Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 28, 2017 | Jul. 02, 2016 | |
Entity Information [Line Items] | |||
Entity Registrant Name | SELECT COMFORT CORP | ||
Entity Central Index Key | 827,187 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 42,950,000 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 747,344 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 11,609 | $ 20,994 |
Marketable debt securities – current | 0 | 6,567 |
Accounts receivable, net of allowance for doubtful accounts of $884 and $1,039, respectively | 19,705 | 29,002 |
Inventories | 75,026 | 86,600 |
Income taxes receivable | 0 | 15,284 |
Prepaid expenses | 8,705 | 10,207 |
Other current assets | 23,282 | 13,737 |
Total current assets | 138,327 | 182,391 |
Non-current assets: | ||
Marketable debt securities – non-current | 0 | 8,553 |
Property and equipment, net | 208,367 | 204,376 |
Goodwill and intangible assets, net | 80,817 | 83,344 |
Deferred income taxes | 4,667 | 3,036 |
Other non-current assets | 24,988 | 19,197 |
Total assets | 457,166 | 500,897 |
Current liabilities: | ||
Accounts payable | 105,375 | 103,941 |
Customer prepayments | 26,207 | 51,473 |
Accrued sales returns | 15,222 | 20,562 |
Compensation and benefits | 19,455 | 15,670 |
Taxes and withholding | 23,430 | 9,856 |
Other current liabilities | 35,628 | 23,447 |
Total current liabilities | 225,317 | 224,949 |
Non-current liabilities: | ||
Other non-current liabilities | 71,529 | 53,609 |
Total liabilities | 296,846 | 278,558 |
Shareholders' equity: | ||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.01 par value; 142,500 shares authorized, 43,569 and 49,402 shares issued and outstanding, respectively | 436 | 494 |
Additional paid-in capital | 0 | 0 |
Retained earnings | 159,884 | 221,859 |
Accumulated other comprehensive loss | 0 | (14) |
Total shareholders’ equity | 160,320 | 222,339 |
Total liabilities and shareholders’ equity | $ 457,166 | $ 500,897 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Current assets: | ||
Accounts receivable, net of allowance for doubtful accounts | $ 884 | $ 1,039 |
Shareholders' equity: | ||
Undesignated preferred stock, shares authorized (in shares) | 5,000 | 5,000 |
Undesignated preferred stock, shares issued (in shares) | 0 | 0 |
Undesignated preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 142,500 | 142,500 |
Common stock, shares issued (in shares) | 43,569 | 49,402 |
Common stock, shares outstanding (in shares) | 43,569 | 49,402 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Income Statement [Abstract] | |||
Net sales | $ 1,311,291 | $ 1,213,699 | $ 1,156,757 |
Cost of sales | 501,131 | 472,948 | 449,907 |
Gross profit | 810,160 | 740,751 | 706,850 |
Operating expenses: | |||
Sales and marketing | 595,845 | 550,475 | 512,007 |
General and administrative | 109,674 | 99,209 | 84,864 |
Research and development | 27,991 | 15,971 | 8,233 |
Total operating expenses | 733,510 | 665,655 | 605,104 |
Operating income | 76,650 | 75,096 | 101,746 |
Other (expense) income, net | (717) | 334 | 362 |
Income before income taxes | 75,933 | 75,430 | 102,108 |
Income tax expense | 24,516 | 24,911 | 34,134 |
Net income | $ 51,417 | $ 50,519 | $ 67,974 |
Basic net income per share: | |||
Net income per share – basic | $ 1.11 | $ 0.99 | $ 1.27 |
Weighted-average shares – basic | 46,154,000 | 51,252,000 | 53,452,000 |
Diluted net income per share: | |||
Net income per share – diluted | $ 1.10 | $ 0.97 | $ 1.25 |
Weighted-average shares – diluted | 46,902,000 | 52,101,000 | 54,193,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 51,417 | $ 50,519 | $ 67,974 |
Other comprehensive income (loss) – unrealized gain (loss) on available-for-sale marketable debt securities, net of income tax | 14 | 20 | (47) |
Comprehensive income | $ 51,431 | $ 50,539 | $ 67,927 |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Balance (in shares) at Dec. 28, 2013 | 54,901 | ||||
Balance at Dec. 28, 2013 | $ 225,220 | $ 549 | $ 5,382 | $ 219,276 | $ 13 |
Comprehensive income: | |||||
Net income | 67,974 | 0 | 0 | 67,974 | 0 |
Unrealized gain (loss) on available-for-sale marketable debt securities | (47) | $ 0 | 0 | 0 | (47) |
Exercise of common stock options (in shares) | 239 | ||||
Exercise of common stock options | 2,873 | $ 2 | 2,871 | 0 | 0 |
Tax effect from stock-based compensation | 581 | $ 0 | 581 | 0 | 0 |
Stock-based compensation (in shares) | (96) | ||||
Stock-based compensation | 6,798 | $ (1) | 6,799 | 0 | 0 |
Repurchases of common stock (in shares) | (2,246) | ||||
Repurchases of common stock | (46,492) | $ (22) | (15,633) | (30,837) | 0 |
Balance (in shares) at Jan. 03, 2015 | 52,798 | ||||
Balance at Jan. 03, 2015 | 256,907 | $ 528 | 0 | 256,413 | (34) |
Comprehensive income: | |||||
Net income | 50,519 | 0 | 0 | 50,519 | 0 |
Unrealized gain (loss) on available-for-sale marketable debt securities | 20 | $ 0 | 0 | 0 | 20 |
Exercise of common stock options (in shares) | 253 | ||||
Exercise of common stock options | 2,976 | $ 3 | 2,973 | 0 | 0 |
Tax effect from stock-based compensation | 1,828 | $ 0 | 1,828 | 0 | 0 |
Stock-based compensation (in shares) | (7) | ||||
Stock-based compensation | 10,290 | $ 0 | 10,290 | 0 | 0 |
Repurchases of common stock (in shares) | (3,642) | ||||
Repurchases of common stock | $ (100,201) | $ (37) | (15,091) | (85,073) | 0 |
Balance (in shares) at Jan. 02, 2016 | 49,402 | 49,402 | |||
Balance at Jan. 02, 2016 | $ 222,339 | $ 494 | 0 | 221,859 | (14) |
Comprehensive income: | |||||
Net income | 51,417 | 0 | 0 | 51,417 | 0 |
Unrealized gain (loss) on available-for-sale marketable debt securities | 14 | $ 0 | 0 | 0 | 14 |
Exercise of common stock options (in shares) | 188 | ||||
Exercise of common stock options | 2,298 | $ 2 | 2,296 | 0 | 0 |
Tax effect from stock-based compensation | (1,016) | $ 0 | (1,016) | 0 | 0 |
Stock-based compensation (in shares) | 11 | ||||
Stock-based compensation | 11,961 | $ 0 | 11,961 | 0 | 0 |
Repurchases of common stock (in shares) | (6,032) | ||||
Repurchases of common stock | $ (126,693) | $ (60) | (13,241) | (113,392) | 0 |
Balance (in shares) at Dec. 31, 2016 | 43,569 | 43,569 | |||
Balance at Dec. 31, 2016 | $ 160,320 | $ 436 | $ 0 | $ 159,884 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 51,417 | $ 50,519 | $ 67,974 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 57,172 | 47,630 | 39,809 |
Stock-based compensation | 11,961 | 10,290 | 6,798 |
Net loss on disposals and impairments of assets | 27 | 190 | 492 |
Excess tax benefits from stock-based compensation | (517) | (2,182) | (1,163) |
Deferred income taxes | (1,640) | 11,924 | (311) |
Gain on sale of non-marketable equity securities | 0 | (6,891) | 0 |
Changes in operating assets and liabilities, net of effect of acquisition: | |||
Accounts receivable | 9,297 | (9,259) | (4,717) |
Inventories | 11,574 | (33,065) | (13,383) |
Income taxes | 25,119 | (13,943) | (4,314) |
Prepaid expenses and other assets | (2,195) | 8,680 | (9,973) |
Accounts payable | (4,965) | 19,130 | 14,340 |
Customer prepayments | (25,266) | 22,735 | 13,334 |
Accrued compensation and benefits | 2,808 | (17,493) | 17,735 |
Other taxes and withholding | 2,723 | 135 | 2,584 |
Other accruals and liabilities | 14,130 | 19,542 | 15,263 |
Net cash provided by operating activities | 151,645 | 107,942 | 144,468 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (57,852) | (85,586) | (76,594) |
Proceeds from marketable debt securities | 21,053 | 127,664 | 54,506 |
Investments in marketable debt securities | (5,968) | (29,299) | (90,349) |
Proceeds from sales of property and equipment | 92 | 72 | 5 |
Acquisition of business | 0 | (70,018) | 0 |
Proceeds from (investment in) non-marketable equity securities | 0 | 12,891 | (1,500) |
Increase in restricted cash | 0 | 0 | (500) |
Net cash used in investing activities | (42,675) | (44,276) | (114,432) |
Cash flows from financing activities: | |||
Repurchases of common stock | (126,693) | (100,201) | (46,492) |
Net increase in short-term borrowings | 5,932 | 1,097 | 6,192 |
Proceeds from issuance of common stock | 2,298 | 2,976 | 2,873 |
Excess tax benefits from stock-based compensation | 517 | 2,182 | 1,163 |
Debt issuance costs | (409) | (721) | 0 |
Net cash used in financing activities | (118,355) | (94,667) | (36,264) |
Net decrease in cash and cash equivalents | (9,385) | (31,001) | (6,228) |
Cash and cash equivalents, at beginning of period | 20,994 | 51,995 | 58,223 |
Cash and cash equivalents, at end of period | 11,609 | 20,994 | 51,995 |
Supplemental Cash Flow Information [Abstract] | |||
Income taxes (received) paid | (653) | 26,681 | 38,474 |
Interest paid | 608 | 96 | 49 |
Purchases of property and equipment included in accounts payable | $ 5,517 | $ 5,051 | $ 5,802 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Business and Summary of Significant Accounting Policies | Business and Summary of Significant Accounting Policies Business & Basis of Presentation Select Comfort Corporation and our 100%-owned subsidiaries (Select Comfort or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of a complete line of Sleep Number beds. We are the pioneer in biometric sleep tracking and adjustability. Only the Sleep Number bed offers SleepIQ technology - proprietary sensor technology that works directly with the bed’s DualAir system to track each individual’s sleep. SleepIQ technology communicates how you slept and what adjustments you can make to optimize your sleep and improve your daily life. Select Comfort also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. As the only national specialty-mattress retailer, we generate revenue by selling products through two distribution channels. Our Company-Controlled channel, which includes Retail, Online and Phone, sells directly to consumers. Our Wholesale/Other channel sells to and through selected retail and wholesale customers in the United States and the QVC shopping channel. The consolidated financial statements include the accounts of Select Comfort Corporation and our subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. Fiscal Year Our fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2016 ended December 31, 2016 ; fiscal 2015 ended January 2, 2016 ; and fiscal 2014 ended January 3, 2015 . Fiscal years 2016 and 2015 each had 52 weeks and fiscal year 2014 had 53 weeks. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. Our critical accounting policies consist of stock-based compensation, goodwill and indefinite-lived intangible assets, warranty liabilities and revenue recognition. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in our consolidated balance sheets and in net increase in short-term borrowings in the financing activities section of our consolidated statements of cash flows. Book overdrafts totaled $26.6 million and $20.7 million at December 31, 2016 , and January 2, 2016 , respectively. Marketable Debt Securities Our investment portfolio was comprised of U.S. agency securities, corporate debt securities and municipal bonds. The value of these securities was subject to market and credit volatility during the period these investments were held. We classify marketable debt securities as available-for-sale investments and these securities were stated at their estimated fair value. Our investments with original maturities of greater than three months, but current maturities of less than one year, are recorded as marketable debt securities – current. Our investments with current maturities of more than one year are recorded as marketable debt securities – non-current. Unrealized gains and losses, net of income tax, are reported as a component of accumulated other comprehensive income (loss) in our consolidated balance sheets. Other-than-temporary declines in market value, if any, from original cost are charged to other (expense) income, net in the consolidated statements of operations in the period in which the loss occurs, and a new cost basis for the security is established. In determining whether an other-than-temporary decline in the market value has occurred, we consider the duration and extent that the fair value of the investment is below its cost. Realized gains and losses, if any, are calculated on the specific identification method and are measured and reclassified from accumulated other comprehensive income (loss) in our consolidated balance sheets to other (expense) income, net in our consolidated statements of operations. Concentration of Credit Risk Our investment policy’s primary focus is to preserve principal and maintain adequate liquidity. Our investment policy addresses the concentration of credit risk by limiting the concentration in certain investment types. Our exposure to a concentration of credit risk consists primarily of cash and cash equivalents. We place our cash with high-credit quality issuers and financial institutions. We previously held investments in U.S. agency securities, corporate debt securities and municipal bonds. We believe no significant concentration of credit risk exists with respect to our cash and cash equivalents. Accounts Receivable Accounts receivable are recorded net of an allowance for expected losses and consist primarily of receivables from wholesale customers and receivables from third-party financiers for customer credit card purchases. The allowance is recognized in an amount equal to anticipated future write-offs. We estimate future write-offs based on delinquencies, aging trends, industry risk trends, our historical experience and current trends. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. Inventories Inventories include materials, labor and overhead and are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Property and Equipment Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net income in our consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable. Estimated useful lives of our property and equipment by major asset category are as follows: Leasehold improvements 5 to 11 years Furniture and equipment 5 to 7 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years Goodwill and Intangible Assets, Net Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company's net identifiable assets. Our intangible assets include developed technologies, trade names/trademarks and customer relationships. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 7 - 10 years. Asset Impairment Charges Long-lived Assets and Definite-lived Intangible Assets - we review our long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When we recognize an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If we recognize an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The Financial Accounting Standards Board's (FASB) guidance allows us to perform either a quantitative assessment or a qualitative assessment before calculating the fair value of a reporting unit. We have elected to perform the quantitative assessment. The quantitative goodwill impairment test is a two-step process. The first step is a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. If this step reflects impairment, then the loss would be measured as the excess of recorded goodwill over its implied fair value. Implied fair value is the excess of fair value of the reporting unit over the fair value of all identified assets and liabilities. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and our market capitalization. