# EDGAR Filing Document

**Accession Number:** 0000827187
**File Stem:** 0000827187-26-000041
**Filing Date:** 2026-5
**Character Count:** 143021
**Document Hash:** 4d135c2dc7762d643e622485c075cfa2
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000827187-26-000041.hdr.sgml**: 20260512

**ACCESSION NUMBER**: 0000827187-26-000041

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 78

**CONFORMED PERIOD OF REPORT**: 20260404

**FILED AS OF DATE**: 20260512

**DATE AS OF CHANGE**: 20260512

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Sleep Number Corp
- **CENTRAL INDEX KEY:** 0000827187
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOUSEHOLD FURNITURE [2510]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 411597886
- **STATE OF INCORPORATION:** MN
- **FISCAL YEAR END:** 0103

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-25121
- **FILM NUMBER:** 26965838

**BUSINESS ADDRESS:**
- **STREET 1:** 1001 THIRD AVENUE SOUTH
- **CITY:** MINNEAPOLIS
- **STATE:** MN
- **ZIP:** 55404
- **BUSINESS PHONE:** 7635517000

**MAIL ADDRESS:**
- **STREET 1:** 1001 THIRD AVENUE SOUTH
- **CITY:** MINNEAPOLIS
- **STATE:** MN
- **ZIP:** 55404

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SELECT COMFORT CORP
- **DATE OF NAME CHANGE:** 19980821

?xml version='1.0' encoding='ASCII'? snbr-20260404

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q** 

**(Mark One)**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES** **EXCHANGE ACT OF 1934**

For the quarterly period ended April 4, 2026

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES** **EXCHANGE ACT OF 1934**

**Commission File Number: 000-25121** 

**_______________________________________________________________________**

![a1.jpg](snbr-20260404_g1.jpg)

## SLEEP NUMBER CORPORATION
(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Minnesota** | **41-1597886** |
| (State or other jurisdiction of incorporation or <br>organization)<br>| (I.R.S. Employer Identification No.) |

---

---

| | | |
|:---|:---|:---|
| **1001 Third Avenue South** | **1001 Third Avenue South** |  |
| **Minneapolis,** | **Minnesota** | **55404** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: **(763) 551-7000** 

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading**<br>**Symbol(s)**<br>| **Name of each exchange on which registered** |
| Common Stock, par value $0.01 per share | SNBR | Nasdaq Global Select Market |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant

to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting

company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
|  |  | Emerging growth company | ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 4, 2026, 23,049,000 shares of the registrant's Common Stock were outstanding.

---

| | |
|:---|:---|
| **i \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**INDEX**

---

| | | |
|:---|:---|:---|
| | | **Page** |
| **[PART I: FINANCIAL INFORMATION](#ia09d87b8cc134ec1b4f5e0236f51af25_10)** | **[PART I: FINANCIAL INFORMATION](#ia09d87b8cc134ec1b4f5e0236f51af25_10)** | [1](#ia09d87b8cc134ec1b4f5e0236f51af25_10) |
| [Item 1.](#ia09d87b8cc134ec1b4f5e0236f51af25_13) | [Financial Statements (unaudited)](#ia09d87b8cc134ec1b4f5e0236f51af25_13) | [1](#ia09d87b8cc134ec1b4f5e0236f51af25_13) |
|  | [Condensed Consolidated Balance Sheets](#ia09d87b8cc134ec1b4f5e0236f51af25_16) | [1](#ia09d87b8cc134ec1b4f5e0236f51af25_16) |
|  | [Condensed Consolidated Statements of Operations](#ia09d87b8cc134ec1b4f5e0236f51af25_19) | [2](#ia09d87b8cc134ec1b4f5e0236f51af25_19) |
|  | [Condensed Consolidated Statements of Shareholders' Deficit](#ia09d87b8cc134ec1b4f5e0236f51af25_22) | [3](#ia09d87b8cc134ec1b4f5e0236f51af25_22) |
|  | [Condensed Consolidated Statements of Cash Flows](#ia09d87b8cc134ec1b4f5e0236f51af25_25) | [4](#ia09d87b8cc134ec1b4f5e0236f51af25_25) |
|  | [Notes to Condensed Consolidated Financial Statements](#ia09d87b8cc134ec1b4f5e0236f51af25_28) | [5](#ia09d87b8cc134ec1b4f5e0236f51af25_28) |
| [Item 2.](#ia09d87b8cc134ec1b4f5e0236f51af25_79) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ia09d87b8cc134ec1b4f5e0236f51af25_79) | [15](#ia09d87b8cc134ec1b4f5e0236f51af25_79) |
| [Item 3.](#ia09d87b8cc134ec1b4f5e0236f51af25_148) | [Quantitative and Qualitative Disclosures About Market Risk](#ia09d87b8cc134ec1b4f5e0236f51af25_148) | [27](#ia09d87b8cc134ec1b4f5e0236f51af25_148) |
| [Item 4.](#ia09d87b8cc134ec1b4f5e0236f51af25_151) | [Controls and Procedures](#ia09d87b8cc134ec1b4f5e0236f51af25_151) | [27](#ia09d87b8cc134ec1b4f5e0236f51af25_151) |
| **[PART II: OTHER INFORMATION](#ia09d87b8cc134ec1b4f5e0236f51af25_154)** | **[PART II: OTHER INFORMATION](#ia09d87b8cc134ec1b4f5e0236f51af25_154)** | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_154) |
| [Item 1.](#ia09d87b8cc134ec1b4f5e0236f51af25_157) | [Legal Proceedings](#ia09d87b8cc134ec1b4f5e0236f51af25_157) | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_157) |
| [Item 1A.](#ia09d87b8cc134ec1b4f5e0236f51af25_160) | [Risk Factors](#ia09d87b8cc134ec1b4f5e0236f51af25_160) | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_160) |
| [Item 2.](#ia09d87b8cc134ec1b4f5e0236f51af25_163) | [Unregistered Sales of Equity Securities and Use of Proceeds](#ia09d87b8cc134ec1b4f5e0236f51af25_163) | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_163) |
| [Item 3.](#ia09d87b8cc134ec1b4f5e0236f51af25_166) | [Defaults Upon Senior Securities](#ia09d87b8cc134ec1b4f5e0236f51af25_166) | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_166) |
| [Item 4.](#ia09d87b8cc134ec1b4f5e0236f51af25_169) | [Mine Safety Disclosures](#ia09d87b8cc134ec1b4f5e0236f51af25_169) | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_169) |
| [Item 5.](#ia09d87b8cc134ec1b4f5e0236f51af25_172) | [Other Information](#ia09d87b8cc134ec1b4f5e0236f51af25_172) | [28](#ia09d87b8cc134ec1b4f5e0236f51af25_172) |
| [Item 6.](#ia09d87b8cc134ec1b4f5e0236f51af25_178) | [Exhibits](#ia09d87b8cc134ec1b4f5e0236f51af25_178) | [29](#ia09d87b8cc134ec1b4f5e0236f51af25_178) |
| **[SIGNATURES](#ia09d87b8cc134ec1b4f5e0236f51af25_181)** | **[SIGNATURES](#ia09d87b8cc134ec1b4f5e0236f51af25_181)** | [30](#ia09d87b8cc134ec1b4f5e0236f51af25_181) |

---

---

| | |
|:---|:---|
| **1 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**PART I: FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Condensed Consolidated Balance Sheets**

**(in thousands, except per share amounts)**

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| **Assets** | (unaudited) | (audited) |
| Current assets: |  |  |
| Cash and cash equivalents | $1484 | $1693 |
| Accounts receivable, net of allowances of $656 and $694, respectively | 13354 | 15502 |
| Inventories | 78216 | 82233 |
| Prepaid expenses | 19727 | 13656 |
| Other current assets | 30694 | 36873 |
| Total current assets | 143475 | 149957 |
| Non-current assets: |  |  |
| Property and equipment, net | 73755 | 86528 |
| Operating lease right-of-use assets | 295315 | 311723 |
| Goodwill and intangible assets, net | 66131 | 66186 |
| Deferred income taxes | 399 | 399 |
| Other non-current assets | 61933 | 65267 |
| Total assets | $641008 | $680060 |
| **Liabilities and Shareholders' Deficit** |  |  |
| Current liabilities: |  |  |
| Borrowings under credit facility | $605600 | $588200 |
| Accounts payable | 116395 | 117977 |
| Customer prepayments | 43338 | 39527 |
| Accrued sales returns | 12266 | 12817 |
| Compensation and benefits | 19415 | 14975 |
| Taxes and withholding | 10908 | 11429 |
| Operating lease liabilities | 79340 | 81191 |
| Other current liabilities | 44447 | 46430 |
| Total current liabilities | 931709 | 912546 |
| Non-current liabilities: |  |  |
| Operating lease liabilities | 268697 | 273111 |
| Other non-current liabilities | 66921 | 72878 |
| Total liabilities | 1267327 | 1258535 |
| Shareholders' deficit: |  |  |
| Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding |  |  |
| Common stock, $0.01 par value; 142,500 shares authorized, 23,049 and 22,860 shares issued <br>and outstanding, respectively<br>| 230 | 229 |
| Additional paid-in capital | 34906 | 32454 |
| Accumulated deficit | (661455) | (611158) |
| Total shareholders' deficit | (626319) | (578475) |
| Total liabilities and shareholders' deficit | $641008 | $680060 |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **2 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Condensed Consolidated Statements of Operations**

