The Company leases its retail, office and manufacturing space under operating leases which, in addition to the minimum

lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating

expenses. While the Company’s local market development approach generally results in long-term participation in given

markets, its retail store leases generally provide for an initial lease term of five to 10 years. Sleep Number’s office and

manufacturing leases provide for an initial lease term of up to 15 years. In addition, its mall-based retail store leases may

require payment of variable rent based on net sales in excess of certain thresholds. Certain leases may contain options to

extend the term of the original lease. The exercise of lease renewal options is at the Company’s sole discretion. Lease

options are included in the lease term only if exercise is reasonably certain at lease commencement. The Company lease

agreements do not contain any material residual value guarantees. The Company also leases vehicles and certain

equipment under operating leases with an initial lease term of three to six years.

The Company’s operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease

costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent

escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease

commencement date or the date the Company takes possession of the property. During lease renewal negotiations that

extend beyond the original lease term, the Company estimates straight-line rent expense based on current market

conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be

reasonably estimated. Future payments for real estate taxes and certain building operating expenses for which the

Company is obligated are not included in operating lease costs.

At December 28, 2024, the Company’s finance lease right-of-use assets and lease liabilities were not significant.

(1)Includes short-term lease costs which are not significant.

The maturities of operating lease liabilities as of December 28, 2024, were as follows(1) (in thousands):


2025	$104,800
2026	94,005
2027	77,310
2028	64,734
2029	44,711
Thereafter	76,495
Total operating lease payments(2)	462,055
Less: Interest	72,547
Present value of operating lease liabilities	$389,508

(1)Total operating lease payments exclude $12 million of legally binding minimum lease payments for leases signed but not yet commenced.

(2)Includes the current portion of $82 million for operating lease liabilities.

Other information related to operating leases was as follows:


	December 28, 2024	December 30, 2023
Weighted-average remaining lease term (years)	5.4	5.9
Weighted-average discount rate	6.6%	6.5%


(in thousands)	2024	2023	2022
Cash paid for amounts included in present value of operating lease liabilities	$108,116	$108,294	$99,819
Right-of-use assets obtained in exchange for operating lease liabilities	$57,712	$69,396	$82,117