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. Based on our 2016 assessments, we determined there was no impairment. Warranty Liabilities We provide a limited warranty on most of the products we sell. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by us and are adjusted for any current trends as appropriate. Actual warranty claim costs could differ from these estimates. We regularly assess and adjust the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. We classify as non-current those estimated warranty costs expected to be paid out in greater than one year. The activity in the accrued warranty liabilities account was as follows (in thousands): 2016 2015 2014 Balance at beginning of period $ 10,028 $ 5,824 $ 4,153 Additions charged to costs and expenses for current-year sales 9,034 9,368 9,437 Deductions from reserves (10,016 ) (6,486 ) (8,118 ) Changes in liability for pre-existing warranties during the current year, including expirations (413 ) 1,322 352 Balance at end of period $ 8,633 $ 10,028 $ 5,824 Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: • Level 1 – observable inputs such as quoted prices in active markets; • Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Our Level 2 securities included U.S. Agency bonds, corporate bonds and municipal bonds whose value is determined by a third-party pricing service using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves and benchmark securities. We did not hold any Level 3 securities at December 31, 2016 or January 2, 2016. We generally estimate fair value of long-lived assets, including our retail stores, using the income approach, which we base on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date. Dividends We are not restricted from paying cash dividends under our credit agreement so long as we are not in default under the credit agreement and so long as the payment of such dividends would not create an event of default. However, we have not historically paid, and have no current plans to pay, cash dividends on our common stock. Revenue Recognition Revenue is recognized when the sales price is fixed or determinable, collectability is reasonably assured and title passes. Amounts billed to customers for delivery and setup are included in net sales. Revenue is reported net of estimated sales returns and excludes sales taxes. We accept sales returns after a 100-night trial period. The accrued sales returns estimate is based on historical return rates and is adjusted for any current trends as appropriate. If actual returns vary from expected rates, sales in future periods are adjusted. Our SleepIQ system is a multiple-element arrangement with deliverables that include a bed, hardware and software. We analyze our multiple-element arrangement(s) to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. We determined that the SleepIQ system has two units of accounting consisting of: (i) the bed; and (ii) the hardware/software. The hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. We valued the two units of accounting based on their relative selling prices. At December 31, 2016 and January 2, 2016 , we had deferred revenue totaling $61.3 million and $33.6 million , of which $21.0 million and $7.7 million are included in other current liabilities, respectively, and $40.3 million and $25.9 million are included in other non-current liabilities, respectively, in our consolidated balance sheets. We also have related deferred costs totaling $33.2 million and $21.6 million , of which $11.6 million and $5.0 million are included in other current assets, respectively, and $21.6 million and $16.6 million are included in other non-current assets, respectively, in our consolidated balance sheets. The deferred revenue and costs are recognized over the product’s estimated life of four years . Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within our industry): Cost of Sales Sales & Marketing • Costs associated with purchasing, manufacturing, shipping, handling and delivering our products to our retail stores and customers; • Physical inventory losses, scrap and obsolescence; • Related occupancy and depreciation expenses; • Costs associated with returns and exchanges; and • Estimated costs to service customer warranty claims. • Advertising and media production; • Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage; • Payroll and benefits for sales and customer service staff; • Store occupancy costs; • Store depreciation expense; • Credit card processing fees; and • Promotional financing costs. G&A R&D (1) • Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management; • Occupancy costs of corporate facilities; • Depreciation related to corporate assets; • Information hardware, software and maintenance; • Insurance; • Investor relations costs; and • Other overhead costs. • Internal labor and benefits related to research and development activities; • Outside consulting services related to research and development activities; and • Testing equipment related to research and development activities. (1) Costs incurred in connection with R&D are charged to expense as incurred. Operating Leases We lease our 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. Our retail store leases generally provide for an initial lease term of five to 10 years. In addition, our mall-based retail store leases may require payment of contingent rent based on net sales in excess of certain thresholds. Certain retail store leases may contain options to extend the term of the original lease. Minimum rent expense, which excludes contingent rents, is recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. We record any difference between the straight-line rent amounts and amounts payable under the leases as part of deferred rent, in other current liabilities or other non-current liabilities, as appropriate. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date we take possession of the property. During lease renewal negotiations that extend beyond the original lease term, we estimate straight-line rent expense based on current market conditions. At December 31, 2016 , and January 2, 2016 , deferred rent included in other current liabilities in our consolidated balance sheets was $0.2 million and $0.4 million , respectively, and deferred rent included in other non-current liabilities in our consolidated balance sheets was $9.6 million and $7.5 million , respectively. Contingent rent expense is recorded when it is probable the expense has been incurred and the amount is reasonably estimable. Future payments for real estate taxes and certain building operating expenses for which we are obligated are not included in minimum lease payments. Leasehold improvements that are funded by landlord incentives or allowances under an operating lease are recorded as deferred lease incentives, in other current liabilities or other non-current liabilities, as appropriate and amortized as reductions to rent expense over the lease term. At December 31, 2016 , and January 2, 2016 , deferred lease incentives included in other current liabilities in our consolidated balance sheets were $2.9 million and $2.8 million , respectively, and deferred lease incentives included in other non-current liabilities in our consolidated balance sheets were $8.9 million and $7.9 million , respectively. Pre-Opening Costs Costs associated with the start-up and promotion of new retail store openings are expensed as incurred. Advertising Costs We incur advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs. Advertising expense was $189.8 million , $180.8 million and $158.5 million in 2016 , 2015 and 2014 , respectively. Advertising costs deferred and included in prepaid expenses in our consolidated balance sheets were $1.2 million and $4.5 million as of December 31, 2016 , and January 2, 2016 , respectively. Insurance We are self-insured for certain losses related to health and workers’ compensation claims, although we obtain third-party insurance coverage to limit exposure to these claims. We estimate our self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. Our self-insurance liability was $6.2 million and $7.7 million at December 31, 2016 , and January 2, 2016 , respectively. At December 31, 2016 , and January 2, 2016 , $3.5 million and $4.0 million , respectively, were included in compensation and benefits and $2.7 million and $3.7 million , respectively, were included in other non-current liabilities in our consolidated balance sheets. At December 31, 2016 and January 2, 2016 , we had a restricted deposit of $3.2 million with our insurer that serves as collateral for our workers’ compensation insurance obligations and was included in other current assets in our consolidated balance sheets. Software Capitalization For software developed or obtained for internal use, we capitalize direct external costs associated with developing or obtaining internal-use software. In addition, we capitalize certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. We expense any data conversion or training costs as incurred. Stock-Based Compensation We compensate officers, directors and key employees with stock-based compensation under two stock plans approved by our shareholders in 2004 and 2010 and administered under the supervision of our Board of Directors (Board). At December 31, 2016 , a total of 3.9 million shares were available for future grant under the 2010 stock plan. These plans include non-qualified stock options and stock awards. We record stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. We recognize stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. We reduce compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. We include, as part of cash flows from financing activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. See " New Accounting Pronouncements " below regarding revised guidance for stock-based compensation in 2017. Stock Options - stock option awards are granted at exercise prices equal to the closing price of our stock on the grant date. Generally, options vest proportionally over 3 years and expire after 10 years . Compensation expense is recognized ratably over the vesting period. We determine the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model and a single option award approach. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows: Expected Volatility – expected volatility was determined based on implied volatility of our traded options and historical volatility of our stock price. Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Expected Term – expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. Stock Awards - we issue stock awards to certain employees in conjunction with our stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of our common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options. Certain time-based stock awards have either a performance condition (performance-based) or a market condition (market-based). Performance-based Stock Awards – the final number of shares earned and the related compensation expense is adjusted up or down to the extent the performance target is met as of the last day of the performance period. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2016, 2015 and 2014 awards. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2016, 2015 and 2014, the performance targets are growth in net sales and in operating profit, and the performance periods are fiscal 2016 through 2018, fiscal 2015 through 2017, and 2014 through 2016, respectively. Market-based Stock Awards – the related compensation expense is fixed, however, the final number of shares earned is adjusted to the extent that the market condition is achieved during the performance period. The actual number of shares that will ultimately be awarded range from 0% to 100% of the target amount for 2014 awards. There were no market-based stock awards granted in 2016 or 2015. For the market-based stock awards granted in 2014, the market condition was based on increases in our stock price for a specified number of sequential days and the performance period is three years beginning on the date of grant, which was March 28, 2014. As of December 31, 2016 , the market condition had been achieved. See Note 10, Shareholders’ Equity , for additional information on stock-based compensation. Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. We evaluate all available positive and negative evidence, including our forecast of future taxable income, to assess the need for a valuation allowance on our deferred tax assets. We record a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in our tax returns. We follow a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes. We classify net interest and penalties on tax uncertainties as a component of income tax expense in our consolidated statements of operations. Net Income Per Share We calculate basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the period. We calculate diluted net income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards. Sources of Supply We currently obtain materials and components used to produce our beds from outside sources. As a result, we are dependent upon suppliers that in some instances, are our sole source of supply. We are continuing our efforts to dual-source key components. The failure of one or more of our suppliers to provide us with materials or components on a timely basis could significantly impact our consolidated results of operations and net income per share. We believe we can obtain these raw materials and components from other sources of supply in the ordinary course of business, although an unexpected loss of supply over a short period of time may not allow us to replace these sources in the ordinary course of business. New Accounting Pronouncements Adopted In November 2015, the FASB issued new guidance related to classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as non-current on the balance sheet. It is effective for interim and annual periods beginning after December 15, 2016, but early adoption is permitted. We elected to early adopt this guidance as of December 31, 2016 on a retrospective basis. The new guidance did not impact our consolidated results of operations or operating cash flows. Adoption of the new standard impacted our previously reported consolidated balance sheet as follows for the period ended January 2, 2016 (in thousands): As Adjusted As Reported Current assets: Deferred income taxes $ — $ 15,535 Non-current assets: Deferred income taxes $ 3,036 $ — Non-current liabilities: Deferred income taxes $ — $ 12,499 Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued a comprehensive new revenue recognition model that requires a company to recognize revenue in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This new guidance was originally effective for fiscal years beginning after December 15, 2016 and early adoption was not permitted. In July 2015, the FASB deferred the effective date from fiscal years beginning after December 15, 2016 to fiscal years beginning after December 15, 2017 (including interim reporting periods within those fiscal years). Early adoption is permitted to the original effective date of fiscal years beginning after December 15, 2016 (including interim reporting periods within those fiscal years). Companies may use either a full retrospective or a modified retrospective approach to adopt this new guidance. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures, and have not yet selected a transition method. In February 2016, the FASB issued new guidance on accounting for leases that generally requires most leases to be recognized on the balance sheet. This new guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The provisions of this new guidance are to be applied using a modified retrospective approach, with elective reliefs, which requires application of the new guidance for all periods presented. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures. In March 2016, the FASB issued new guidance on the accounting for, and disclosure of, stock-based compensation which will be effective for us beginning in 2017. The new guidance is intended to simplify several aspects of the accounting |