**(unaudited - in thousands, except per share amounts)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Net sales | $318987 | $393261 |
| Cost of sales | 134372 | 152726 |
| Gross profit | 184615 | 240535 |
| Operating expenses: |  |  |
| Sales and marketing | 160795 | 189103 |
| General and administrative | 33592 | 38619 |
| Research and development | 5348 | 10903 |
| Restructuring costs | 21736 | 60 |
| Total operating expenses | 221471 | 238685 |
| Operating (loss) income | (36856) | 1850 |
| Interest expense, net | 13103 | 11081 |
| Loss before income taxes | (49959) | (9231) |
| Income tax expense (benefit) | 338 | (585) |
| Net loss | $(50297) | $(8646) |
| Basic and diluted net loss per share: |  |  |
| Net loss per share – basic and diluted | $(2.19) | $(0.38) |
| Weighted-average shares – basic and diluted | 22991 | 22706 |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **3 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Condensed Consolidated Statements of Shareholders' Deficit**

**(unaudited - in thousands)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Additional**<br>**Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Total** |
| | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Total** |
| Balance at January 3, 2026 | 22860 | $229 | $32454 | $(611158) | $(578475) |
| Net loss |  |  |  | (50297) | (50297) |
| Stock-based compensation | 292 | 2 | 2824 |  | 2826 |
| Repurchases of common stock | (103) | (1) | (372) |  | (373) |
| Balance at April 4, 2026 | 23049 | $230 | $34906 | $(661455) | $(626319) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Additional**<br>**Paid-in**<br>**Capital** | **Accumulated** <br>**Deficit** | **Total** |
| | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** | **Accumulated** <br>**Deficit** | **Total** |
| Balance at December 28, 2024 | 22388 | 224 | 27390 | (479200) | (451586) |
| Net loss |  |  |  | (8646) | (8646) |
| Stock-based compensation | 346 | 3 | 3948 |  | 3951 |
| Repurchases of common stock | (74) |  | (563) |  | (563) |
| Balance at March 29, 2025 | 22660 | 227 | 30775 | (487846) | (456844) |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **4 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Condensed Consolidated Statements of Cash Flows**

**(unaudited - in thousands)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Cash flows from operating activities: |  |  |
| Net loss | $(50297) | $(8646) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| Depreciation and amortization | 12371 | 14836 |
| Stock-based compensation | 2826 | 3951 |
| Inventory obsolescence write off | 2099 |  |
| Loss on disposal and impairment of leased assets | 17539 | 17 |
| Deferred income taxes |  | (1321) |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable | 2148 | 3291 |
| Inventories | 1918 | (724) |
| Income taxes | 482 | 736 |
| Prepaid expenses and other assets | (4266) | 781 |
| Accounts payable | 3818 | 8784 |
| Customer prepayments | 3811 | (6576) |
| Accrued compensation and benefits | 4354 | (9686) |
| Other taxes and withholding | (1003) | (1925) |
| Other accruals and liabilities | (3551) | (6144) |
| Net cash used in operating activities | (7751) | (2626) |
| Cash flows from investing activities: |  |  |
| Purchases of property and equipment | (5441) | (4599) |
| Net cash used in investing activities | (5441) | (4599) |
| Cash flows from financing activities: |  |  |
| Net increase in short-term borrowings | 13805 | 9087 |
| Repurchases of common stock | (373) | (563) |
| Debt issuance costs | (449) | (1558) |
| Net cash provided by financing activities | 12983 | 6966 |
| Net decrease in cash and cash equivalents | (209) | (259) |
| Cash and cash equivalents, at beginning of period | 1693 | 1950 |
| Cash and cash equivalents, at end of period | $1484 | $1691 |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **5 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

 **1. Business and Summary of Significant Accounting Policies**

*Business & Basis of Presentation*

The Company prepared the condensed consolidated financial statements as of and for the three months ended April 4,

2026 of Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company), without audit,

pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of

management, all normal recurring adjustments, including the elimination of all intra-entity balances and transactions,

necessary to present fairly its financial position as of April 4, 2026 and January 3, 2026, and the consolidated results of

operations and cash flows for the periods presented. The historical and quarterly consolidated results of operations may

not be indicative of the results that may be achieved for the full year or any future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

Generally Accepted Accounting Principles (GAAP) have been condensed or omitted pursuant to such rules and

regulations. These condensed consolidated financial statements should be read in conjunction with the most recent

audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for

the fiscal year ended January 3, 2026 and other recent filings with the SEC.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company 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 condensed 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 consolidated financial statements in future periods and could be material.

The Company's critical accounting policies consist of stock-based compensation, warranty liabilities, revenue recognition

and valuation allowance for deferred tax assets.

*Accounting Pronouncements Recently Adopted*

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit

Losses for Accounts Receivable and Contract Assets", which provides a practical expedient related to the estimation of

expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for

under Topic 606, including those assets acquired in a business combination. This guidance is effective for the Company

for its fiscal year and all interim periods beginning January 4, 2026 on a prospective basis. The Company has elected the

practical expedient under the standard which permits an entity to assume that current conditions as of the balance sheet

date do not change for the remaining life of the current accounts receivable and current contract assets. This simplifies the

estimation process for short-term financial assets. The adoption of ASU 2025-05 did not have a material impact on the

Company's results of operations, cash flows or financial condition.

*Going Concern*

The Company's financial statements have been prepared under the assumption that the Company will continue as a going

concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business for the

foreseeable future.

Historically, the Company has relied principally on liquidity generated from operating activities to fund the Company's day-

to-day operations and service its debt. The Company has a history of net losses and negative operating cash flows and

expects to continue to incur additional losses in the future. Although the Company continues to pursue its turnaround

strategy "Sleep Number Shifts," centered on product, marketing and distribution, as well as ongoing cost savings and

operating efficiencies, to reignite growth and increase financial resilience, the timing and realization of its turnaround

strategy cannot be guaranteed to ensure sufficient cash flow is generated to provide liquidity to meet the Company's

obligations. While the Company was able to amend its Credit Agreement to provide that the lenders will forbear from

---

| | |
|:---|:---|
| **6 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

exercising certain rights and remedies in respect to certain events of default under the Credit Agreement (the "Specified

Defaults") through the first week ending after July 1, 2026, and add a $25 million term loan facility with a maturity date of

June 30, 2026, the Company was not able to amend covenants beyond July 1, 2026 and therefore the Company

anticipates that it will not remain in compliance with the financial covenants of its Credit Agreement for the next twelve

months. These conditions and events raise substantial doubt about the Company's ability to continue as a going concern.

Management's plan to address the substantial doubt about the Company's ability to continue as a going concern, as

described above, includes the following ongoing actions:

• execute the Company's turnaround strategy centered on product, marketing and distribution with ongoing cost

savings and operating efficiencies to reignite growth and increase financial resilience;

• following the recent amendment of the Credit Agreement, the Company continues to engage with lenders to fulfill

the Company's obligations under the credit facility and other provisions as needed; and

• work with financial advisors to negotiate with the lenders and identify and secure additional capital options,

alternative financing arrangements, strategic alternatives, or other comprehensive solutions to address the

Company's capital structure and leverage needs to return to growth and create long-term value.

There can be no assurance of the Company's ability to realize these plans. As a result, the Company has concluded that

management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern for at

least one year from the date of issuance of these financial statements.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of

recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this

uncertainty.

 **2. Fair Value Measurements**

At both April 4, 2026 and January 3, 2026, the Company had $17 million of debt and equity securities that fund the

deferred compensation plan and are classified in other non-current assets. The Company also had corresponding

deferred compensation plan liabilities of $17 million at both April 4, 2026 and January 3, 2026 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 the Company 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.

