Commitments and Contingencies

3 Months Ended

Apr. 04, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Sales Returns

The activity in the sales returns liability account was as follows (in thousands):

	Three Months Ended
	April 4, 2015			March 29, 2014
Balance at beginning of year	$	15,262		$	9,433
Additions that reduce net sales	23,077			19,021
Deductions from reserves	(23,174		)	(17,717		)
Balance at end of period	$	15,165		$	10,737

Warranty Liabilities

The activity in the accrued warranty liabilities account was as follows (in thousands): 

	Three Months Ended
	April 4, 2015			March 29, 2014
Balance at beginning of year	$	5,824		$	4,153
Additions charged to costs and expenses for current-year sales	3,008			1,568
Deductions from reserves	(2,318		)	(1,536		)
Changes in liability for pre-existing warranties during the current year, including expirations	211			153
Balance at end of period	$	6,725		$	4,338

Legal Proceedings

We are involved from time to time in various legal proceedings arising in the ordinary course of our business, including primarily commercial, product liability, employment and intellectual property claims. In accordance with generally accepted accounting principles in the United States, we record a liability in our consolidated financial statements with respect to any of these matters when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. With respect to currently pending legal proceedings, we have not established an estimated range of reasonably possible additional losses either because we believe that we have valid defenses to claims asserted against us or the proceeding has not advanced to a stage of discovery that would enable us to establish an estimate. We currently do not expect the outcome of these matters to have a material effect on our consolidated results of operations, financial position or cash flows. Litigation, however, is inherently unpredictable, and it is possible that the ultimate outcome of one or more claims asserted against us could adversely impact our consolidated results of operations, financial position or cash flows. We expense legal costs as incurred.

On August 23, 2013, we filed a complaint in U.S. District Court in the District of Minnesota against Gentherm, Inc. seeking a declaratory judgment that Select Comfort be named as an assignee of certain patents asserted against Select Comfort by Gentherm or in the alternative that the asserted patents are not enforceable or are invalid or that Select Comfort and its products do not infringe any valid claim of the asserted patents. This complaint was filed after Gentherm asserted in a letter that Select Comfort’s recently introduced DualTemp™ layer product infringed certain patents owned by Gentherm. Subsequently, Gentherm filed counterclaims alleging infringement of its patents and seeking various legal and equitable remedies, including injunctive relief, treble damages and attorney’s fees. In March of 2015, the parties agreed to dismiss without prejudice all of the claims and counterclaims asserted in this litigation.