Acquisition of BAM Labs, Inc. (
Acquisition of BAM Labs, Inc. (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Acquisition of BAM Labs, Inc. [Abstract] | |
Business Combination Disclosure [Text Block] | Acquisition of BAM Labs, Inc. In September 2015 , we completed the acquisition of BAM Labs, Inc. (now operating as SleepIQ LABS), the leading provider of biometric sensor and sleep monitoring for data-driven health and wellness. The addition of SleepIQ LABS strengthens Sleep Number’s leadership in sleep innovation, adjustability and individualization. The acquisition broadens and deepens electrical, biomedical, software and backend capabilities - API (application program interface) and bio-signal analysis. Our ownership and control of biometric data advances smart, connected products that empower our customers with the knowledge to adjust for their best sleep. We previously held a $6.0 million minority equity investment in BAM Labs, Inc. based on the cost method (see Note 4, Investments, for further details). In connection with the acquisition, our equity investment was remeasured to a fair value of $12.9 million . We acquired the remaining capital stock of BAM Labs, Inc. for $57.1 million for a total enterprise value of $70.0 million . Our consolidated statement of operations included $13.0 million and $3.3 million of SleepIQ LABS research and development expenses for the years ended December 31, 2016 and January 2, 2016, respectively. The acquisition of SleepIQ LABS did not have a significant impact on our consolidated results of operations, operating cash flows or financial position for the years ended December 31, 2016 or January 2, 2016. The following table summarizes the fair value of the net assets acquired as of the acquisition date (in thousands): Accounts receivable $ 105 Prepaid expenses 98 Property and equipment 91 Deferred income taxes 2,754 Goodwill 55,083 Intangible assets 13,619 Total assets acquired 71,750 Accounts payable 269 Compensation and benefits 322 Other non-current liabilities 1,141 Total liabilities acquired 1,732 Net assets acquired $ 70,018 Intangible assets of $13.6 million consisted of developed technologies with an estimated useful life of eight years . The goodwill will not be deductible for income tax purposes. |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table sets forth by level within the fair value hierarchy, our financial assets at January 2, 2016, that were accounted for at fair value on a recurring basis, according to the valuation techniques we used to determine their fair value (in thousands). At December 31, 2016, we did not hold any financial assets that required a fair value measurement on a recurring basis. January 2, 2016 Level 1 Level 2 Level 3 Total Marketable debt securities – current Municipal bonds $ — $ 4,055 $ — $ 4,055 Corporate bonds — 2,512 — 2,512 — 6,567 — 6,567 Marketable debt securities – non-current Corporate bonds — 5,001 — 5,001 U.S. Agency bonds — 2,496 — 2,496 Municipal bonds — 1,056 — 1,056 — 8,553 — 8,553 $ — $ 15,120 $ — $ 15,120 At December 31, 2016 and January 2, 2016 , we had $2.3 million and $1.6 million , respectively, of debt and equity securities that fund our deferred compensation plan and are classified in other non-current assets. We also had corresponding deferred compensation plan liabilities of $2.3 million and $1.6 million at December 31, 2016 and January 2, 2016 , respectively, which are included in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. Unrealized gains/(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan liabilities. |
Investments (Notes)
Investments (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Investments [Abstract] | |
Investments | Investments Marketable Debt Securities The following table sets forth our investments in marketable debt securities at January 2, 2016 (in thousands). We did not hold any marketable debt securities at December 31, 2016. January 2, 2016 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Corporate bonds $ 7,532 $ — $ (19 ) $ 7,513 U.S. Agency bonds 2,497 — (1 ) 2,496 Municipal bonds 5,114 — (3 ) 5,111 $ 15,143 $ — $ (23 ) $ 15,120 Maturities of marketable debt securities were as follows (in thousands): January 2, 2016 Amortized Cost Fair Value Marketable debt securities – current (due in less than one year) $ 6,575 $ 6,567 Marketable debt securities – non-current (due in one to two years) 8,568 8,553 $ 15,143 $ 15,120 During 2016 , 2015 and 2014 , respectively, we received proceeds of $21.1 million , $127.5 million and $54.2 million , respectively, from marketable debt securities. Other Investments We previously held a minority equity investment in one of our strategic product-development partners, BAM Labs, Inc. In September 2015, we completed the acquisition of the remaining outstanding capital stock of BAM Labs, Inc. The carrying value of our equity investment in BAM Labs, Inc. prior to the acquisition was $6.0 million based on the cost method. In connection with the acquisition, our equity investment was remeasured to a fair value of $12.9 million , resulting in a $3.5 million gain net of expenses, including $3.4 million of acquisition-related expenses. The remeasured fair value of our equity investment was based on the fair value of BAM Labs, Inc. at the acquisition date. The net gain of $3.5 million is included in general and administrative expenses on our consolidated statement of operations for the fiscal year ended January 2, 2016 . See Note 2, Acquisition of BAM Labs, Inc. , for details regarding this acquisition. |
Inventories (Notes)
Inventories (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): December 31, January 2, Raw materials $ 7,973 $ 9,349 Work in progress 72 48 Finished goods 66,981 77,203 $ 75,026 $ 86,600 Our finished goods inventory, as of December 31, 2016 , was comprised of $20.7 million of finished beds, including retail display beds and deliveries in-transit to those customers who have utilized home delivery services, $29.2 million of finished components that were ready for assembly for the completion of beds, and $17.1 million of retail accessories. Our finished goods inventory, as of January 2, 2016 , was comprised of $22.5 million of finished beds, including retail display beds and deliveries in-transit to those customers who have utilized home delivery services, $40.3 million of finished components that were ready for assembly for the completion of beds, and $14.4 million of retail accessories. |
Property and Equipment (Notes)
Property and Equipment (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment [Abstract] | |
Property and Equipment[Text Block] | Property and Equipment Property and equipment consisted of the following (in thousands): December 31, January 2, Land $ 1,999 $ 1,999 Leasehold improvements 97,600 91,184 Furniture and equipment 81,541 68,276 Production machinery, computer equipment and software 209,900 191,482 Property under capital lease — 1,077 Construction in progress 13,823 3,540 Less: Accumulated depreciation and amortization (196,496 ) (153,182 ) $ 208,367 $ 204,376 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets, Net Goodwill and Indefinite-Lived Intangible Assets The following is a roll forward of goodwill and indefinite-lived trade name/trademarks (in thousands): Twelve Months Ended Twelve Months Ended December 31, 2016 January 2, 2016 Goodwill Indefinite-Lived Goodwill Indefinite-Lived Beginning balance $ 64,046 $ 1,396 $ 8,963 $ 1,396 SleepIQ LABS — — 55,083 — Ending balance $ 64,046 $ 1,396 $ 64,046 $ 1,396 Definite-Lived Intangible Assets The following table provides the gross carrying amount and related accumulated amortization of our definite-lived intangible assets (in thousands): December 31, 2016 January 2, 2016 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Developed technologies (1) $ 18,851 $ 4,524 $ 18,851 $ 2,342 Customer relationships 2,413 1,365 2,413 1,020 Trade names/trademarks 101 101 101 101 $ 21,365 $ 5,990 $ 21,365 $ 3,463 ___________________ (1) In September 2015, in connection with the acquisition of BAM Labs, Inc. (now operating as SleepIQ LABS), we acquired $13.6 million of definite-lived intangible assets consisting of developed technologies. Amortization expense in 2016 , 2015 and 2014 for definite-lived intangible assets was $2.5 million , $1.3 million and $0.8 million , respectively. Annual amortization for definite-lived intangible assets is expected to be approximately $2.5 million for 2017 through 2019 and $ 2.2 million for 2020 and 2021. See Note 2, Acquisition of BAM Labs , Inc., for additional details. |
Leases (Notes)
Leases (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Leases of Lessee Disclosure [Text Block] | Leases Rent expense was as follows (in thousands): Facility Rents: 2016 2015 2014 Minimum rents $ 59,002 $ 52,650 $ 47,754 Contingent rents 3,099 5,168 6,241 Total $ 62,101 $ 57,818 $ 53,995 Equipment Rents $ 5,316 $ 4,362 $ 3,609 The aggregate minimum rental commitments under operating leases for subsequent years are as follows (in thousands): 2017 $ 66,493 2018 58,964 2019 49,322 2020 42,862 2021 37,517 Thereafter 137,239 Total future minimum lease payments $ 392,397 |
Credit Agreement (Notes)
Credit Agreement (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement Our revolving credit facility, as amended, has a net aggregate availability of $150 million . The credit facility is for general corporate purposes and is utilized to meet our seasonal working capital requirements. The credit facility contains an accordion feature that allows us to increase the amount of the available credit from $150 million up to $200 million , subject to lenders' approval. The credit facility matures in February 2021 . The credit agreement provides the lenders with a collateral security interest in substantially all of our assets and those of our subsidiaries and requires us to comply with, among other things, a maximum leverage ratio and a minimum interest coverage ratio. Under the terms of the credit agreement we pay a variable rate of interest and a commitment fee based on our leverage ratio. As of December 31, 2016, we had no outstanding borrowings or letters of credit and we were in compliance with all financial covenants. |
Shareholders' Equity (Notes)
Shareholders' Equity (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Shareholders' Equity [Abstract] | |
Shareholders’ Equity | Shareholders’ Equity Stock-Based Compensation Expense Total stock-based compensation expense was as follows (in thousands): 2016 2015 2014 Stock options $ 2,281 $ 2,634 $ 2,125 Stock awards 9,680 7,656 4,673 Total stock-based compensation expense (1) 11,961 10,290 6,798 Income tax benefit 3,947 3,413 2,284 Total stock-based compensation expense, net of tax $ 8,014 $ 6,877 $ 4,514 ___________________ (1) Reflects a $1.2 million benefit in 2014 related to a change in estimated forfeitures due to employee turnover. Stock Options A summary of our stock option activity was as follows (in thousands, except per share amounts and years): Stock Options Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (1) Balance at January 2, 2016 1,388 $ 18.44 5.3 $ 7,366 Granted 299 19.19 Exercised (188 ) 12.21 Canceled/Forfeited (145 ) 25.71 Outstanding at December 31, 2016 1,354 $ 18.70 5.9 $ 7,541 Exercisable at December 31, 2016 927 $ 17.40 4.6 $ 6,264 Vested and expected to vest at December 31, 2016 1,315 $ 18.61 5.9 $ 7,442 ___________________ (1) Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant. Other information pertaining to options was as follows (in thousands, except per share amounts): 2016 2015 2014 Weighted-average grant date fair value of stock options granted $ 8.85 $ 15.94 $ 9.33 Total intrinsic value (at exercise) of stock options exercised $ 2,088 $ 4,592 $ 2,478 Cash received from the exercise of stock options for the fiscal year ended December 31, 2016 was $2.3 million . Our tax benefit related to the exercise of stock options for the fiscal year ended December 31, 2016 was $0.8 million . At December 31, 2016 , there was $2.6 million of total stock option compensation expense related to non-vested stock options not yet recognized, which is expected to be recognized over a weighted-average period of 1.8 years. During fiscal 2016, 30,500 market-based stock options were granted and had a weighted-average grant date fair value of $10.25 per option. These options are reflected in the stock option activity table above. There were no market-based stock options granted in 2015 or 2014. The assumptions used to calculate the fair value of market-based stock options granted using the Monte Carlo simulation model were as follows: Valuation Assumptions 2016 2015 2014 Expected dividend yield 0 % NA NA Expected volatility 50 % NA NA Risk-free interest rate 1.8 % NA NA Except for the market-based stock options discussed above, the fair value of options granted was calculated using the Black-Scholes-Merton option-pricing model. The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows: Valuation Assumptions 2016 2015 2014 Expected dividend yield 0 % 0 % 0 % Expected volatility 50 % 54 % 58 % Risk-free interest rate 1.4 % 1.6 % 1.8 % Expected term (in years) 5.2 5.2 5.3 Stock Awards Stock award activity was as follows (in thousands, except per share amounts): Time- Based Stock Awards Weighted-Average Grant Date Fair Value Performance- and Market-Based Stock Awards Weighted-Average Grant Date Fair Value Outstanding at January 2, 2016 454 $23.14 710 $22.01 Granted 289 19.78 347 18.84 Vested (189 ) 24.55 (52 ) 24.57 Canceled/Forfeited (24 ) 21.34 (106 ) 20.24 Outstanding at December 31, 2016 530 $20.83 899 $20.87 At December 31, 2016 , there was $5.2 million of unrecognized compensation expense related to non-vested time-based stock awards, which is expected to be recognized over a weighted-average period of 1.7 years and $7.8 million of unrecognized compensation expense related to non-vested performance- and market-based stock awards, which is expected to be recognized over a weighted-average period of 1.9 years . During fiscal 2014 , 126,550 market-based stock awards were granted and had a weighted-average grant date fair value of $14.90 per award. These stock awards are reflected in the "Performance- and Market-Based Stock Awards" column in the stock award activity table above. There were no market-based stock awards granted in 2016 or 2015. The assumptions used to calculate the fair value of market-based stock awards granted using the Monte Carlo simulation model were as follows: Valuation Assumptions 2016 2015 2014 Expected dividend yield NA NA 0% Expected volatility NA NA 58% Risk-free interest rate NA NA 0.9% Repurchases of Common Stock Repurchases of our common stock were as follows (in thousands): 2016 2015 2014 Amount repurchased under Board-approved share repurchase program $ 125,000 $ 98,446 $ 45,044 Amount repurchased in connection with the vesting of employee restricted stock grants 1,693 1,755 1,448 Total amount repurchased $ 126,693 $ 100,201 $ 46,492 As of December 31, 2016 , the remaining authorization under our Board-approved share repurchase program was $245 million . There is no expiration date governing the period over which we can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to retained earnings. Net Income per Common Share The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): 2016 2015 2014 Net income $ 51,417 $ 50,519 $ 67,974 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 46,154 51,252 53,452 Dilutive effect of stock-based awards 748 849 741 Diluted weighted-average shares outstanding 46,902 52,101 54,193 Net income per share – basic $ 1.11 $ 0.99 $ 1.27 Net income per share – diluted $ 1.10 $ 0.97 $ 1.25 Additional potential dilutive stock options totaling 0.6 million , 0.4 million and 0.8 million for 2016 , 2015 and 2014 , respectively, have been excluded from our diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of our common stock). |