During the three months ended April 4, 2026, the Company continued to initiate cost savings and operational efficiencies

to reduce operating expenses and accelerate gross margin initiatives. As a result the Company recorded $22 million of

restructuring costs during the quarter. Refer to Note 12, *Restructuring Costs* for additional information. In the $22 million,

we recorded $18 million of long-lived asset impairment charges primarily related to lease right-of-use assets and property

and equipment. The restructuring costs are included on the Company's condensed consolidated statements of operations.

All non-recurring fair value remeasurements discussed above were based on significant unobservable inputs (Level 3).

The remaining carrying value of net long-lived assets subject to impairment approximates fair value and was immaterial as

of April 4, 2026.

 **3. Inventories**

Inventories consisted of the following (in thousands):

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| Raw materials | $6244 | $5842 |
| Work in progress | 143 | 137 |
| Finished goods | 71829 | 76254 |
|  | $78216 | $82233 |

---

---

| | |
|:---|:---|
| **7 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

 **4. Goodwill and Intangible Assets, Net**

*Goodwill and Indefinite-lived Intangible Assets*

Goodwill was $64.0 million at both April 4, 2026 and January 3, 2026. Indefinite-lived trade name/trademarks totaled

$1.4 million at both April 4, 2026 and January 3, 2026.

*Definite-lived Intangible Assets*

Patents were $2.0 million at both April 4, 2026 and January 3, 2026. Accumulated amortization was $1.3 million at April 4,

2026 and $1.2 million at January 3, 2026. Amortization expense was $0.1 million for both the three months ended April 4,

2026 and March 29, 2025.

Annual amortization for patents for subsequent years is as follows (in thousands):

---

| | |
|:---|:---|
| 2026 (excluding the three months ended April 4, 2026) | $166 |
| 2027 | 222 |
| 2028 | 156 |
| 2029 | 99 |
| 2030 | 45 |
| Total future amortization for definite-lived intangible assets | $688 |

---

 **5. Credit Agreement**

As of April 4, 2026, the Company's credit facility had a total commitment amount of $653 million. The credit facility, as

amended, is for general corporate purposes and to meet seasonal working capital requirements. The Amended and

Restated Credit and Security Agreement, dated February 14, 2018, among the Company, U.S. Bank National Association

and the several banks and other financial institutions from time to time party thereto (as amended, the Credit Agreement)

provides the lenders with a collateral security interest in substantially all of the Company's assets and those of its

subsidiaries and requires the Company to comply with, among other things, a maximum Net Leverage Ratio and a

minimum Interest Coverage Ratio. The carrying amount of the outstanding borrowings under the Credit Agreement

approximates fair value because interest rates approximate the current rates available to the Company. Under the terms

of the Credit Agreement, the Company pays a variable rate of interest and a commitment fee based on the amended

terms below.

On November 4, 2025, the Company amended the Credit Agreement. The amendment, among other things: (a) extended

the maturity date of the Credit Agreement to December 3, 2027; (b) reduced the revolving credit facility from $485 million

to $475 million, which decreases further to $465 million on July 31, 2026; (c) replaced the leverage-based pricing grids

used to determine the Applicable Margin and Applicable Commitment Fee Rate (each as defined in the Credit Agreement)

in favor of (I) with respect to Applicable Margin for Term SOFR Loans, 4.25% starting January 1, 2027 and continuing

thereafter, and (II) with respect to the Applicable Commitment Fee Rate, 0.75% starting January 1, 2027 and continuing

thereafter; (d) on each Regularly Scheduled Payment Date (as defined in the Credit Agreement) occurring on and after

March 31, 2027, increases the amortization of outstanding term loans an additional $1,250,000 (for an aggregate

scheduled principal payment of $3,750,000); (e) terminated the accordion feature; (f) adjusted the permissible maximum

Net Leverage Ratio (as defined in the Credit Agreement) to (I) 4.75 to 1.00 for the quarterly reporting period ending April 4,

2026, (II) 4.80 to 1.00 for the quarterly reporting period ending July 4, 2026, and (III) 4.00 to 1.00 for each quarterly

reporting period thereafter; (g) adjusts the Liquidity financial covenant so that the Company must ensure that liquidity is no

lower than and $40 million for each monthly reporting period; (h) adjusts the permissible minimum Interest Coverage Ratio

to (I) 2.10 to 1.00 for the quarterly reporting periods ending January 3, 2026 and April 4, 2026, (II) 1.80 to 1.00 for the

quarterly reporting period ending July 4, 2026, (III) 2.10 to 1.00 for the reporting period ending October 3, 2026, and (IV)

2.20 to 1.00 for each quarterly reporting period occurring thereafter; (i) adds a new quarterly minimum EBITDA covenant

test that begins for the quarterly reporting period ending April 4, 2026; (j) adjusts the consolidated EBITDA calculation to

include an addback for certain expenses and costs incurred for the trailing twelve months for discontinued operations,

downsized functions and employment expenses for laid-off employees; and (k) provides for additional and more frequent

---

| | |
|:---|:---|
| **8 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

reporting requirements. In connection with the amendment, the Company also agreed to pay the lenders certain

amendment fees and to reimburse the lenders for certain expenses.

On April 27, 2026, the Company entered into a Forbearance Agreement and Thirteenth Amendment (the "Thirteenth

Amendment") amending the Credit Agreement. The amendment, among other things: (a) adds a $25 million term loan

facility (the "2026 Term Loan") that accrues interest at a rate per annum equal to the one-month term SOFR rate plus

8.00% and that matures on June 30, 2026, with a $5 million amortization payment due on June 1, 2026; (b) provides that

the lenders will forbear from exercising certain rights and remedies in respect of certain events of default under the Credit

Agreement (the "Specified Defaults"), subject to certain forbearance termination events; (c) requires that cash interest

payments in respect of all loans outstanding under the Credit Agreement be payable at least monthly; (d) permits the sale

of the Company's claim for certain tariff refunds; (e) requires mandatory prepayments of the loans outstanding under the

Credit Agreement with any proceeds received from certain asset sales, equity issuances, debt incurrences, insurance

claims or condemnation or similar payments; (f) provides for additional and more frequent reporting requirements; (g)

adjusts the minimum liquidity financial covenant such that it does not apply from April 27, 2026 until the last Business Day

of the first week ending after July 1, 2026; (h) requires that the Company not permit disbursements or new draws under

the revolving credit facility outstanding under the Credit Agreement (the "Revolving Facility") to exceed an agreed

permitted variance amount; and (i) requires the Company to satisfy certain milestones, including milestones relating to the

Company's efforts to consummate a strategic transaction that is designed to maximize enterprise value and provide for

payment in full of the obligations under the Credit Agreement. Following such amendment, the Company was in

compliance with all covenants (other than with respect to the Specified Defaults).

The following table summarizes the Company's borrowings under the credit facility ($ in thousands):

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| Outstanding borrowings | $605600 | $588200 |
| Outstanding letters of credit | $8300 | $8800 |
| Additional borrowing capacity | $38600 | $58000 |
| Weighted-average interest rate | 7.8% | 7.8% |

---

 **6. Leases**

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

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

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

markets, the retail store leases generally provide for an initial lease term of five to ten years. The Company's office and

manufacturing leases provide for an initial lease term of up to fifteen years. In addition, the Company's mall-based retail

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

contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company's sole

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

The Company's lease agreements do not contain any material residual value guarantees. The Company also leases

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

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

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

and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or

the date the Company takes possession of the property. During lease renewal negotiations that extend beyond the original

lease term, the Company estimates straight-line rent expense based on current market conditions. Variable lease costs

are recorded when it is probable the cost has been incurred and the amount can be reasonably estimated. Future

payments for real estate taxes and certain building operating expenses for which the Company is obligated are not

included in operating lease costs.

At April 4, 2026, the Company's finance right-of-use (ROU) assets and lease liabilities were not significant.

---

| | |
|:---|:---|
| **9 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

The Company evaluates its operating lease ROU assets for impairment whenever events or changes in circumstances

indicate that the carrying amount of the assets may not be recoverable. During the three months ended April 4, 2026,

certain office and retail locations have ceased operations or plan to cease operations in the near term but remain under

lease obligations. As a result, the Company recorded impairment charges of $18 million, which are included in

restructuring costs in the condensed consolidated statements of operations and cash flows. The Company continues to

monitor its real estate footprint and may incur additional impairment charges in future periods.

Lease costs were as follows (in thousands):

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Operating lease costs<sup>(1)</sup> | $24806 | $26537 |
| Variable lease costs<sup>(2)</sup> | $(23) | $103 |

---

<sup>(1)</sup> Includes short-term lease costs which are not significant.

