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Commitments and Contingencies
3 Months Ended
Apr. 02, 2016
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 2,
2016
 
April 4,
2015
Balance at beginning of year
$
20,562

 
$
15,262

Additions that reduce net sales
23,636

 
23,077

Deductions from reserves
(21,288
)
 
(23,174
)
Balance at end of period
$
22,910

 
$
15,165



Warranty Liabilities
   
The activity in the accrued warranty liabilities account was as follows (in thousands): 
 
Three Months Ended
 
April 2,
2016
 
April 4,
2015
Balance at beginning of year
$
10,028

 
$
5,824

Additions charged to costs and expenses for current-year sales
3,585

 
3,008

Deductions from reserves
(3,272
)
 
(2,318
)
Changes in liability for pre-existing warranties during the current year, including expirations
(574
)
 
211

Balance at end of period
$
9,767

 
$
6,725


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 December 4, 2015, Saeid Azimpour, a consumer, filed a purported class-action lawsuit in U.S. District Court in Minnesota alleging he was fraudulently induced to purchase a down alternative pillow at a Sleep Number store based on signage that indicated that the pillow was 50% off. Plaintiff alleges that the price he paid for the pillow was not truly 50% off the price at which Sleep Number previously sold the pillow. Plaintiff asserts 10 causes of action including consumer fraud, unlawful trade practices, deceptive trade practices under Minnesota law, violation of the Minnesota false advertising law, unjust enrichment, violation of the California unfair competition law, violation of the California false advertising law and violation of the California remedies act. Plaintiff seeks to represent all individuals who “purchased one or more items from the Company advertised or priced at a discount from the original retail price at any time between December 1, 2011 and present.” Plaintiff seeks injunctive relief, damages, disgorgement and attorneys’ fees. We believe the claims asserted in this lawsuit are without merit and we intend to vigorously defend this case.