Other (Expense) Income, Net (No
Other (Expense) Income, Net (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
Other Income, Net | Other (Expense) Income, Net Other (expense) income, net, consisted of the following (in thousands): 2016 2015 2014 Interest expense (811 ) (160 ) (53 ) Interest income $ 94 $ 494 415 Other (expense) income, net $ (717 ) $ 334 $ 362 |
Income Taxes (Notes)
Income Taxes (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense consisted of the following (in thousands): 2016 2015 2014 Current: Federal $ 21,634 $ 7,272 $ 29,484 State 5,289 3,870 4,161 26,923 11,142 33,645 Deferred: Federal (105 ) 13,567 747 State (2,302 ) 202 (258 ) (2,407 ) 13,769 489 Income tax expense $ 24,516 $ 24,911 $ 34,134 The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate: 2016 2015 2014 Statutory federal income tax 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 2.6 3.0 2.5 Manufacturing deduction (3.3 ) (1.7 ) (3.3 ) Changes in unrecognized tax benefits 1.2 0.3 0.3 Non-taxable acquisition-related transactions — (2.6 ) — Other (3.2 ) (1.0 ) (1.1 ) Effective income tax rate 32.3 % 33.0 % 33.4 % We file income tax returns with the U.S. federal government and various state jurisdictions. In the normal course of business, we are subject to examination by federal and state taxing authorities. We are no longer subject to federal income tax examinations for years prior to 2013 or state income tax examinations prior to 2012 . Deferred Income Taxes The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands): 2016 2015 Deferred tax assets: Stock-based compensation $ 9,834 $ 8,756 Deferred rent and lease incentives 8,388 6,977 Warranty and returns liabilities 7,948 10,817 Net operating loss carryforwards and credits 6,368 7,847 Compensation and benefits 4,115 3,788 Other 5,264 4,561 Total gross deferred tax assets 41,917 42,746 Valuation allowance (620 ) (1,441 ) Total deferred tax assets after valuation allowance 41,297 41,305 Deferred tax liabilities: Property and equipment 27,049 26,330 Deferred revenue 3,279 5,598 Other 6,302 6,341 Total gross deferred tax liabilities 36,630 38,269 Net deferred tax assets $ 4,667 $ 3,036 At December 31, 2016 , we had net operating loss carryforwards for federal purposes of $10.0 million , which will expire between 2025 and 2034 , and for state income tax purposes of $14.8 million , which will expire between 2017 and 2036 . We evaluate our deferred income taxes quarterly to determine if valuation allowances are required. As part of this evaluation, we assess whether valuation allowances should be established for any deferred tax assets that are not considered more likely than not to be realized, using all available evidence, both positive and negative. This assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. We have provided a $0.6 million valuation allowance resulting primarily from our inability to utilize certain foreign net operating losses, and federal net operating losses associated with our acquisition of BAM Labs, Inc. Unrecognized Tax Benefits Reconciliations of the beginning and ending amounts of unrecognized tax benefits for 2016 , 2015 and 2014 were as follows (in thousands): Federal and State Tax 2016 2015 2014 Beginning balance $ 2,077 $ 742 $ 474 Increases related to current-year tax positions 326 1,277 172 Increases related to prior-year tax positions 1,594 113 110 Lapse of statute of limitations (333 ) (55 ) (14 ) Settlements with taxing authorities (204 ) — — Ending balance $ 3,460 $ 2,077 $ 742 As of December 31, 2016 and January 2, 2016 , we had $3.5 million and $2.1 million , respectively, of unrecognized tax benefits, which if recognized, would affect our effective tax rate. The amount of unrecognized tax benefits is not expected to change materially within the next 12 months. |
Profit Sharing and 401(K) Plan
Profit Sharing and 401(K) Plan (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Profit Sharing and 401 (k) Plan [Abstract] | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Profit Sharing and 401(k) Plan Under our profit sharing and 401(k) plan, eligible employees may defer up to 50% of their compensation on a pre-tax basis, subject to Internal Revenue Service limitations. Each year, we may make a discretionary contribution equal to a percentage of the employee’s contribution. During 2016 , 2015 and 2014 , our contributions, net of forfeitures, were $4.6 million , $4.2 million and $3.7 million , respectively. |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies 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 January 12, 2015, Plaintiffs David and Katina Spade commenced a purported class action lawsuit in New Jersey state court against Select Comfort alleging that Select Comfort violated New Jersey consumer statutes by failing to provide to purchasing consumers certain disclosures required by the New Jersey Furniture Regulations. It is undisputed that plaintiffs suffered no actual damages or in any way relied upon or were impacted by the alleged omissions. Nonetheless, on behalf of a purported class of New Jersey purchasers of Select Comfort beds and bases, plaintiffs seek to recover a $100 statutory fine for each alleged omission, along with attorneys’ fees and costs. Select Comfort removed the case to the United States District Court for the District of New Jersey, which subsequently granted Select Comfort’s motion to dismiss. Plaintiffs appealed to the United States Court of Appeals for the Third Circuit, which has certified two questions of law to the New Jersey Supreme Court relating to whether plaintiffs who have suffered no actual injury may bring claims. The New Jersey Supreme Court has not yet indicated whether it will accept the certification. As the United States District Court for the District of New Jersey agreed, we believe that the case is without merit and the order of dismissal should be affirmed. 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 alleged that the price he paid for the pillow was not truly 50% off the price at which Sleep Number previously sold the pillow. Plaintiff asserted 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 sought 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 sought injunctive relief, damages, disgorgement and attorneys’ fees. On June 13, 2016, the Court dismissed the case without prejudice. On August 25, 2016, plaintiff filed a new complaint asserting claims and prayers for relief similar to those described above. On January 4, 2017, plaintiff agreed to dismissal of all claims including dismissal with prejudice of the class claims asserted in this case. Consumer Credit Arrangements We refer customers seeking extended financing to certain third party financiers (Card Servicers). The Card Servicers, if credit is granted, establish the interest rates, fees, and all other terms and conditions of the customer’s account based on their evaluation of the creditworthiness of the customer. As the receivables are owned by the Card Servicers, at no time are the receivables purchased or acquired from us. We are not liable to the Card Servicers for our customers’ credit defaults. Commitments As of December 31, 2016 , we had $5.5 million of inventory purchase commitments. As part of the normal course of business, there are a limited number of inventory supply contracts that contain penalty provisions for failure to purchase contracted quantities. We do not currently expect any payments under these provisions. At December 31, 2016 , we had entered into 33 lease commitments for future retail store locations and a lease commitment for our corporate facilities. These lease commitments provide for minimum rentals over the next five to 15 years, which if consummated based on current cost estimates, would approximate $96 million over the initial lease term. The minimum rentals for these lease commitments have been included in the future minimum lease payments in Note 8, Leases . |
Summary of Quarterly Financial
Summary of Quarterly Financial Data (unaudited) (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Quarterly Financial Data (unaudited) [Abstract] | |
Quarterly Financial Information [Text Block] | Summary of Quarterly Financial Data (unaudited) The following is a condensed summary of our quarterly results (in thousands, except net income per share amounts). Quarterly diluted net income per share amounts may not total to the respective annual amount due to changes in weighted-average shares outstanding during the year. 2016 First Second Third Fourth Fiscal Year Net sales $ 352,980 $ 276,878 $ 367,988 $ 313,445 $ 1,311,291 Gross profit 209,074 171,261 232,343 197,482 810,160 Operating income 19,898 2,396 39,044 15,312 76,650 Net income 12,969 1,416 25,745 11,287 51,417 Net income per share – diluted $ 0.27 $ 0.03 $ 0.56 $ 0.25 $ 1.10 2015 First Second Third Fourth Fiscal Year Net sales $ 349,809 $ 275,289 $ 373,919 $ 214,682 $ 1,213,699 Gross profit 215,833 170,539 233,636 120,743 740,751 Operating income (loss) 43,725 16,629 45,399 (30,657 ) 75,096 Net income (loss) 28,799 11,038 31,854 (21,172 ) 50,519 Net income (loss) per share – diluted $ 0.54 $ 0.21 $ 0.62 $ (0.42 ) $ 0.97 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | SELECT COMFORT CORPORATION AND SUBSIDIARIES Schedule II - Valuation and Qualifying Accounts (in thousands) Description 2016 2015 2014 Allowance for doubtful accounts Balance at beginning of period $ 1,039 $ 739 $ 425 Additions charged to costs and expenses 1,224 1,577 729 Deductions from reserves (1,379 ) (1,277 ) (415 ) Balance at end of period $ 884 $ 1,039 $ 739 Accrued sales returns Balance at beginning of period $ 20,562 $ 15,262 $ 9,433 Additions charged to costs and expenses 71,958 84,265 78,890 Deductions from reserves (77,298 ) (78,965 ) (73,061 ) Balance at end of period $ 15,222 $ 20,562 $ 15,262 |
Business and Summary of Signi24
Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation [Text Block] | Business & Basis of Presentation Select Comfort Corporation and our 100%-owned subsidiaries (Select Comfort or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of a complete line of Sleep Number beds. We are the pioneer in biometric sleep tracking and adjustability. Only the Sleep Number bed offers SleepIQ technology - proprietary sensor technology that works directly with the bed’s DualAir system to track each individual’s sleep. SleepIQ technology communicates how you slept and what adjustments you can make to optimize your sleep and improve your daily life. Select Comfort also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. As the only national specialty-mattress retailer, we generate revenue by selling products through two distribution channels. Our Company-Controlled channel, which includes Retail, Online and Phone, sells directly to consumers. Our Wholesale/Other channel sells to and through selected retail and wholesale customers in the United States and the QVC shopping channel. The consolidated financial statements include the accounts of Select Comfort Corporation and our subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. |
Fiscal Year [Policy Text Block] | Fiscal Year Our fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2016 ended December 31, 2016 ; fiscal 2015 ended January 2, 2016 ; and fiscal 2014 ended January 3, 2015 . Fiscal years 2016 and 2015 each had 52 weeks and fiscal year 2014 had 53 weeks. |
Use of Estimates in the Preparation of Financial Statements [Policy Text Block] | Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. Our critical accounting policies consist of stock-based compensation, goodwill and indefinite-lived intangible assets, warranty liabilities and revenue recognition. |
Cash and Cash Equivalents [Policy Text Block] | Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in our consolidated balance sheets and in net increase in short-term borrowings in the financing activities section of our consolidated statements of cash flows. |
Marketable Debt Securities[Policy Text Block] | Marketable Debt Securities Our investment portfolio was comprised of U.S. agency securities, corporate debt securities and municipal bonds. The value of these securities was subject to market and credit volatility during the period these investments were held. We classify marketable debt securities as available-for-sale investments and these securities were stated at their estimated fair value. Our investments with original maturities of greater than three months, but current maturities of less than one year, are recorded as marketable debt securities – current. Our investments with current maturities of more than one year are recorded as marketable debt securities – non-current. Unrealized gains and losses, net of income tax, are reported as a component of accumulated other comprehensive income (loss) in our consolidated balance sheets. Other-than-temporary declines in market value, if any, from original cost are charged to other (expense) income, net in the consolidated statements of operations in the period in which the loss occurs, and a new cost basis for the security is established. In determining whether an other-than-temporary decline in the market value has occurred, we consider the duration and extent that the fair value of the investment is below its cost. Realized gains and losses, if any, are calculated on the specific identification method and are measured and reclassified from accumulated other comprehensive income (loss) in our consolidated balance sheets to other (expense) income, net in our consolidated statements of operations. |
Concentration of Credit Risk [Policy Text Block] | Concentration of Credit Risk Our investment policy’s primary focus is to preserve principal and maintain adequate liquidity. Our investment policy addresses the concentration of credit risk by limiting the concentration in certain investment types. Our exposure to a concentration of credit risk consists primarily of cash and cash equivalents. We place our cash with high-credit quality issuers and financial institutions. We previously held investments in U.S. agency securities, corporate debt securities and municipal bonds. We believe no significant concentration of credit risk exists with respect to our cash and cash equivalents. |