<sup>(2)</sup> Variable lease costs include adjustments to percentage rent.

The maturities of operating lease liabilities for subsequent years are as follows<sup>(1)</sup> (in thousands):

---

| | |
|:---|:---|
| 2026 (excluding the three months ended April 4, 2026) | $76273 |
| 2027 | 90860 |
| 2028 | 78412 |
| 2029 | 57745 |
| 2030 | 43507 |
| 2031 | 31089 |
| Thereafter | 30179 |
| Total operating lease payments<sup>(2)</sup> | 408065 |
| Less: Interest | 60028 |
| Present value of operating lease liabilities | $348037 |

---

<sup>(1)</sup> Total operating lease payments exclude $2 million of legally binding minimum lease payments for leases signed but not yet commenced.

<sup>(2)</sup> Includes the current portion of $79 million for operating lease liabilities.

Other information related to operating leases was as follows:

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| Weighted-average remaining lease term (in years) | 4.9 | 5.0 |
| Weighted-average discount rate | 6.7% | 6.7% |

---

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| (in thousands) | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Cash paid for amounts included in present value of operating lease liabilities<sup>(1)</sup> | $25840 | $26589 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $14323 | $7711 |

---

<sup>(1)</sup> Cash paid for amounts included in present value of operating lease liabilities are included within the change in other accruals and liabilities within the

condensed consolidated statement of cash flows offset by non-cash right-of-use asset amortization and lease liability accretion.

 **7. Repurchases of Common Stock**

For the three months ended April 4, 2026 and March 29, 2025, we repurchased $0.4 million and $0.6 million of common

stock in connection with the vesting of restricted stock grants. We made no purchases under the Board-approved stock

purchase plan in either period. As of April 4, 2026, the remaining authorization under the Board-approved $600 million

share repurchase program was $348 million.

---

| | |
|:---|:---|
| **10 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

 **8. Revenue Recognition**

Deferred contract assets and deferred contract liabilities are included in the condensed consolidated balance sheets as

follows (in thousands):

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| Deferred contract assets included in: |  |  |
| Other current assets | $25969 | $28704 |
| Other non-current assets | 29404 | 33522 |
|  | $55373 | $62226 |

---

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| Deferred contract liabilities included in: |  |  |
| Other current liabilities | $32139 | $35690 |
| Other non-current liabilities | 35725 | 40961 |
|  | $67864 | $76651 |

---

Deferred revenue and costs related to SleepIQ<sup>®</sup> technology are currently recognized on a straight-line basis over the

product's estimated life of 4.5 years because the Company's inputs are generally expended evenly throughout the

performance period. During the three months ended April 4, 2026 and March 29, 2025, the Company recognized revenue

of $11 million and $10 million, respectively, that was included in the deferred contract liability balances at the beginning of

the respective periods.

Revenue from goods and services transferred to customers at a point in time accounted for approximately 97% of

revenues for both the three months ended April 4, 2026 and March 29, 2025.

Net sales were as follows (in thousands):

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Retail stores | $277637 | $344442 |
| Online, phone, chat and other | 41350 | 48819 |
| Total Company | $318987 | $393261 |

---

*Obligation for Sales Returns*

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

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Balance at beginning of year | $12817 | $19092 |
| Additions that reduce net sales | 11496 | 18787 |
| Deductions from reserves | (12047) | (21102) |
| Balance at end of period | $12266 | $16777 |

---

---

| | |
|:---|:---|
| **11 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

 **9. Stock-Based Compensation Expense**

Total stock-based compensation expense was as follows (in thousands):

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Stock awards<sup>(1)</sup> | $2646 | $2933 |
| Stock options | 180 | 1018 |
| Total stock-based compensation expense <sup>(1)</sup> | $2826 | $3951 |

---

<sup>(1)</sup> Changes in stock-based compensation expense include the cumulative impact of the change in the expected achievements of certain performance

targets.

 **10. Profit Sharing and 401(k) Plan**

Under the Company's 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 pay period, the Company makes a contribution equal

to a percentage of the employee's contribution. Effective October 10, 2025, the Company suspended the 401(k) matching

contribution due to current business performance. During the three months ended March 29, 2025, the Company's

contributions, net of forfeitures, $1.8 million.

 **11. Net Loss per Common Share**

The components of basic and diluted net loss per share were as follows (in thousands, except per share amounts):

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Net loss | $(50297) | $(8646) |
| **Reconciliation of weighted-average shares outstanding:** |  |  |
| Basic weighted-average shares outstanding | 22991 | 22706 |
| Dilutive effect of stock-based awards |  |  |
| Diluted weighted-average shares outstanding | 22991 | 22706 |
| Net loss per share – basic and diluted | $(2.19) | $(0.38) |

---

For the three month periods ended April 4, 2026 and March 29, 2025, otherwise dilutive stock-based awards have been

excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-

dilutive effect on our net loss per diluted share. Additional potential dilutive stock-based awards totaling 3.1 million and

1.9 million for the three months ended April 4, 2026 and March 29, 2025, respectively, have been excluded from the

diluted net loss per share calculations because these stock-based awards were anti-dilutive.

 **12. Restructuring Costs**

In the fourth quarter of 2023, the Company initiated cost reduction actions to reduce operating expenses and accelerate

gross margin initiatives, and recognized $84.5 million of restructuring costs through January 3, 2026. The Company has

incurred an additional $21.7 million and of restructuring costs during the three months ended April 4, 2026. Charges

incurred related to this initiative were comprised of contract termination costs, severance and employee-related benefits,

professional fees and other, and asset impairment charges and are included in restructuring costs in the Company's

condensed consolidated statement of operations. The Company expects approximately $2 million of additional

restructuring costs to be incurred through the remainder of 2026, primarily due to severance and employee-related

benefits, contract termination costs, and asset impairment charges.

---

| | |
|:---|:---|
| **12 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

The following table provides a summary of the Company's restructuring costs during the three months ended April 4, 2026

and March 29, 2025 (in thousands):

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Cash restructuring costs: |  |  |
| Contract termination costs<sup>(1)</sup> | $1551 | $(114) |
| Severance and employee-related benefits | 1134 | 157 |
| Professional fees and other | 1512 | 17 |
| Total cash restructuring costs | 4197 | 60 |
| Non-cash restructuring costs: |  |  |
| Asset impairments<sup>(2)</sup> | 17539 |  |
| Total restructuring costs | $21736 | $60 |

---

<sup>(1)</sup> Primarily comprised of lease termination costs. Costs incurred during the three months ended March 29, 2025 were favorable to original estimates.

<sup>(2)</sup> Primarily comprised of impairments of lease right-of-use assets and property and equipment.

The following table provides the activity in the Company's restructuring related liabilities, which are included within

accounts payable, compensation and benefits and other current liabilities on the condensed consolidated balance sheet

(in thousands):

---

| | | |
|:---|:---|:---|
| | **April 4,**<br>**2026**<br>| **January 3,**<br>**2026**<br>|
| Balance at the beginning of year | $6076 | $3341 |
| Expenses | 4197 | 19754 |
| Cash payments | (4133) | (17019) |
| Balance at the end of the period | $6140 | $6076 |

---

Since the initiation of cost reduction actions in the fourth quarter of 2023, the Company has recognized a cumulative

$106.2 million of restructuring costs, as follows (in thousands):

---

| | |
|:---|:---|
| | **Cumulative** |
| | **April 4,**<br>**2026**<br>|
| Cash restructuring costs: |  |
| Contract termination costs<sup>(1)</sup> | $24396 |
| Severance and employee-related benefits | 18856 |
| Professional fees and other | 9073 |
| Total cash restructuring costs | 52325 |
| Non-cash restructuring costs: |  |
| Asset impairments<sup>(2)</sup> | 53902 |
| Total restructuring costs | $106227 |

---

<sup>(1)</sup> Primarily comprised of strategic-development partner contract termination costs and lease termination costs.

<sup>(2)</sup> Primarily comprised of impairments of strategic-development partner long-lived assets, lease right-of-use assets and property and equipment.

---

| | |
|:---|:---|
| **13 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

**13. Income Taxes**

Income tax expense was $0.3 million for the three months ended April 4, 2026, compared with income tax benefit of

$0.6 million for the same period one year ago.

The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required. As part of

this evaluation, the Company 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. On the basis of this evaluation, as of April 4, 2026, a

valuation allowance of $55 million has been recorded to recognize only a portion of the deferred tax asset that is more

likely than not to be realized. The Company continues to assess the need for the valuation allowance and will make

adjustments when appropriate.

