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Select Comfort Cuts 120 Jobs; Suspends SAP Implementation - Update

Tuesday, bed and sleep-related product maker Select Comfort Corp. (SCSS), citing further slow down in sales after Thanksgiving and anticipating continued macro-economic challenges in 2009, announced a series of cost reduction initiatives including a cut in workforce by approximately 120 positions and suspension of SAP implementation.

The Minneapolis, Minnesota-based company said that actions being taken include a workforce reduction of approximately 120 positions within headquarters or approximately 22% of the corporate workforce, which includes general and administrative and customer service positions. In addition, the company announced that it will immediately cease all activities associated with the implementation of SAP-based IT applications.

The company anticipates cost savings of approximately $15 million on an annualized basis from the initiatives and additional actions that are currently being explored, beginning in the first quarter of 2009.

Select Comfort expects to incur a charge of approximately $35 million in the fourth quarter of 2008, which are primarily asset impairments with approximately $4.0 million of severance and other cash costs.

As announced earlier, the company is on track to close approximately 20 stores during the first quarter of 2009. Select Comfort said that it will continue to examine its store base and expects to close additional stores throughout 2009.

Bill McLaughlin, President and CEO, Select Comfort Corp. said, "During the course of the year, we've navigated through an extremely difficult macro-economic environment by focusing on reducing our cost structure and improving product margins. We expect these macro-economic challenges to continue and possibly worsen in 2009. Therefore, we've taken additional actions to better align our cost and cash structure with our 2009 outlook for the economy."

Select Comfort closed Tuesday's regular trading at $0.26, up $0.02 or 9.57%, on a volume of 460,283 shares on the Nasdaq. In after-hours trade, the stock is up $0.05 or 20.39% trading at $0.31.

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