Accounts Receivable [Policy Text Block] | Accounts Receivable Accounts receivable are recorded net of an allowance for expected losses and consist primarily of receivables from wholesale customers and receivables from third-party financiers for customer credit card purchases. The allowance is recognized in an amount equal to anticipated future write-offs. We estimate future write-offs based on delinquencies, aging trends, industry risk trends, our historical experience and current trends. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. |
Inventories [Policy Text Block] | Inventories Inventories include materials, labor and overhead and are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. |
Property and Equipment [Policy Text Block] | Property and Equipment Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net income in our consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable. Estimated useful lives of our property and equipment by major asset category are as follows: Leasehold improvements 5 to 11 years Furniture and equipment 5 to 7 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years |
Goodwill and Intangible Assets, Net - Goodwill, Policy [Policy Text Block] | Goodwill and Intangible Assets, Net Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company's net identifiable assets. |
Goodwill and Intangible Assets, Net - Intangible Assets, Policy [Policy Text Block] | Our intangible assets include developed technologies, trade names/trademarks and customer relationships. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 7 - 10 years. |
Asset Impairment Charges [Policy Text Block] | Asset Impairment Charges Long-lived Assets and Definite-lived Intangible Assets - we review our long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When we recognize an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If we recognize an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The Financial Accounting Standards Board's (FASB) guidance allows us to perform either a quantitative assessment or a qualitative assessment before calculating the fair value of a reporting unit. We have elected to perform the quantitative assessment. The quantitative goodwill impairment test is a two-step process. The first step is a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. If this step reflects impairment, then the loss would be measured as the excess of recorded goodwill over its implied fair value. Implied fair value is the excess of fair value of the reporting unit over the fair value of all identified assets and liabilities. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and our market capitalization. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. Based on our 2016 assessments, we determined there was no impairment. |
Warranty Liabilities [Policy Text Block] | Warranty Liabilities We provide a limited warranty on most of the products we sell. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by us and are adjusted for any current trends as appropriate. Actual warranty claim costs could differ from these estimates. We regularly assess and adjust the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. We classify as non-current those estimated warranty costs expected to be paid out in greater than one year. |
Fair Value Measurements [Policy Text Block] | Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: • Level 1 – observable inputs such as quoted prices in active markets; • Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Our Level 2 securities included U.S. Agency bonds, corporate bonds and municipal bonds whose value is determined by a third-party pricing service using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves and benchmark securities. We did not hold any Level 3 securities at December 31, 2016 or January 2, 2016. We generally estimate fair value of long-lived assets, including our retail stores, using the income approach, which we base on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date. |
Dividends [Policy Text Block] | Dividends We are not restricted from paying cash dividends under our credit agreement so long as we are not in default under the credit agreement and so long as the payment of such dividends would not create an event of default. However, we have not historically paid, and have no current plans to pay, cash dividends on our common stock. |
Revenue Recognition [Policy Text Block] | Revenue Recognition Revenue is recognized when the sales price is fixed or determinable, collectability is reasonably assured and title passes. Amounts billed to customers for delivery and setup are included in net sales. Revenue is reported net of estimated sales returns and excludes sales taxes. We accept sales returns after a 100-night trial period. The accrued sales returns estimate is based on historical return rates and is adjusted for any current trends as appropriate. If actual returns vary from expected rates, sales in future periods are adjusted. Our SleepIQ system is a multiple-element arrangement with deliverables that include a bed, hardware and software. We analyze our multiple-element arrangement(s) to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. We determined that the SleepIQ system has two units of accounting consisting of: (i) the bed; and (ii) the hardware/software. The hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. We valued the two units of accounting based on their relative selling prices. At December 31, 2016 and January 2, 2016 , we had deferred revenue totaling $61.3 million and $33.6 million , of which $21.0 million and $7.7 million are included in other current liabilities, respectively, and $40.3 million and $25.9 million are included in other non-current liabilities, respectively, in our consolidated balance sheets. We also have related deferred costs totaling $33.2 million and $21.6 million , of which $11.6 million and $5.0 million are included in other current assets, respectively, and $21.6 million and $16.6 million are included in other non-current assets, respectively, in our consolidated balance sheets. The deferred revenue and costs are recognized over the product’s estimated life of four years . |
Expenses [Policy Text Block] | The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within our industry): Cost of Sales Sales & Marketing • Costs associated with purchasing, manufacturing, shipping, handling and delivering our products to our retail stores and customers; • Physical inventory losses, scrap and obsolescence; • Related occupancy and depreciation expenses; • Costs associated with returns and exchanges; and • Estimated costs to service customer warranty claims. • Advertising and media production; • Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage; • Payroll and benefits for sales and customer service staff; • Store occupancy costs; • Store depreciation expense; • Credit card processing fees; and • Promotional financing costs. G&A R&D (1) • Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management; • Occupancy costs of corporate facilities; • Depreciation related to corporate assets; • Information hardware, software and maintenance; • Insurance; • Investor relations costs; and • Other overhead costs. • Internal labor and benefits related to research and development activities; • Outside consulting services related to research and development activities; and • Testing equipment related to research and development activities. (1) Costs incurred in connection with R&D are charged to expense as incurred. |
Operating Leases [Policy Text Block] | Operating Leases We lease our 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. Our retail store leases generally provide for an initial lease term of five to 10 years. In addition, our mall-based retail store leases may require payment of contingent rent based on net sales in excess of certain thresholds. Certain retail store leases may contain options to extend the term of the original lease. Minimum rent expense, which excludes contingent rents, is recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. We record any difference between the straight-line rent amounts and amounts payable under the leases as part of deferred rent, in other current liabilities or other non-current liabilities, as appropriate. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date we take possession of the property. During lease renewal negotiations that extend beyond the original lease term, we estimate straight-line rent expense based on current market conditions. At December 31, 2016 , and January 2, 2016 , deferred rent included in other current liabilities in our consolidated balance sheets was $0.2 million and $0.4 million , respectively, and deferred rent included in other non-current liabilities in our consolidated balance sheets was $9.6 million and $7.5 million , respectively. Contingent rent expense is recorded when it is probable the expense has been incurred and the amount is reasonably estimable. Future payments for real estate taxes and certain building operating expenses for which we are obligated are not included in minimum lease payments. Leasehold improvements that are funded by landlord incentives or allowances under an operating lease are recorded as deferred lease incentives, in other current liabilities or other non-current liabilities, as appropriate and amortized as reductions to rent expense over the lease term. At December 31, 2016 , and January 2, 2016 , deferred lease incentives included in other current liabilities in our consolidated balance sheets were $2.9 million and $2.8 million , respectively, and deferred lease incentives included in other non-current liabilities in our consolidated balance sheets were $8.9 million and $7.9 million , respectively. |
Pre-opening Costs [Policy Text Block] | Pre-Opening Costs Costs associated with the start-up and promotion of new retail store openings are expensed as incurred. |
Advertising Costs [Policy Text Block] | Advertising Costs We incur advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs. |
Insurance [Policy Text Block] | Insurance We are self-insured for certain losses related to health and workers’ compensation claims, although we obtain third-party insurance coverage to limit exposure to these claims. We estimate our self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. |
Software Capitalization, Policy [Policy Text Block] | Software Capitalization For software developed or obtained for internal use, we capitalize direct external costs associated with developing or obtaining internal-use software. In addition, we capitalize certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. We expense any data conversion or training costs as incurred. |
Stock-based Compensation [Policy Text Block] | Stock-Based Compensation We compensate officers, directors and key employees with stock-based compensation under two stock plans approved by our shareholders in 2004 and 2010 and administered under the supervision of our Board of Directors (Board). At December 31, 2016 , a total of 3.9 million shares were available for future grant under the 2010 stock plan. These plans include non-qualified stock options and stock awards. We record stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. We recognize stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. We reduce compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. We include, as part of cash flows from financing activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. See " New Accounting Pronouncements " below regarding revised guidance for stock-based compensation in 2017. Stock Options - stock option awards are granted at exercise prices equal to the closing price of our stock on the grant date. Generally, options vest proportionally over 3 years and expire after 10 years . Compensation expense is recognized ratably over the vesting period. We determine the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model and a single option award approach. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows: Expected Volatility – expected volatility was determined based on implied volatility of our traded options and historical volatility of our stock price. Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Expected Term – expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. Stock Awards - we issue stock awards to certain employees in conjunction with our stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of our common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options. Certain time-based stock awards have either a performance condition (performance-based) or a market condition (market-based). Performance-based Stock Awards – the final number of shares earned and the related compensation expense is adjusted up or down to the extent the performance target is met as of the last day of the performance period. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2016, 2015 and 2014 awards. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2016, 2015 and 2014, the performance targets are growth in net sales and in operating profit, and the performance periods are fiscal 2016 through 2018, fiscal 2015 through 2017, and 2014 through 2016, respectively. Market-based Stock Awards – the related compensation expense is fixed, however, the final number of shares earned is adjusted to the extent that the market condition is achieved during the performance period. The actual number of shares that will ultimately be awarded range from 0% to 100% of the target amount for 2014 awards. There were no market-based stock awards granted in 2016 or 2015. For the market-based stock awards granted in 2014, the market condition was based on increases in our stock price for a specified number of sequential days and the performance period is three years beginning on the date of grant, which was March 28, 2014. As of December 31, 2016 , the market condition had been achieved. See Note 10, Shareholders’ Equity , for additional information on stock-based compensation. |
Income Taxes [Policy Text Block] | Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. We evaluate all available positive and negative evidence, including our forecast of future taxable income, to assess the need for a valuation allowance on our deferred tax assets. We record a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in our tax returns. We follow a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes. We classify net interest and penalties on tax uncertainties as a component of income tax expense in our consolidated statements of operations. |
Net Income Per Share [Policy Text Block] | Net Income Per Share We calculate basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the period. We calculate diluted net income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards. |