**14. Segments**

The Company's chief operating decision maker (CODM), who is the Chief Executive Officer, assesses company-wide

performance and allocates resources based on consolidated financial information. Consequently, the Company views the

entire organization as one reportable segment and the strategic purpose of all operating activities is to support that one

segment.

The CODM manages the Company's business activities as a single operating and reportable segment at the consolidated

level. The CODM uses net loss, as reported on the Company's consolidated statement of operations, in evaluating

performance of the Company in determining how to allocate resources of the Company as a whole, including investing in

the Company's product development, sales and marketing campaigns, and employee compensation. The measure of

segment assets that is reviewed by the CODM is reported within the consolidated balance sheet as consolidated total

assets. The CODM also uses consolidated earnings or losses before interest, taxes, depreciation and amortization

(Adjusted EBITDA) as the basis for the CODM to evaluate the performance of the Company.

The following is a summary of the significant expense categories and consolidated net loss details provided to the CODM

(in thousands):

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Net Sales | $318987 | $393261 |
| Less: |  |  |
| Cost of sales | (134372) | (152726) |
| Marketing expenses | (79102) | (97940) |
| Selling expenses | (81693) | (91163) |
| General and administrative | (33592) | (38619) |
| Research and development | (5348) | (10903) |
| Restructuring costs | (21736) | (60) |
| Interest expense | (13103) | (11081) |
| Income tax (expense) benefit | (338) | 585 |
| Net loss | $(50297) | $(8646) |

---

---

| | |
|:---|:---|
| **14 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

**15. Commitments and Contingencies**

*Warranty Liabilities*

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

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Balance at beginning of period | $5656 | $6947 |
| Additions charged to costs and expenses for current-year sales | 2522 | 3131 |
| Deductions from reserves | (2541) | (3162) |
| Changes in liability for pre-existing warranties during the current year, including <br>expirations<br>| 86 | (405) |
| Balance at end of period | $5723 | $6511 |

---

*Legal Proceedings*

The Company is involved from time to time in various legal proceedings arising in the ordinary course of its business,

including primarily commercial, product liability, employment and intellectual property claims. In accordance with U.S.

GAAP, the Company records a liability in its consolidated financial statements with respect to any of these matters when it

is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. If a material

loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of

loss is disclosed. With respect to currently pending legal proceedings, the Company has not established an estimated

range of reasonably possible material losses either because it believes that it has valid defenses to claims asserted

against it, the proceeding has not advanced to a stage of discovery that would enable it to establish an estimate, or the

potential loss is not material. The Company currently does not expect the outcome of pending legal proceedings to have a

material effect on its 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 the Company could

adversely impact its consolidated results of operations, financial position or cash flows. The Company expenses legal

costs as incurred.

<u>Purported</u> <u>Class Action Complaint</u>

On September 27, 2024, a purported customer served a putative class action complaint on behalf of themself and a

putative class of California consumers against Sleep Number in the United States District Court for the Eastern District of

California alleging that Sleep Number's beds are perpetually on sale in violation of California law. The plaintiff seeks

injunctive relief, damages and attorney's fees. Sleep Number moved to dismiss the amended complaint, which motion the

Magistrate recommended be granted by the Court without prejudice. The Magistrate's recommendation is pending with

the Court.

---

| | |
|:---|:---|
| **15 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF** 

**OPERATIONS**

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide a

reader of the Company's condensed consolidated financial statements with a narrative from the perspective of

management on its financial condition, results of operations, liquidity and certain other factors that may affect the

Company's future results. MD&A is presented in seven sections:

• Forward-Looking Statements and Risk Factors

• Business Overview

• Results of Operations

• Liquidity and Capital Resources

• Non-GAAP Data Reconciliations

• Critical Accounting Policies

**Forward-looking Statements and Risk Factors**

***The discussion in this Quarterly Report on Form 10-Q contains certain forward-looking statements that relate to***

***future plans, events, financial results or performance. You can identify forward-looking statements by those that***

***are not historical in nature, particularly those that use terminology such as "may," "will," "should," "could,"***

***"expect," "anticipate," "believe," "estimate," "plan," "project," "predict," "intend," "potential," "continue" or the***

***negative of these or similar terms. These statements are subject to certain risks and uncertainties that could***

***cause actual results to differ materially from the Company's historical experience and its present expectations or***

***projections. These risks and uncertainties include, among others:***

• Changes in economic conditions and consumer sentiment and related impacts on discretionary consumer spending;

• Interest rates remain elevated, and may further increase and impact the cost of servicing the Company's

indebtedness;

• Availability of attractive and cost-effective consumer credit options;

• Ability to achieve the improvements, growth, cost-savings, efficiencies and other benefits related to its turnaround

strategy to avoid adverse effects and the costs to implement its turnaround strategy;

• Ability to continue as a going concern;

• Access to additional capital and its access to such capital or alternative financing options may depend on factors

beyond the Company's control or require the Company to accept unfavorable terms;

• Ability to manage the Company's credit agreement, which contains financial covenants and other restrictions on our

actions;

• Effectiveness and efficiency of the Company's marketing strategy and promotions;

• Ability to execute Sleep Number's Total Retail distribution strategy;

• Ability to compete effectively;

• Ability to achieve and maintain high levels of product and service quality;

• Ability to improve and expand the product line, anticipate and respond to changing consumer trends, and execute new

product introductions;

• Ability to protect the Company's technology, trademarks and brand, and the adequacy of its intellectual property

rights;

• Dependence on, and ability to maintain working relationships with key suppliers and third parties, including some that

are the only source of supply or services currently used by the Company;

• Fluctuations in commodity prices or third-party delivery or logistics costs and other inflationary pressures;

• Risks inherent in global-sourcing activities, including tariffs, foreign regulation, geo-political turmoil, war, pandemics,

labor challenges, foreign currency fluctuations, inflation, climate or other disasters and resulting supply shortages, and

production and delivery delays and disruptions;

• Operating with minimal levels of inventory, which may leave the Company vulnerable to supply shortages;

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| **16 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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• Risks of disruption in the operation of any of the Company's facilities and operations, including manufacturing,

assembly, distribution, logistics, field services, home delivery, headquarters, product development, retail or customer

service operations;

• Ability to effectively complete potential future acquisitions, business combinations or divestitures;

• Sleep Number's ability, and the ability of its suppliers and vendors, to attract, retain and motivate qualified and

effective personnel;

• Ability to comply with existing and changing government regulations and laws;

• Ability to identify and withstand cyber threats that could compromise the security of the Company's systems or those

of third parties upon which it relies and could result in a data breach or business disruption;

• Risks associated with advancements in, adoption of or the failure to effectively adopt, artificial intelligence and related

technologies;

• Adequacy of the Company's and third-party information systems, and costs and disruptions related to upgrading or

maintaining these systems;

• Volatility of Sleep Number stock, its removal from various stock indices and the potential negative effects of

shareholder activism or of changes in coverage by securities analysts;

• Unfavorable tax treatment;

• Environmental, social and governance risks, including increasing scrutiny and evolving regulatory and stakeholder

expectations; and

• Ability to adapt to climate change and readiness for legal or regulatory responses thereto.

***Additional information concerning these, and other risks and uncertainties is contained under the caption "Risk***

***Factors" in Part I, Item 1A. in the Company's Annual Report on Form 10-K and in Part II. Item 1A. in subsequent***

***Quarterly Reports on Form 10-Q.***

The Company has no obligation to publicly update or revise any of the forward-looking statements contained in this

Quarterly Report on Form 10-Q.

**Business Overview**

Sleep Number is the leader in personalized sleep wellness. Its mattresses are designed to evolve with each sleeper to

help them feel and perform their best. With adjustable firmness, pressure-relieving support and temperature balancing

comfort built into every mattress, Sleep Number beds adapt to customers' changing needs, night after night, year after

year. Backed by over 40 years of innovation, over 1,000 patents and patents pending, and billions of hours of sleep data,

Sleep Number has helped more than 16 million people achieve their best sleep. The fully integrated model ensures quality,

durability, and care at every step—from design and craftsmanship to delivery and long-term support.

