Commitments and Contingencies

3 Months Ended

Apr. 02, 2022

Commitments and Contingencies Disclosure [Abstract]

Warranty Liabilities

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


	Three Months Ended
	April 2, 2022		April 3, 2021
Balance at beginning of year	$	10,069	$	12,152
Additions charged to costs and expenses for current-year sales	4,447		4,330
Deductions from reserves	(4,750)		(4,717)
Changes in liability for pre-existing warranties during the current year, including expirations	(31)		(156)
Balance at end of period	$	9,735	$	11,609

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 U.S. generally accepted accounting principles, 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. If a material loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. With respect to currently pending legal proceedings, we have not established an estimated range of reasonably possible material losses either because we believe that we have valid defenses to claims asserted against us, the proceeding has not advanced to a stage of discovery that would enable us to establish an estimate, or the potential loss is not material. We currently do not expect the outcome of pending legal proceedings 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 14, 2021, Steamfitters Local 449 Pension & Retirement Security Funds filed a putative class action complaint in the United States District Court for the District of Minnesota on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021, inclusive, against Sleep Number, Shelly Ibach and David Callen. Plaintiff alleges material misstatements and omissions in certain of Sleep Number’s public disclosures during the purported class period, in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The complaint seeks, among other things, unspecified monetary damages, reasonable costs and expenses and equitable/injunctive or other relief as deemed appropriate by the Court. We believe these claims are without merit and intend to vigorously defend the matter.