Sources of Supply [Policy Text Block] | Sources of Supply We currently obtain materials and components used to produce our beds from outside sources. As a result, we are dependent upon suppliers that in some instances, are our sole source of supply. We are continuing our efforts to dual-source key components. The failure of one or more of our suppliers to provide us with materials or components on a timely basis could significantly impact our consolidated results of operations and net income per share. We believe we can obtain these raw materials and components from other sources of supply in the ordinary course of business, although an unexpected loss of supply over a short period of time may not allow us to replace these sources in the ordinary course of business. |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements Adopted In November 2015, the FASB issued new guidance related to classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as non-current on the balance sheet. It is effective for interim and annual periods beginning after December 15, 2016, but early adoption is permitted. We elected to early adopt this guidance as of December 31, 2016 on a retrospective basis. The new guidance did not impact our consolidated results of operations or operating cash flows. Adoption of the new standard impacted our previously reported consolidated balance sheet as follows for the period ended January 2, 2016 (in thousands): As Adjusted As Reported Current assets: Deferred income taxes $ — $ 15,535 Non-current assets: Deferred income taxes $ 3,036 $ — Non-current liabilities: Deferred income taxes $ — $ 12,499 Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued a comprehensive new revenue recognition model that requires a company to recognize revenue in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This new guidance was originally effective for fiscal years beginning after December 15, 2016 and early adoption was not permitted. In July 2015, the FASB deferred the effective date from fiscal years beginning after December 15, 2016 to fiscal years beginning after December 15, 2017 (including interim reporting periods within those fiscal years). Early adoption is permitted to the original effective date of fiscal years beginning after December 15, 2016 (including interim reporting periods within those fiscal years). Companies may use either a full retrospective or a modified retrospective approach to adopt this new guidance. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures, and have not yet selected a transition method. In February 2016, the FASB issued new guidance on accounting for leases that generally requires most leases to be recognized on the balance sheet. This new guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The provisions of this new guidance are to be applied using a modified retrospective approach, with elective reliefs, which requires application of the new guidance for all periods presented. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures. In March 2016, the FASB issued new guidance on the accounting for, and disclosure of, stock-based compensation which will be effective for us beginning in 2017. The new guidance is intended to simplify several aspects of the accounting for stock-based compensation arrangements, including the income tax impact, forfeitures and classification on the statement of cash flows. Under the current guidance, excess tax benefits and deficiencies have been recognized in additional paid-in capital in the consolidated balance sheets. Upon adoption of the new guidance, these excess tax benefits or deficiencies are required to be recognized as discrete adjustments to income tax expense in the consolidated statements of operations. We will adopt the new guidance on a prospective basis and these discrete adjustments could have a material impact on income tax expense and net income. |
Repurchase of Common Stock [Text Block] | There is no expiration date governing the period over which we can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to retained earnings. |
Business and Summary of Signi25
Business and Summary of Significant Accounting Policies Estimate Useful Life of Property and Equipment by Major Asset Category (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Estimated Useful Life of our Property, Plant and Equipment [Abstract] | |
Estimated Useful Lives Of Property And Equipment [Table Text Block] | Estimated useful lives of our property and equipment by major asset category are as follows: Leasehold improvements 5 to 11 years Furniture and equipment 5 to 7 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years |
Business and Summary of Signi26
Business and Summary of Significant Accounting Policies Warranty Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Standard Product Warranty Disclosure [Abstract] | |
Schedule of Product Warranty Liability [Table Text Block] | The activity in the accrued warranty liabilities account was as follows (in thousands): 2016 2015 2014 Balance at beginning of period $ 10,028 $ 5,824 $ 4,153 Additions charged to costs and expenses for current-year sales 9,034 9,368 9,437 Deductions from reserves (10,016 ) (6,486 ) (8,118 ) Changes in liability for pre-existing warranties during the current year, including expirations (413 ) 1,322 352 Balance at end of period $ 8,633 $ 10,028 $ 5,824 |
Acquisition of BAM Labs, Inc.27
Acquisition of BAM Labs, Inc. (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Acquisition of BAM Labs, Inc. [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table summarizes the fair value of the net assets acquired as of the acquisition date (in thousands): Accounts receivable $ 105 Prepaid expenses 98 Property and equipment 91 Deferred income taxes 2,754 Goodwill 55,083 Intangible assets 13,619 Total assets acquired 71,750 Accounts payable 269 Compensation and benefits 322 Other non-current liabilities 1,141 Total liabilities acquired 1,732 Net assets acquired $ 70,018 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis | The following table sets forth by level within the fair value hierarchy, our financial assets at January 2, 2016, that were accounted for at fair value on a recurring basis, according to the valuation techniques we used to determine their fair value (in thousands). At December 31, 2016, we did not hold any financial assets that required a fair value measurement on a recurring basis. January 2, 2016 Level 1 Level 2 Level 3 Total Marketable debt securities – current Municipal bonds $ — $ 4,055 $ — $ 4,055 Corporate bonds — 2,512 — 2,512 — 6,567 — 6,567 Marketable debt securities – non-current Corporate bonds — 5,001 — 5,001 U.S. Agency bonds — 2,496 — 2,496 Municipal bonds — 1,056 — 1,056 — 8,553 — 8,553 $ — $ 15,120 $ — $ 15,120 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments [Abstract] | |
Investments of marketable debt securities | The following table sets forth our investments in marketable debt securities at January 2, 2016 (in thousands). We did not hold any marketable debt securities at December 31, 2016. January 2, 2016 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Corporate bonds $ 7,532 $ — $ (19 ) $ 7,513 U.S. Agency bonds 2,497 — (1 ) 2,496 Municipal bonds 5,114 — (3 ) 5,111 $ 15,143 $ — $ (23 ) $ 15,120 |
Maturities of marketable debt securities | Maturities of marketable debt securities were as follows (in thousands): January 2, 2016 Amortized Cost Fair Value Marketable debt securities – current (due in less than one year) $ 6,575 $ 6,567 Marketable debt securities – non-current (due in one to two years) 8,568 8,553 $ 15,143 $ 15,120 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | Inventories consisted of the following (in thousands): December 31, January 2, Raw materials $ 7,973 $ 9,349 Work in progress 72 48 Finished goods 66,981 77,203 $ 75,026 $ 86,600 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | Property and equipment consisted of the following (in thousands): December 31, January 2, Land $ 1,999 $ 1,999 Leasehold improvements 97,600 91,184 Furniture and equipment 81,541 68,276 Production machinery, computer equipment and software 209,900 191,482 Property under capital lease — 1,077 Construction in progress 13,823 3,540 Less: Accumulated depreciation and amortization (196,496 ) (153,182 ) $ 208,367 $ 204,376 |
Goodwill and Intangible Asset32
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Indefinite-Lived Intangible Assets | The following is a roll forward of goodwill and indefinite-lived trade name/trademarks (in thousands): Twelve Months Ended Twelve Months Ended December 31, 2016 January 2, 2016 Goodwill Indefinite-Lived Goodwill Indefinite-Lived Beginning balance $ 64,046 $ 1,396 $ 8,963 $ 1,396 SleepIQ LABS — — 55,083 — Ending balance $ 64,046 $ 1,396 $ 64,046 $ 1,396 |
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | Twelve Months Ended Twelve Months Ended December 31, 2016 January 2, 2016 Goodwill Indefinite-Lived Goodwill Indefinite-Lived Beginning balance $ 64,046 $ 1,396 $ 8,963 $ 1,396 SleepIQ LABS — — 55,083 — Ending balance $ 64,046 $ 1,396 $ 64,046 $ 1,396 |
Definite-Lived Intangible Assets | The following table provides the gross carrying amount and related accumulated amortization of our definite-lived intangible assets (in thousands): December 31, 2016 January 2, 2016 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Developed technologies (1) $ 18,851 $ 4,524 $ 18,851 $ 2,342 Customer relationships 2,413 1,365 2,413 1,020 Trade names/trademarks 101 101 101 101 $ 21,365 $ 5,990 $ 21,365 $ 3,463 ___________________ (1) In September 2015, in connection with the acquisition of BAM Labs, Inc. (now operating as SleepIQ LABS), we acquired $13.6 million of definite-lived intangible assets consisting of developed technologies. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Rent Expense [Table Text Block] | Rent expense was as follows (in thousands): Facility Rents: 2016 2015 2014 Minimum rents $ 59,002 $ 52,650 $ 47,754 Contingent rents 3,099 5,168 6,241 Total $ 62,101 $ 57,818 $ 53,995 Equipment Rents $ 5,316 $ 4,362 $ 3,609 |
Future minimum payments operating leases [Table Text Block] | The aggregate minimum rental commitments under operating leases for subsequent years are as follows (in thousands): 2017 $ 66,493 2018 58,964 2019 49,322 2020 42,862 2021 37,517 Thereafter 137,239 Total future minimum lease payments $ 392,397 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock-based compensation expense | Total stock-based compensation expense was as follows (in thousands): 2016 2015 2014 Stock options $ 2,281 $ 2,634 $ 2,125 Stock awards 9,680 7,656 4,673 Total stock-based compensation expense (1) 11,961 10,290 6,798 Income tax benefit 3,947 3,413 2,284 Total stock-based compensation expense, net of tax $ 8,014 $ 6,877 $ 4,514 ___________________ (1) Reflects a $1.2 million benefit in 2014 related to a change in estimated forfeitures due to employee turnover. |
Stock options rollforward | A summary of our stock option activity was as follows (in thousands, except per share amounts and years): Stock Options Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (1) Balance at January 2, 2016 1,388 $ 18.44 5.3 $ 7,366 Granted 299 19.19 Exercised (188 ) 12.21 Canceled/Forfeited (145 ) 25.71 Outstanding at December 31, 2016 1,354 $ 18.70 5.9 $ 7,541 Exercisable at December 31, 2016 927 $ 17.40 4.6 $ 6,264 Vested and expected to vest at December 31, 2016 1,315 $ 18.61 5.9 $ 7,442 ___________________ (1) Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant. |
Stock options - other information | Other information pertaining to options was as follows (in thousands, except per share amounts): 2016 2015 2014 Weighted-average grant date fair value of stock options granted $ 8.85 $ 15.94 $ 9.33 Total intrinsic value (at exercise) of stock options exercised $ 2,088 $ 4,592 $ 2,478 |
Stock options - valuation assumptions | The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows: Valuation Assumptions 2016 2015 2014 Expected dividend yield 0 % 0 % 0 % Expected volatility 50 % 54 % 58 % Risk-free interest rate 1.4 % 1.6 % 1.8 % Expected term (in years) 5.2 5.2 5.3 |
Stock awards rollforward | Stock award activity was as follows (in thousands, except per share amounts): Time- Based Stock Awards Weighted-Average Grant Date Fair Value Performance- and Market-Based Stock Awards Weighted-Average Grant Date Fair Value Outstanding at January 2, 2016 454 $23.14 710 $22.01 Granted 289 19.78 347 18.84 Vested (189 ) 24.55 (52 ) 24.57 Canceled/Forfeited (24 ) 21.34 (106 ) 20.24 Outstanding at December 31, 2016 530 $20.83 899 $20.87 |
Stock awards - valuation assumptions | The assumptions used to calculate the fair value of market-based stock awards granted using the Monte Carlo simulation model were as follows: Valuation Assumptions 2016 2015 2014 Expected dividend yield NA NA 0% Expected volatility NA NA 58% Risk-free interest rate NA NA 0.9% |
Share Repurchase | Repurchases of our common stock were as follows (in thousands): 2016 2015 2014 Amount repurchased under Board-approved share repurchase program $ 125,000 $ 98,446 $ 45,044 Amount repurchased in connection with the vesting of employee restricted stock grants 1,693 1,755 1,448 Total amount repurchased $ 126,693 $ 100,201 $ 46,492 |
Schedule of Earnings Per Share Reconciliation | The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): 2016 2015 2014 Net income $ 51,417 $ 50,519 $ 67,974 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 46,154 51,252 53,452 Dilutive effect of stock-based awards 748 849 741 Diluted weighted-average shares outstanding 46,902 52,101 54,193 Net income per share – basic $ 1.11 $ 0.99 $ 1.27 Net income per share – diluted $ 1.10 $ 0.97 $ 1.25 |
Other (Expense) Income, Net (Ta
Other (Expense) Income, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
Other Income, Net | Other (expense) income, net, consisted of the following (in thousands): 2016 2015 2014 Interest expense (811 ) (160 ) (53 ) Interest income $ 94 $ 494 415 Other (expense) income, net $ (717 ) $ 334 $ 362 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income tax expense (benefit) | Income tax expense consisted of the following (in thousands): 2016 2015 2014 Current: Federal $ 21,634 $ 7,272 $ 29,484 State 5,289 3,870 4,161 26,923 11,142 33,645 Deferred: Federal (105 ) 13,567 747 State (2,302 ) 202 (258 ) (2,407 ) 13,769 489 Income tax expense $ 24,516 $ 24,911 $ 34,134 |
Reconciliation of income tax expense (benefit) at the statutory federal rate | The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate: 2016 2015 2014 Statutory federal income tax 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 2.6 3.0 2.5 Manufacturing deduction (3.3 ) (1.7 ) (3.3 ) Changes in unrecognized tax benefits 1.2 0.3 0.3 Non-taxable acquisition-related transactions — (2.6 ) — Other (3.2 ) (1.0 ) (1.1 ) Effective income tax rate 32.3 % 33.0 % 33.4 % |
Deferred income taxes | The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands): 2016 2015 Deferred tax assets: Stock-based compensation $ 9,834 $ 8,756 Deferred rent and lease incentives 8,388 6,977 Warranty and returns liabilities 7,948 10,817 Net operating loss carryforwards and credits 6,368 7,847 Compensation and benefits 4,115 3,788 Other 5,264 4,561 Total gross deferred tax assets 41,917 42,746 Valuation allowance (620 ) (1,441 ) Total deferred tax assets after valuation allowance 41,297 41,305 Deferred tax liabilities: Property and equipment 27,049 26,330 Deferred revenue 3,279 5,598 Other 6,302 6,341 Total gross deferred tax liabilities 36,630 38,269 Net deferred tax assets $ 4,667 $ 3,036 |