Sleep Number products are awarded the industry's top recognitions, including ranked #1 in customer satisfaction for

mattresses purchased in-store and online, and #1 in comfort, by J.D. Power. In addition, the company is the Official Sleep +

Wellness Partner of the NFL, marking a relationship that leverages players, team partnerships, and league-wide initiatives

to amplify brand awareness and drive consumer engagement. Sleep Number's life-changing, differentiated smart

mattresses combine physical and digital innovations, integrating unparalleled physical comfort with a highly advanced

sleep wellness platform. The smart beds offer the Company's signature firmness adjustability, enabling each sleeper

adjustable comfort. Embedded digital sensors learn the sleep needs of each individual; "sense and do" technology uses

the sensed data to automatically adjust the smart mattress to keep the sleeper comfortable throughout the night.

Temperature balancing technology supports the ideal climate for each sleeper and solves a prevalent sleep challenge.

Additionally, smart mattresses are an exceptional value, with personalized sleep insights delivered daily, new features

regularly added to all smart mattresses through over-the-air updates and prices to meet most budgets. Sleep Number's

mattresses provide unmatched features, benefits and comfort that can lead to improved sleep health and wellness for

both sleepers.

The Company's advantaged business model is supported by its consumer innovation strategy: an individualized, digital

sleep wellness platform, a network of millions of highly engaged Smart Sleepers who are loyal brand advocates, a

vertically integrated operating model and a team member culture of individuality.

The Company's 3,000 mission-driven team members are focused on driving value creation, including our exclusive direct-

to-consumer selling in 577 stores and online, which meets customers whenever and wherever they choose to provide an

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exceptional experience and a lifelong relationship. Additionally, the Company partners with world-leading institutions to

bring the power of 40 billion hours of longitudinal sleep data to sleep science and research.

In November 2025, the Company introduced its turnaround strategy "Sleep Number Shifts," a focused, company-wide

effort to reposition the brand, expand reach to new customer groups, and reignite growth. The aim is to drive value for

shareholders, customers and team members with efforts rooted in the consumer through all dimensions of the business.

It is centered on three key areas:

• **Product:** The Company is simplifying its offering with the goal of growing its customer base while building on the

demand from repeat customers

• **Marketing:** The Company is modernizing its efforts by expanding channels and reach with new creative to better

connect with today's consumer and drive engagement with a focus on better ROI

• **Distribution:** The Company is focused on optimizing store footprint as well as exploring opportunities to expand

distribution into new channels, both physical and digital.

"Sleep Number Shifts" is being implemented as the Company continues to execute cost savings and operating

efficiencies, including real estate optimization and right-sizing the fixed cost base. While the Company is focused on

implementing the "Sleep Number Shifts" and executing cost savings and operating efficiencies, it faces liquidity

challenges.

**Results of Operations**

*Quarterly and Year-to-Date Results*

Quarterly and year-to-date operating results may fluctuate significantly as a result of a variety of factors, including

increases or decreases in sales, timing, amount and effectiveness of advertising expenditures, changes in sales return

rates or warranty experience, timing of investments in growth initiatives and infrastructure, timing of store openings/

closings and related expenses, changes in net sales resulting from changes in the Company's store base, timing of new

product introductions and related expenses, timing of promotional offerings, competitive factors, changes in commodity

costs, disruptions in global supplies or third-party service providers, seasonality of retail and bedding industry sales,

consumer sentiment and general economic conditions. The extent to which these external factors will impact the

Company's business and its consolidated financial results will depend on future developments, which are highly uncertain

and cannot be predicted. Therefore, the historical results of operations may not be indicative of the results that may be

achieved for any future period.

*Highlights*

Financial highlights for the three months ended April 4, 2026 were as follows:

• Net sales for the three months ended April 4, 2026 decreased 19% to $319 million, compared with $393 million for the

same period one year ago. Demand was impacted by ongoing industry demand pressure and lower store traffic.

• The net sales change resulted from a 16% comparable sales decrease in Total Retail. For additional details, see the

components of total net sales change on page [19](#ia09d87b8cc134ec1b4f5e0236f51af25_100).

• Average sales per store (sales for stores open at least one year, Total Retail, including online, phone and chat) on a

trailing twelve-month basis for the period ended April 4, 2026 totaled $2.2 million, compared with $2.5 million for the

same period one year ago.

• Operating loss for the three months ended April 4, 2026 was $37 million, compared with operating income of

$2 million for the same period one year ago. The $39 million decrease in operating income was driven by the lower

gross profit, partially offset by a $17 million reduction in operating expenses. The Company's first quarter operating

loss rate was impacted by the deleveraging impact of the 19% decrease in net sales.

• Adjusted EBITDA for the three months ended April 4, 2026 was $6 million, compared to $22 million for the same

period one year ago. The decrease was primarily due to higher net loss when compared to the same period one year

ago, partially offset by an increase restructuring costs and other non-recurring items. For additional details, see *Non-*

*GAAP Data Reconciliations* section on page [24](#ia09d87b8cc134ec1b4f5e0236f51af25_142).

• Gross profit margin of 57.9% for the three months ended April 4, 2026 compared to 61.2% for the same period one

year ago. See the gross profit discussion on page [20](#ia09d87b8cc134ec1b4f5e0236f51af25_115) for additional details.

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• The $17 million year-over-year reduction in the Company's operating expenses was due to lower sales and marketing

expenses, general and administrative expenses, and research and development expenses, partially offset by higher

restructuring costs.

• Net loss for the three months ended April 4, 2026 was $50 million, compared with $9 million for the same period one

year ago. Net loss per diluted share was $2.19, compared with $0.38 for the same period one year ago.

• The Company's adjusted return on invested capital (Adjusted ROIC) was negative 13.1% on a trailing twelve-month

basis for the period ended April 4, 2026, compared with 7.2% for the comparable period one year ago. For additional

details, see *Non-GAAP Data Reconciliations* section beginning on page [24](#ia09d87b8cc134ec1b4f5e0236f51af25_142).

• The Company used $8 million in cash from operating activities for the three months ended April 4, 2026, compared

with $3 million for the same period one year ago.

• Free cash flow used $13 million for the three months ended April 4, 2026, compared with $7 million used for the same

period one year ago. For additional details, see *Non-GAAP Data Reconciliations* section on page [24](#ia09d87b8cc134ec1b4f5e0236f51af25_142).

• As of April 4, 2026, the Company had $606 million of borrowings under its credit facility.

The following table sets forth the Company's results of operations expressed as dollars and percentages of net sales.

Figures are in millions, except percentages and per share amounts. Amounts may not add due to rounding differences.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026** | **April 4,**<br>**2026** | **March 29,**<br>**2025** | **March 29,**<br>**2025** |
| Net sales | $319.0 | 100.0% | $393.3 | 100.0% |
| Cost of sales | 134.4 | 42.1% | 152.7 | 38.8% |
| Gross profit | 184.6 | 57.9% | 240.5 | 61.2% |
| Operating expenses: |  |  |  |  |
| Sales and marketing | 160.8 | 50.4% | 189.1 | 48.1% |
| General and administrative | 33.6 | 10.5% | 38.6 | 9.8% |
| Research and development | 5.3 | 1.7% | 10.9 | 2.8% |
| Restructuring costs | 21.7 | 6.8% | 0.1 | 0.0% |
| Total operating expenses | 221.5 | 69.4% | 238.7 | 60.7% |
| Operating (loss) income | (36.9) | (11.6%) | 1.9 | 0.5% |
| Interest expense, net | 13.1 | 4.1% | 11.1 | 2.8% |
| Loss before income taxes | (50.0) | (15.7%) | (9.2) | (2.3%) |
| Income tax expense (benefit) | 0.3 | 0.1% | (0.6) | (0.1%) |
| Net loss | $(50.3) | (15.8%) | $(8.6) | (2.2%) |
| Net loss per share: |  |  |  |  |
| Basic and diluted  | $(2.19) |  | $(0.38) |  |
| Weighted-average number of common shares: |  |  |  |  |
| Basic and diluted | 23.0 |  | 22.7 |  |

---

The percentage of total net sales, by dollar volume, was as follows:

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| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Retail stores | 87.0% | 87.6% |
| Online, phone, chat and other | 13.0% | 12.4% |
| Total Company | 100.0% | 100.0% |

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The components of total net sales change, including comparable net sales changes, were as follows:

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| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| **Sales change rates:** | | |
| Retail comparable-store sales <sup>(1)</sup> | (17%) | (15%) |
| Online, phone and chat | (15%) | (12%) |
| Total Retail comparable sales change <sup>(1)</sup> | (16%) | (15%) |
| Net opened/closed stores and other | (3%) | (1%) |
| Total Company | (19%) | (16%) |

---

<sup>(1)</sup> Stores are included in the comparable-store calculations in the 13th full month of operations. Stores that have been remodeled or repositioned within

the same shopping center remain in the comparable-store base.

