Fund 7,055 of its 29,609 shares; Bayview Investors Ltd., comprised mainly of directors and employees of BancBoston Robertson Stephens, 12,715 of its 29,609 shares; KCB BV, L.P., 161,771 of its 750,843 shares; and directors and current and former employees of the company sold 423,932 shares.

Select Comfort believes it is revolutionizing the mattress industry by offering a unique product through a variety of service-oriented retail channels. The company offers its air beds through 264 Select Comfort retail stores and lease departments, direct marketing operations and road show events.

The estimated $43.3 million in proceeds raised by the offering will be used for general corporate purposes, as well as to repay debt, increase the company’s amount of retail locations and to build its third manufacturing and distribution facility in the first half of 1999.

The company has never been profitable, racking up losses of $413,000 in the nine months ended October 3, 1998 and $2.8 million in the fiscal year ended January 3, 1998.

Patrick Hopf, president of St. Paul Venture Capital, and Christopher Kirchen, a general partner of Consumer Venture Partners, were named to the company’s board of directors in December 1991. Mr. Hopf served as Select Comfort’s chairman from August 1993 to April 1996. Kenneth Macke, a general partner of Macke L.P., and Jean-Michel Valette, a general partner of H&Q Select Comfort Investors, joined the board in 1994.


Select Comfort – Selected Financials

(in thousands, except per share data)

Year Ended

Dec. 31, 1993* Dec. 31, 1994 Dec. 30, 1995

Net sales 14,041 30,472 68,629

Net loss -2,752 -3,371 -4,560

Net loss per share -2.16 -2.65 -3.16

*Unaudited


Select Comfort – Selected Financials

(in thousands, except per share data)

continued

Year Ended Nine Months Ended

Dec. 28, 1996 Jan. 3, 1998 Sept. 27, 1997* Oct. 3, 1998

Net sales 102,028 184,430 126,470 178,835

Net loss -3,685 -2,846 -2,524 -413

Net loss per share

-2.61 -1.59 -1.39 -0.40

*Unaudited