Summary of Income Tax Contingencies [Table Text Block] | Reconciliations of the beginning and ending amounts of unrecognized tax benefits for 2016 , 2015 and 2014 were as follows (in thousands): Federal and State Tax 2016 2015 2014 Beginning balance $ 2,077 $ 742 $ 474 Increases related to current-year tax positions 326 1,277 172 Increases related to prior-year tax positions 1,594 113 110 Lapse of statute of limitations (333 ) (55 ) (14 ) Settlements with taxing authorities (204 ) — — Ending balance $ 3,460 $ 2,077 $ 742 |
Summary of Quarterly Financia37
Summary of Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Quarterly Financial Data (unaudited) [Abstract] | |
Schedule of Quarterly Financial Information [Table Text Block] | The following is a condensed summary of our quarterly results (in thousands, except net income per share amounts). Quarterly diluted net income per share amounts may not total to the respective annual amount due to changes in weighted-average shares outstanding during the year. 2016 First Second Third Fourth Fiscal Year Net sales $ 352,980 $ 276,878 $ 367,988 $ 313,445 $ 1,311,291 Gross profit 209,074 171,261 232,343 197,482 810,160 Operating income 19,898 2,396 39,044 15,312 76,650 Net income 12,969 1,416 25,745 11,287 51,417 Net income per share – diluted $ 0.27 $ 0.03 $ 0.56 $ 0.25 $ 1.10 2015 First Second Third Fourth Fiscal Year Net sales $ 349,809 $ 275,289 $ 373,919 $ 214,682 $ 1,213,699 Gross profit 215,833 170,539 233,636 120,743 740,751 Operating income (loss) 43,725 16,629 45,399 (30,657 ) 75,096 Net income (loss) 28,799 11,038 31,854 (21,172 ) 50,519 Net income (loss) per share – diluted $ 0.54 $ 0.21 $ 0.62 $ (0.42 ) $ 0.97 |
Business and Summary of Signi38
Business and Summary of Significant Accounting Policies Fiscal Year (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Fiscal Year [Abstract] | |||
Fiscal Years | 364 days | 364 days | 371 days |
Business and Summary of Signi39
Business and Summary of Significant Accounting Policies Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Jan. 02, 2016 |
Accounts Payable [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Book Overdrafts | $ 26.6 | $ 20.7 |
Business and Summary of Signi40
Business and Summary of Significant Accounting Policies Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Leasehold Improvements [Member] | Minimum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 11 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 7 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 7 years |
Computer Equipment and Software [Member] | Minimum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Computer Equipment and Software [Member] | Maximum [Member] | |
Property and equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 12 years |
Business and Summary of Signi41
Business and Summary of Significant Accounting Policies Definite-Lived Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Minimum [Member] | |
Definite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 7 years |
Maximum [Member] | |
Definite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 10 years |
Business and Summary of Signi42
Business and Summary of Significant Accounting Policies Warranty Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Balance at beginning of year | $ 10,028 | $ 5,824 | $ 4,153 |
Additions charged to costs and expenses for current-year sales | 9,034 | 9,368 | 9,437 |
Deductions from reserves | (10,016) | (6,486) | (8,118) |
Changes in liability for pre-existing warranties during the current year, including expirations | (413) | 1,322 | 352 |
Balance at end of period | $ 8,633 | $ 10,028 | $ 5,824 |
Business and Summary of Signi43
Business and Summary of Significant Accounting Policies Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Deferred Revenue [Line Items] | ||
Deferred Revenue | $ 61.3 | $ 33.6 |
Deferred Costs | $ 33.2 | 21.6 |
Product's Estimate Useful Life [Member] | ||
Deferred Revenue [Line Items] | ||
Product's Estimated Life | 4 years | |
Other Current Assets [Member] | ||
Deferred Revenue [Line Items] | ||
Deferred Costs, Current | $ 11.6 | 5 |
Other Noncurrent Assets [Member] | ||
Deferred Revenue [Line Items] | ||
Deferred Costs, Noncurrent | 21.6 | 16.6 |
Other Current Liabilities [Member] | ||
Deferred Revenue [Line Items] | ||
Deferred Revenue, Current | 21 | 7.7 |
Other Noncurrent Liabilities [Member] | ||
Deferred Revenue [Line Items] | ||
Deferred Revenue, Noncurrent | $ 40.3 | $ 25.9 |
Business and Summary of Signi44
Business and Summary of Significant Accounting Policies Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Other Current Liabilities [Member] | ||
Property and equipment [Line Items] | ||
Deferred Rent Credit, Current | $ 0.2 | $ 0.4 |
Deferred Lease Incentives, Current | 2.9 | 2.8 |
Other Noncurrent Liabilities [Member] | ||
Property and equipment [Line Items] | ||
Deferred Rent Credit, Noncurrent | 9.6 | 7.5 |
Deferred Lease Incentives, Noncurrent | $ 8.9 | $ 7.9 |
Minimum [Member] | ||
Property and equipment [Line Items] | ||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 5 years | |
Maximum [Member] | ||
Property and equipment [Line Items] | ||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 10 years |
Business and Summary of Signi45
Business and Summary of Significant Accounting Policies Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Advertising Expense | $ 189.8 | $ 180.8 | $ 158.5 |
Prepaid Expenses [Member] | |||
Prepaid Advertising | $ 1.2 | $ 4.5 |
Business and Summary of Signi46
Business and Summary of Significant Accounting Policies Insurance (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Jan. 02, 2016 |
Self-Insurance Liability | $ 6.2 | $ 7.7 |
Compensation and Benefits [Member] | ||
Self-Insurance Liability, Current | 3.5 | 4 |
Other Noncurrent Liabilities [Member] | ||
Self-Insurance Liability, Noncurrent | 2.7 | 3.7 |
Other Current Assets [Member] | ||
Restricted Deposit Workers Compensation | $ 3.2 | $ 3.2 |
Business and Summary of Signi47
Business and Summary of Significant Accounting Policies Stock-Based Compensation (Details) shares in Millions | 12 Months Ended | ||
Dec. 31, 2016stock_planshares | Jan. 02, 2016 | Jan. 03, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of stock plans approved by shareholders | stock_plan | 2 | ||
Number of Shares Available for Grant | shares | 3.9 | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award Option Vesting Period | 3 years | ||
Award Expiration Period | 10 years | ||
2016 Performance Stock Award Grant [Member] | Minimum [Member] | Performance-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 0.00% | ||
2016 Performance Stock Award Grant [Member] | Maximum [Member] | Performance-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 200.00% | ||
2015 Performance Stock Award Grant [Member] | Minimum [Member] | Performance-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 0.00% | ||
2015 Performance Stock Award Grant [Member] | Maximum [Member] | Performance-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 200.00% | ||
2014 Performance Stock Award Grant [Member] | Minimum [Member] | Performance-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 0.00% | ||
2014 Performance Stock Award Grant [Member] | Maximum [Member] | Performance-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 200.00% | ||
2014 Market-Based Stock Award Grant [Member] | Minimum [Member] | Market-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 0.00% | ||
2014 Market-Based Stock Award Grant [Member] | Maximum [Member] | Market-Based Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Awards - Shares Awarded - Increase (Decrease), Percentage | 100.00% |
Business and Summary of Signi48
Business and Summary of Significant Accounting Policies Business and Summary of Significant accounting Policies New Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
New Accounting Pronouncements [Line Items] | ||
Deferred income tax assets, noncurrent | $ 4,667 | $ 3,036 |
As adjusted [Member] | Accounting Standards Update 2015-17 [Member] | ||
New Accounting Pronouncements [Line Items] | ||
Deferred income tax assets, current | 0 | |
Deferred income tax assets, noncurrent | 3,036 | |
Deferred income tax liabilities, noncurrent | 0 | |
As reported [Member] | Accounting Standards Update 2015-17 [Member] | ||
New Accounting Pronouncements [Line Items] | ||
Deferred income tax assets, current | 15,535 | |
Deferred income tax assets, noncurrent | 0 | |
Deferred income tax liabilities, noncurrent | $ 12,499 |
Acquisition of BAM Labs, Inc.49
Acquisition of BAM Labs, Inc. (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Sep. 30, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | Sep. 29, 2015 | |
Business Acquisition [Line Items] | |||||
Cash paid to acquire remaining capital stock of BAM Labs, Inc. | $ 0 | $ 70,018 | $ 0 | ||
Research and Development Expense | 27,991 | 15,971 | 8,233 | ||
Goodwill | 64,046 | 64,046 | $ 8,963 | ||
BAM Labs, Inc. [Member] | |||||
Business Acquisition [Line Items] | |||||
Remeasured Fair Value | $ 12,900 | ||||
Cash paid to acquire remaining capital stock of BAM Labs, Inc. | $ 57,100 | ||||
Total acquisition price | 70,018 | ||||
Accounts Receivables | 105 | ||||
Prepaid expenses | 98 | ||||
Property and Equipment | 91 | ||||
Deferred income taxes | 2,754 | ||||
Goodwill | 55,083 | ||||
Intangible Assets | 13,619 | ||||
Total Assets Acquired | 71,750 | ||||
Accounts Payable | 269 | ||||
Compensation and benefits | 322 | ||||
Other long-term liabilities | 1,141 | ||||
Total liabilities acquired | 1,732 | ||||
Developed Technologies [Member] | BAM Labs, Inc. [Member] | |||||
Business Acquisition [Line Items] | |||||
Estimated Useful Life - acquired developed technologies | 8 years | ||||
Other Noncurrent Assets [Member] | |||||
Business Acquisition [Line Items] | |||||
Cost Method Investment | $ 6,000 | ||||
Research and Development Expense [Member] | BAM Labs, Inc. [Member] | |||||
Business Acquisition [Line Items] | |||||
Research and Development Expense | $ 13,000 | $ 3,300 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring [Member] - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | $ 6,567 | |
Marketable debt securities - noncurrent | 8,553 | |
Marketable debt securities | 15,120 | |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 0 | |
Marketable debt securities - noncurrent | 0 | |
Marketable debt securities | 0 | |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 6,567 | |
Marketable debt securities - noncurrent | 8,553 | |
Marketable debt securities | 15,120 | |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 0 | |
Marketable debt securities - noncurrent | 0 | |
Marketable debt securities | 0 | |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 2,512 | |
Marketable debt securities - noncurrent | 5,001 | |
Corporate Bonds [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 0 | |
Marketable debt securities - noncurrent | 0 | |
Corporate Bonds [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 2,512 | |
Marketable debt securities - noncurrent | 5,001 | |
Corporate Bonds [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 0 | |
Marketable debt securities - noncurrent | 0 | |
U.S. Agency bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - noncurrent | 2,496 | |
U.S. Agency bonds [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - noncurrent | 0 | |
U.S. Agency bonds [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - noncurrent | 2,496 | |
U.S. Agency bonds [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - noncurrent | 0 | |
Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 4,055 | |
Marketable debt securities - noncurrent | 1,056 | |
Municipal Bonds [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 0 | |
Marketable debt securities - noncurrent | 0 | |
Municipal Bonds [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 4,055 | |
Marketable debt securities - noncurrent | 1,056 | |
Municipal Bonds [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable debt securities - current | 0 | |
Marketable debt securities - noncurrent | 0 | |
Other Assets [Member] | Available-for-sale Securities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan assets | $ 2,300 | 1,600 |
Other Noncurrent Liabilities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan liability | $ 2,300 | $ 1,600 |
Investments - Marketable Debt S
Investments - Marketable Debt Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale Debt Securities, Amortized Cost Basis | $ 15,143 | ||
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | (23) | ||
Available-for-sale Securities, Debt Securities | 15,120 | ||
Available-for-sale Securities, Gross Realized Gains (Losses), Sale Proceeds | $ 21,100 | 127,500 | $ 54,200 |
Amortized Cost [Abstract] | |||
Marketable debt securities - current (due in less than one year) | 6,575 | ||
Marketable debt securities - non-current (due in one to two years) | 8,568 | ||
Marketable debt securities | 15,143 | ||
Fair Value [Abstract] | |||
Marketable debt securities - current (due in less than one year) | 6,567 | ||
Marketable debt securities - non-current (due in one to two years) | 8,553 | ||
Corporate bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale Debt Securities, Amortized Cost Basis | 7,532 | ||
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | (19) | ||
Available-for-sale Securities, Debt Securities | 7,513 | ||
Amortized Cost [Abstract] | |||
Marketable debt securities | 7,532 | ||
U.S. Agency bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale Debt Securities, Amortized Cost Basis | 2,497 | ||
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | (1) | ||
Available-for-sale Securities, Debt Securities | 2,496 | ||
Amortized Cost [Abstract] | |||
Marketable debt securities | 2,497 | ||
Municipal bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale Debt Securities, Amortized Cost Basis | 5,114 | ||
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | (3) | ||
Available-for-sale Securities, Debt Securities | 5,111 | ||
Amortized Cost [Abstract] | |||
Marketable debt securities | $ 5,114 |
Investments - Other Investments
Investments - Other Investments (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Jan. 02, 2016 | Sep. 29, 2015 | |
Other Noncurrent Assets [Member] | |||
Cost method investment | $ 6 | ||
BAM Labs, Inc. [Member] | |||
Remeasured Fair Value | $ 12.9 | ||
Acquisition related costs | $ 3.4 | ||
BAM Labs, Inc. [Member] | General and Administrative Expense [Member] | |||
Gain on remeasurement of cost investment, net of acquisition related expenses | $ 3.5 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,973 | $ 9,349 |
Work in progress | 72 | 48 |
Finished goods | 66,981 | 77,203 |
Inventories | 75,026 | 86,600 |
Components of finished goods inventory [Abstract] | ||
Finished beds included in finished goods inventory | 20,700 | 22,500 |
Finished components included in finished goods inventory | 29,200 | 40,300 |
Retail accessories included in finished goods inventory | $ 17,100 | $ 14,400 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Property and equipment [Line Items] | ||
Less: Accumulated depreciation and amortization | $ (196,496) | $ (153,182) |
Property and equipment, net | 208,367 | 204,376 |
Land [Member] | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 1,999 | 1,999 |
Leasehold Improvements [Member] | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 97,600 | 91,184 |
Office furniture and equipment [Member] | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 81,541 | 68,276 |