Other sales metrics were as follows:

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| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Average sales per store <sup>(1)</sup> (in thousands) | $2170 | $2495 |
| Average sales per square foot <sup>(1)</sup> | $700 | $807 |
| Stores > $2 million in net sales <sup>(2)</sup> | 31% | 51% |
| Stores > $3 million in net sales <sup>(2)</sup> | 6% | 15% |
| Average revenue per mattress unit – Total Retail <sup>(3)</sup> | $6021 | $5992 |

---

<sup>(1)</sup> Trailing-twelve months Total Retail comparable sales per store open at least one year.

<sup>(2)</sup> Trailing-twelve months for stores open at least one year (excludes Online, Phone and Chat sales).

<sup>(3)</sup> Represents Total Retail net sales divided by Total Retail mattress units.

The number of retail stores operating was as follows:

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| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Beginning of period | 600 | 640 |
| Opened |  | 2 |
| Closed | (23) | (5) |
| End of period | 577 | 637 |

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| **20 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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**Comparison of Three Months Ended April 4, 2026 with Three Months Ended March 29, 2025**

*Net sales*

Net sales for the three months ended April 4, 2026 of $319 million decreased 19% from $393 million for the same period

one year ago driven by lower volume and reduced store count. Macro environment and weather conditions in January and

early February in the three months ended April 4, 2026 had a significant negative impact on net sales. The net sales

change consisted primarily of a 16% Total Retail comparable sales decrease.

The $74 million net sales decrease compared with the same period one year ago was comprised of the following: (i) a

$54 million decrease in Total Retail comparable net sales; (ii) a $7 million decrease from online, phone and chat; and (iii) a

$13 million decrease from net store closings and other. Total Retail mattress unit sales decreased 19% compared with the

prior year. Total Retail average revenue per mattress unit increased to $6,021, compared with $5,992 in the prior-year

period.

*Gross profit*

Gross profit of $185 million for the three months ended April 4, 2026 decreased by $56 million, or 23%, compared with

$241 million for the same period one year ago. The gross profit margin totaled 57.9% of net sales for the three months

ended April 4, 2026, compared to 61.2% in the prior-year comparable period.

The current-year gross profit margin decrease of 3.3 ppt was affected by the following items: (i) an unfavorable product

mix decreased the rate by 1.4 ppt; (ii) unfavorable cost variances and other non-mattress unit sales and warranty related

revenue deleveraged the rate by 1.4 ppt; and (iii) higher discounts on close-out models deleveraged the rate by 0.5 ppt.

*Sales and marketing expenses*

Sales and marketing expenses for the three months ended April 4, 2026 were $161 million, or 50.4% of net sales,

compared with $189 million, or 48.1% of net sales, for the same period one year ago. The current-year sales and

marketing expenses rate increase of 2.3 ppt. was primarily due to the deleveraging impact of an 19% net sales decline,

partially offset by a 15% decrease in sales and marketing expenses including a 32% lower media spend.

*General and administrative expenses*

General and administrative (G&A) expenses totaled $34 million, or 10.5% of net sales, for the three months ended April 4,

2026, compared with $39 million, or 9.8% of net sales, in the prior-year period. The changes in G&A expenses consisted

mainly of: (i) a $3 million decrease in employee compensation; (ii) a $2 million year-over-year decrease in company-wide,

performance-based incentive compensation; and (iii) a $1 million decrease in depreciation and amortization; offset by (iv)

a $1 million increase in professional and consulting fees. The G&A expenses rate increased by 0.7 ppt. in the current-year

period, compared with the same period one year ago due to the items discussed above offset by the deleveraging impact

of lower net sales.

*Research and development expenses*

Research and development (R&D) expenses totaled $5 million for the three months ended April 4, 2026, compared with

$11 million with the same period one year ago. While the Company's consumer innovation pipeline remains robust, it is re-

prioritizing R&D resources in this highly constrained environment. Moving forward, the Company's innovation agenda will

focus on maintaining and improving the Company's core technologies and introducing additional advancements, while

driving costs out of the product.

*Interest expense, net*

Interest expense, net totaled $13 million for the three months ended April 4, 2026, compared to $11 million for the same

period one year ago. The increase was due to an increase in the average debt outstanding compared to the same period

one year ago offset slightly by a lower weighted-average interest rate.

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| **21 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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*Restructuring Costs*

Restructuring costs for the three months ended April 4, 2026 were $22 million, compared with $0.1 million for the same

period one year ago. Charges incurred related to this initiative were comprised of contract termination costs, severance

and employee-related benefits, professional fees and other, and asset impairment charges. These costs are included in

the restructuring costs line in the Company's condensed consolidated statement of operations. The Company expects an

additional $2 million of restructuring costs to be incurred through the remainder of 2026, primarily due to severance and

employee-related benefits, contract termination costs, and asset impairment charges. See Note 12, *Restructuring Costs*,

of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, *Financial Information*, of this

Quarterly Report on Form 10-Q for further information on restructuring costs.

*Income tax expense (benefit)*

Income tax expense was $0.3 million for the three months ended April 4, 2026, compared with a benefit of $0.6 million for

the same period one year ago. The change in income tax expense was primarily due to state tax expense and discrete

items recognized in the three months ended April 4, 2026, while federal tax losses did not create a benefit due to the

deferred tax valuation allowance.

The Company evaluates its deferred income taxes on a quarterly basis to determine if valuation allowances are required.

As part of this evaluation, the Company 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. On the basis of this evaluation, as of April 4, 2026, a

valuation allowance of $55 million has been recorded to recognize only a portion of the deferred tax asset that is more

likely than not to be realized. The Company continues to assess the need for the valuation allowance and will make

adjustments when appropriate.

**Liquidity and Capital Resources**

*Going Concern Considerations*

The Company's financial statements have been prepared under the assumption that the Company will continue as a going

concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business for the

foreseeable future.

Historically, the Company has relied principally on liquidity generated from operating activities to fund the Company's day-

to-day operations and service its debt. The Company has a history of net losses and negative operating cash flows and

expects to continue to incur additional losses in the future. Although the Company continues to pursue its turnaround

strategy "Sleep Number Shifts," centered on product, marketing and distribution, as well as ongoing cost savings and

operating efficiencies, to reignite growth and increase financial resilience, the timing and realization of its turnaround

strategy cannot be guaranteed to ensure sufficient cash flow is generated to provide liquidity to meet the Company's

obligations. While the Company was able to amend its Credit Agreement to provide that the lenders will forbear from

exercising certain rights and remedies in respect to certain events of default under the Credit Agreement (the "Specified

Defaults") through the first week ending after July 1, 2026, and add a $25 million term loan facility with a maturity date of

June 30, 2026, the Company was not able to amend covenants beyond July 1, 2026 and therefore the Company

anticipates that it will not remain in compliance with the financial covenants of its Credit Agreement for the next twelve

months. These conditions and events raise substantial doubt about the Company's ability to continue as a going concern.

Management's plan to address the substantial doubt about the Company's ability to continue as a going concern, as

described above, includes the following ongoing actions:

• execute the Company's turnaround strategy centered on product, marketing and distribution with ongoing cost

savings and operating efficiencies to reignite growth and increase financial resilience;

• following the recent amendment of the Credit Agreement, the Company continues to engage with lenders to fulfill

the Company's obligations under the credit facility and other provisions as needed; and

• work with financial advisors to negotiate with the lenders and identify and secure additional capital options,

alternative financing arrangements, strategic alternatives, or other comprehensive solutions to address the

Company's capital structure and leverage needs to return to growth and create long-term value.

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There can be no assurance of the Company's ability to realize these plans. As a result, the Company has concluded that

management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern for at

least one year from the date of issuance of these financial statements.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of

recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this

uncertainty.

*Sources and Uses of Cash*

Managing liquidity and capital resources is an important part of the Company's commitment to deliver superior

shareholder value over time.

The Company's primary sources of liquidity are cash flows provided by operating activities and cash available under its

$653 million revolving credit facility, as amended. As of April 4, 2026, the Company did not have any off-balance sheet

financing other than its $8 million in outstanding letters of credit. As discussed above in *Going Concern Considerations*,

the cash anticipated to be generated from ongoing operations and cash available under its Credit Agreement are not

expected to be sufficient to generate adequate liquidity to meet the Company's obligations over the next twelve months.

The Company's credit facility, as amended, is for general corporate purposes and to meet seasonal working capital

requirements. The credit facility, as amended, provides the lenders with a collateral security interest in substantially all of

the Company's assets and those of its subsidiaries and requires the Company to comply with, among other things, a

maximum net leverage ratio and a minimum interest coverage ratio.