Production machinery, computer equipment and software [Member] | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 209,900 | 191,482 |
Property under capital lease [Member] | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 0 | 1,077 |
Construction in Progress [Member] | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | $ 13,823 | $ 3,540 |
Goodwill and Intangible Asset55
Goodwill and Intangible Assets Goodwill and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 64,046 | $ 8,963 |
SleepIQ LABS | 0 | 55,083 |
Ending balance | 64,046 | 64,046 |
Trade Name/Trademarks [Member] | ||
Indefinite-lived Intangible Assets [Roll Forward] | ||
Beginning Balance | 1,396 | 1,396 |
SleepIQ LABS | 0 | 0 |
Ending Balance | $ 1,396 | $ 1,396 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets Definite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Sep. 30, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | ||
Definite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | $ 21,365 | $ 21,365 | ||
Accumulated Amortization | 5,990 | 3,463 | ||
Developed Technologies [Member] | ||||
Definite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 18,851 | 18,851 | [1] | |
Accumulated Amortization | 4,524 | 2,342 | ||
Customer Relationships [Member] | ||||
Definite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 2,413 | 2,413 | ||
Accumulated Amortization | 1,365 | 1,020 | ||
Trade name/trademarks [Member] | ||||
Definite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 101 | 101 | ||
Accumulated Amortization | $ 101 | $ 101 | ||
BAM Labs, Inc. [Member] | Developed Technologies [Member] | ||||
Definite-Lived Intangible Assets [Line Items] | ||||
BAM Labs, Inc. purchase | $ 13,600 | |||
[1] | In September 2015, in connection with the acquisition of BAM Labs, Inc. (now operating as SleepIQ LABS), we acquired $13.6 million of definite-lived intangible assets consisting of developed technologies. |
Goodwill and Intangible Asset57
Goodwill and Intangible Assets Amortization Expense and Future Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Definite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 2.5 | $ 1.3 | $ 0.8 |
2,017 | 2.5 | ||
2,018 | 2.5 | ||
2,019 | 2.5 | ||
2,020 | 2.2 | ||
2,021 | $ 2.2 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Operating Leases, Future Minimum Payments Due [Abstract] | |||
2,017 | $ 66,493 | ||
2,018 | 58,964 | ||
2,019 | 49,322 | ||
2,020 | 42,862 | ||
2,021 | 37,517 | ||
Thereafter | 137,239 | ||
Total future minimum lease payments | 392,397 | ||
Facility Rents [Member] | |||
Rent Expense | |||
Minimum Rents | 59,002 | $ 52,650 | $ 47,754 |
Contingent Rents | 3,099 | 5,168 | 6,241 |
Total | 62,101 | 57,818 | 53,995 |
Equipment Rents [Member] | |||
Rent Expense | |||
Total | $ 5,316 | $ 4,362 | $ 3,609 |
Credit Agreement (Details)
Credit Agreement (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Debt Disclosure [Abstract] | |
Current borrowing capacity | $ 150 |
Potential borrowing capacity, with accordion feature | $ 200 |
Line of Credit Facility, Expiration Date | Feb. 24, 2021 |
Shareholders' Equity Stock Base
Shareholders' Equity Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 11,961 | $ 10,290 | $ 6,798 | [1] |
Income tax benefit | 3,947 | 3,413 | 2,284 | |
Total stock-based compensation expense, net of tax | 8,014 | 6,877 | 4,514 | |
Share-based Compensation, Impact of Change in Forfeiture Rate | 1,200 | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 2,281 | 2,634 | 2,125 | |
Time-based, Performance-based and Market-based Stock Awards [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 9,680 | $ 7,656 | $ 4,673 | |
[1] | Reflects a $1.2 million benefit in 2014 related to a change in estimated forfeitures due to employee turnover. |
Shareholders' Equity Stock Opti
Shareholders' Equity Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | ||
Employee Stock Option [Member] | ||||
Stock options activity [Roll Forward] | ||||
Balance at January 2, 2016 | 1,388,000 | |||
Granted | 299,000 | |||
Exercised | (188,000) | |||
Canceled/Forfeited | (145,000) | |||
Outstanding at December 31, 2016 | 1,354,000 | 1,388,000 | ||
Exercisable at December 31, 2016 | 927,000 | |||
Vested and expected to vest at December 31, 2016 | 1,315,000 | |||
Weighted- Average Exercise Price per Share | ||||
Balance at January 2, 2016 | $ 18.44 | |||
Granted | 19.19 | |||
Exercised | 12.21 | |||
Canceled/Forfeited | 25.71 | |||
Outstanding at December 31, 2016 | 18.70 | $ 18.44 | ||
Exercisable at December 31, 2016 | 17.40 | |||
Vested and expected to vest at December 31, 2016 | $ 18.61 | |||
Weighted- Average Remaining Contractual Term | ||||
Weighted-average remaining contractual term (years) - outstanding | 5 years 10 months 24 days | 5 years 3 months 18 days | ||
Weighted-average remaining contractual terms (years) - exercisable | 4 years 7 months 6 days | |||
Weighted-average remaining contractual term (years) - vested and expected to vest | 5 years 10 months 24 days | |||
Aggregate Intrinsic Value | ||||
Aggregate intrinsic value - outstanding | [1] | $ 7,541 | $ 7,366 | |
Aggregate intrinsic value - exercisable | [1] | 6,264 | ||
Aggregate intrinsic value - vested and expected to vest | [1] | $ 7,442 | ||
Other information - options [Abstract] | ||||
Weighted-average grant date fair value of stock options granted | $ 8.85 | $ 15.94 | $ 9.33 | |
Total intrinsic value (at exercise) of stock options exercised | $ 2,088 | $ 4,592 | $ 2,478 | |
Proceeds from stock options exercised | 2,300 | |||
Tax benefit, exercise of stock options | 800 | |||
Stock-based compensation expense related to non-vested awards | $ 2,600 | |||
Weighted average period to recognize remaining expense over | 1 year 9 months 18 days | |||
Stock Option Valuation Assumptions [Abstract] | ||||
Fair value assumptions, method used | Black-Scholes-Merton option-pricing model | |||
Expected dividend yield (in hundredths) | 0.00% | 0.00% | 0.00% | |
Expected volatility (in hundredths) | 50.00% | 54.00% | 58.00% | |
Risk-free interest rate (in hundredths) | 1.40% | 1.60% | 1.80% | |
Expected term (in years) | 5 years 2 months 12 days | 5 years 2 months 12 days | 5 years 3 months 18 days | |
MarketBasedEmployeeStockOption [Member] | ||||
Stock options activity [Roll Forward] | ||||
Granted | 30,500 | |||
Weighted- Average Exercise Price per Share | ||||
Granted | $ 10.25 | |||
Stock Option Valuation Assumptions [Abstract] | ||||
Fair value assumptions, method used | Monte Carlo simulation model | |||
Expected dividend yield (in hundredths) | 0.00% | |||
Expected volatility (in hundredths) | 50.00% | |||
Risk-free interest rate (in hundredths) | 1.80% | |||
[1] | Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant. |
Shareholders' Equity Stock Awar
Shareholders' Equity Stock Awards (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Jan. 03, 2015 | |
Restricted Stock [Member] | ||
Stock awards [Roll Forward] | ||
Outstanding at January 2, 2016 | 454,000 | |
Granted | 289,000 | |
Vested | (189,000) | |
Canceled/Forfeited | (24,000) | |
Outstanding at December 31, 2016 | 530,000 | |
Weighted-Average Grant Date Fair Value | ||
Outstanding at January 2, 2016 | $ 23.14 | |
Granted | 19.78 | |
Vested | 24.55 | |
Canceled/Forfeited | 21.34 | |
Outstanding at December 31, 2016 | $ 20.83 | |
Stock-based compensation expense related to non-vested awards | $ 5.2 | |
Weighted average period to recognize remaining expense over | 1 year 8 months 12 days | |
Performance-Based and Market-Based Stock Award [Member] | ||
Stock awards [Roll Forward] | ||
Outstanding at January 2, 2016 | 710,000 | |
Granted | 347,000 | |
Vested | (52,000) | |
Canceled/Forfeited | (106,000) | |
Outstanding at December 31, 2016 | 899,000 | |
Weighted-Average Grant Date Fair Value | ||
Outstanding at January 2, 2016 | $ 22.01 | |
Granted | 18.84 | |
Vested | 24.57 | |
Canceled/Forfeited | 20.24 | |
Outstanding at December 31, 2016 | $ 20.87 | |
Stock-based compensation expense related to non-vested awards | $ 7.8 | |
Weighted average period to recognize remaining expense over | 1 year 10 months 24 days | |
Market-Based Stock Award [Member] | ||
Stock awards [Roll Forward] | ||
Granted | 126,550 | |
Weighted-Average Grant Date Fair Value | ||
Granted | $ 14.90 | |
Fair value assumptions, method used | Monte Carlo simulation model | |
Expected dividend yield (in hundredths) | 0.00% | |
Expected volatility (in hundredths) | 58.00% | |
Risk-free interest rate (in hundredths) | 0.90% |
Shareholders' Equity Repurchase
Shareholders' Equity Repurchase of Common Stock (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Amount repurchased under Board-approved share repurchase program | $ 125,000 | $ 98,446 | $ 45,044 |
Amount repurchased in connection with the vesting of employee restricted stock grants | 1,693 | 1,755 | 1,448 |
Total amount repurchased | 126,693 | $ 100,201 | $ 46,492 |
Remaining Authorization Stock Purchase Plan | $ 245,000 |
Shareholders' Equity Net Income
Shareholders' Equity Net Income per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Apr. 02, 2016 | Jan. 02, 2016 | Oct. 03, 2015 | Jul. 04, 2015 | Apr. 04, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Net income | $ 11,287 | $ 25,745 | $ 1,416 | $ 12,969 | $ (21,172) | $ 31,854 | $ 11,038 | $ 28,799 | $ 51,417 | $ 50,519 | $ 67,974 |
Basic weighted-average shares outstanding | 46,154,000 | 51,252,000 | 53,452,000 | ||||||||
Effect of dilutive securities | 748,000 | 849,000 | 741,000 | ||||||||
Diluted weighted-average shares outstanding | 46,902,000 | 52,101,000 | 54,193,000 | ||||||||
Net income per share – basic | $ 1.11 | $ 0.99 | $ 1.27 | ||||||||
Net income per share – diluted | $ 0.25 | $ 0.56 | $ 0.03 | $ 0.27 | $ (0.42) | $ 0.62 | $ 0.21 | $ 0.54 | $ 1.10 | $ 0.97 | $ 1.25 |
Employee Stock Option [Member] | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 600,000 | 400,000 | 800,000 |
Other (Expense) Income, Net (De
Other (Expense) Income, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Other Income and Expenses [Abstract] | |||
Interest expense | $ (811) | $ (160) | $ (53) |
Interest income | 94 | 494 | 415 |
Other (expense) income, net | $ (717) | $ 334 | $ 362 |
Income Taxes Income Tax Expense
Income Taxes Income Tax Expense (benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Current: | |||
Federal | $ 21,634 | $ 7,272 | $ 29,484 |
State | 5,289 | 3,870 | 4,161 |
Current Income Tax Expense | 26,923 | 11,142 | 33,645 |
Deferred: | |||
Federal | (105) | 13,567 | 747 |
State | (2,302) | 202 | (258) |
Deferred Income Tax Expense | (2,407) | 13,769 | 489 |
Income Tax Expense | $ 24,516 | $ 24,911 | $ 34,134 |
Income Taxes Income Tax Expen67
Income Taxes Income Tax Expense (Benefit) Reconciliation to Statutory Rate (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Income Tax Examination [Line Items] | |||
Statutory federal income tax | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit | 2.60% | 3.00% | 2.50% |
Manufacturing deduction | (3.30%) | (1.70%) | (3.30%) |
Changes in unrecognized tax benefits | 1.20% | 0.30% | 0.30% |
Non-taxable acquisition-related transactions | 0.00% | (2.60%) | 0.00% |
Other | (3.20%) | (1.00%) | (1.10%) |
Effective income tax rate | 32.30% | 33.00% | 33.40% |
Income Taxes Deferred Income Ta
Income Taxes Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Deferred Tax Assets [Abstract] | ||
Stock-based compensation | $ 9,834 | $ 8,756 |
Deferred rent and lease incentives | 8,388 | 6,977 |
Warranty and returns liabilities | 7,948 | 10,817 |
Net operating loss carryforwards and credits | 6,368 | 7,847 |
Compensation and benefits | 4,115 | 3,788 |
Other | 5,264 | 4,561 |
Total gross deferred tax assets | 41,917 | 42,746 |
Valuation allowance | (620) | (1,441) |
Total deferred tax assets after valuation allowance | 41,297 | 41,305 |
Deferred Tax Liabilities [Abstract] | ||
Property and equipment | 27,049 | 26,330 |
Deferred revenue | 3,279 | 5,598 |
Other | 6,302 | 6,341 |
Total gross deferred tax liabilities | 36,630 | 38,269 |
Net deferred tax assets | 4,667 | $ 3,036 |
Federal [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | 10,000 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | $ 14,800 |
Income Taxes Income Taxes Unrec
Income Taxes Income Taxes Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 2,077 | $ 742 | $ 474 |
Increases related to current-year tax positions | 326 | 1,277 | 172 |
Increases related to prior-year tax positions | 1,594 | 113 | 110 |
Lapse of statute of limitations | (333) | (55) | (14) |
Settlements with taxing authorities | (204) | 0 | 0 |
Ending balance | 3,460 | 2,077 | $ 742 |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 3,500 | $ 2,100 |
Profit Sharing and 401(K) Pla70
Profit Sharing and 401(K) Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Profit Sharing and 401 (k) Plan [Abstract] | |||
Employee compensation deferral (in hundredths) | 50.00% | ||
Employer contributions | $ 4.6 | $ 4.2 | $ 3.7 |
Commitments and Contingencies71
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($)lease_commitment | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Inventory Purchase Commitments | $ 5.5 |
Purchase Commitment [Member] | Future Retail Sites [Member] | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Number of future retail store lease commitments | lease_commitment | 33 |
Future retail store leases, Rent Expense, Minimum Rentals | $ 96 |
Minimum [Member] | Purchase Commitment [Member] | Future Retail Sites [Member] | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Future retail store lease commitments term | 5 years |
Maximum [Member] | Purchase Commitment [Member] | Future Retail Sites [Member] | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Future retail store lease commitments term | 15 years |
Summary of Quarterly Financia72
Summary of Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Apr. 02, 2016 | Jan. 02, 2016 | Oct. 03, 2015 | Jul. 04, 2015 | Apr. 04, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Summary of Quarterly Financial Data (unaudited) [Abstract] | |||||||||||
Net sales | $ 313,445 | $ 367,988 | $ 276,878 | $ 352,980 | $ 214,682 | $ 373,919 | $ 275,289 | $ 349,809 | $ 1,311,291 | $ 1,213,699 | $ 1,156,757 |
Gross profit | 197,482 | 232,343 | 171,261 | 209,074 | 120,743 | 233,636 | 170,539 | 215,833 | 810,160 | 740,751 | 706,850 |
Operating income (loss) | 15,312 | 39,044 | 2,396 | 19,898 | (30,657) | 45,399 | 16,629 | 43,725 | 76,650 | 75,096 | 101,746 |
Net income (loss) | $ 11,287 | $ 25,745 | $ 1,416 | $ 12,969 | $ (21,172) | $ 31,854 | $ 11,038 | $ 28,799 | $ 51,417 | $ 50,519 | $ 67,974 |
Net income (loss) per share – diluted | $ 0.25 | $ 0.56 | $ 0.03 | $ 0.27 | $ (0.42) | $ 0.62 | $ 0.21 | $ 0.54 | $ 1.10 | $ 0.97 | $ 1.25 |
Schedule II - Valuation and Q73
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Allowance for Doubtful Accounts [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | $ 1,039 | $ 739 | $ 425 |
Additions charged to costs and expenses | 1,224 | 1,577 | 729 |
Deductions from reserves | (1,379) | (1,277) | (415) |
Balance at end of period | 884 | 1,039 | 739 |
Allowance for Sales Returns [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | 20,562 | 15,262 | 9,433 |
Additions charged to costs and expenses | 71,958 | 84,265 | 78,890 |
Deductions from reserves | (77,298) | (78,965) | (73,061) |
Balance at end of period | $ 15,222 | $ 20,562 | $ 15,262 |