On November 4, 2025, the Company amended the Credit Agreement. The amendment, among other things: (a) extended

the maturity date of the Credit Agreement to December 3, 2027; (b) reduced the revolving credit facility from $485 million

to $475 million, which decreases further to $465 million on July 31, 2026; (c) replaced the leverage-based pricing grids

used to determine the Applicable Margin and Applicable Commitment Fee Rate (each as defined in the Credit Agreement)

in favor of (I) with respect to Applicable Margin for Term SOFR Loans, 4.25% starting January 1, 2027 and continuing

thereafter, and (II) with respect to the Applicable Commitment Fee Rate, 0.75% starting January 1, 2027 and continuing

thereafter; (d) on each Regularly Scheduled Payment Date (as defined in the Credit Agreement) occurring on and after

March 31, 2027, increases the amortization of outstanding term loans an additional $1,250,000 (for an aggregate

scheduled principal payment of $3,750,000); (e) terminated the accordion feature; (f) adjusted the permissible maximum

Net Leverage Ratio (as defined in the Credit Agreement) to (I) 4.75 to 1.00 for the quarterly reporting period ending April 4,

2026, (II) 4.80 to 1.00 for the quarterly reporting period ending July 4, 2026, and (III) 4.00 to 1.00 for each quarterly

reporting period thereafter; (g) adjusts the Liquidity financial covenant so that the Company must ensure that liquidity is no

lower than and $40 million for each monthly reporting period; (h) adjusts the permissible minimum Interest Coverage Ratio

to (I) 2.10 to 1.00 for the quarterly reporting periods ending January 3, 2026 and April 4, 2026, (II) 1.80 to 1.00 for the

quarterly reporting period ending July 4, 2026, (III) 2.10 to 1.00 for the reporting period ending October 3, 2026, and (IV)

2.20 to 1.00 for each quarterly reporting period occurring thereafter; (i) adds a new quarterly minimum EBITDA covenant

test that begins for the quarterly reporting period ending April 4, 2026; (j) adjusts the consolidated EBITDA calculation to

include an addback for certain expenses and costs incurred for the trailing twelve months for discontinued operations,

downsized functions and employment expenses for laid-off employees; and (k) provides for additional and more frequent

reporting requirements. In connection with the amendment, the Company also agreed to pay the lenders certain

amendment fees and to reimburse the lenders for certain expenses.

On April 27, 2026, the Company entered into a Forbearance Agreement and Thirteenth Amendment (the "Thirteenth

Amendment") amending the Credit Agreement. The amendment, among other things: (a) adds a $25 million term loan

facility (the "2026 Term Loan") that accrues interest at a rate per annum equal to the one-month term SOFR rate plus

8.00% and that matures on June 30, 2026, with a $5 million amortization payment due on June 1, 2026; (b) provides that

the lenders will forbear from exercising certain rights and remedies in respect of certain events of default under the Credit

Agreement (the "Specified Defaults"), subject to certain forbearance termination events; (c) requires that cash interest

payments in respect of all loans outstanding under the Credit Agreement be payable at least monthly; (d) permits the sale

of the Company's claim for certain tariff refunds; (e) requires mandatory prepayments of the loans outstanding under the

Credit Agreement with any proceeds received from certain asset sales, equity issuances, debt incurrences, insurance

claims or condemnation or similar payments; (f) provides for additional and more frequent reporting requirements; (g)

adjusts the minimum liquidity financial covenant such that it does not apply from April 27, 2026 until the last Business Day

of the first week ending after July 1, 2026; (h) requires that the Company not permit disbursements or new draws under

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| **23 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

the revolving credit facility outstanding under the Credit Agreement (the "Revolving Facility") to exceed an agreed

permitted variance amount; and (i) requires the Company to satisfy certain milestones, including milestones relating to the

Company's efforts to consummate a strategic transaction that is designed to maximize enterprise value and provide for

payment in full of the obligations under the Credit Agreement. Following such amendment, the Company was in

compliance with all covenants (other than with respect to the Specified Defaults).

In connection with the Thirteenth Amendment, (i) on April 27, 2026, the 2026 Term Loan was fully funded and the

Company also drew down $2.7 million of revolving loans under the Revolving Facility, such that the aggregate principal

amount of outstanding revolving loans was $447.2 million, and (ii) the Company agreed to pay the lenders certain

amendment fees and to reimburse the lenders for certain expenses.

The Company's management believes that its existing cash on hand combined with its anticipated future net losses may

be insufficient to fund its operations and debt obligations for at least the next 12 months. The Company's management

has concluded that there is substantial doubt about the Company's ability to continue as a going concern, which is not

alleviated, for one year from the date of issuance of this Quarterly Report on Form 10-Q. The Company's future capital

requirements will depend on many factors, including, but not limited to, amending or waiving financial covenants of the

Credit Agreement, the successful execution of any future financing arrangements, its ability to achieve cost efficiencies

and the success of its turnaround strategy. To the extent that the Company's existing cash balance and ongoing cash from

operations is insufficient to fund its future activities, the Company may need to raise additional funds through public or

private equity or debt financing, and such funds may not be available on acceptable terms. If sufficient cash from

operations or external funding is not available, the Company would be unable to adequately fund its business plan and the

Company's business, results of operations, cash flows and financial condition would be materially and adversely affected.

At April 4, 2026, the Company had an aggregate amount of $606 million of borrowings outstanding under its credit

agreement, including $178 million in outstanding term loans and $428 million outstanding under its revolving credit facility,

along with $8 million in outstanding letters of credit. Availability under the revolving credit facility amounted to $39 million.

At April 4, 2026, the weighted-average interest rate on borrowings under the credit facility was 7.8%. Following such

amendment, the Company was in compliance with all covenants (other than with respect to the Specified Defaults).

*Cash Flow Information*

Cash and cash equivalents totaled $1 million and $2 million at April 4, 2026 and January 3, 2026, respectively. The

following table summarizes cash flows (dollars in millions). Amounts may not add due to rounding differences:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Total cash (used in) provided by: |  |  |
| Operating activities | $(7.8) | $(2.6) |
| Investing activities | (5.4) | (4.6) |
| Financing activities | 13.0 | 7.0 |
| Net decrease in cash and cash equivalents | $(0.2) | $(0.3) |

---

Cash used in operating activities for the three months ended April 4, 2026 was $8 million, compared with $3 million for the

three months ended March 29, 2025. Significant components of the year-over-year change in cash provided by operating

activities included: (i) a $42 million year-over-year increase in net loss; (ii) a $5 million fluctuation in accounts payable due

to timing of payments; a $5 million change in prepaid expenses and other current assets; offset by (iv) a $18 million

fluctuation in the impairment of lease and store related assets; (v) a $14 million fluctuation in the amount of compensation

and benefits accrued and timing of the related payments resulting from year-over-year changes in Company-wide

performance-based incentive compensation; a $10 million fluctuation in customer prepayments, and (iii) a $3 million

fluctuation in inventory balances.

Net cash used in investing activities for the both the three months ended April 4, 2026 and March 29, 2025 was $5 million,

and was due to the purchases of property and equipment.

Net cash provided by financing activities was $13 million for the three months ended April 4, 2026, compared with $7

million for the same period one year ago. Short-term borrowings increased by $14 million during the current-year period

---

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|:---|:---|
| **24 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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due to a $17 million increase in borrowings under the revolving credit facility to $606 million and a $4 million decrease in

book overdrafts, which are included in the net change in short-term borrowings. During both the three months ended

April 4, 2026 and March 29, 2025, the Company repurchased $0.5 million of its stock in connection with the vesting of

employee restricted stock awards.

*Share Repurchases*

In the second quarter of fiscal 2022, the Company suspended share repurchases under its Board-approved share

repurchase program. At April 4, 2026, there was $348 million remaining authorization under the Board-approved

$600 million share repurchase program. There is no expiration date governing the period over which the Company can

repurchase shares. The Company made no share repurchases under its Board-approved share repurchase program in

either period.

**Non-GAAP Data Reconciliations**

*Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)*

The Company defines earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net loss plus:

income tax expense (benefit), interest expense, depreciation and amortization, stock-based compensation, restructuring

costs, other non-recurring items and asset impairments. Management believes Adjusted EBITDA is a useful indicator of

the Company's financial performance and its ability to generate cash from operating activities. The Company's definition of

Adjusted EBITDA may not be comparable to similarly titled definitions used by other companies. The table below

reconciles Adjusted EBITDA, which is a non-GAAP financial measure, to the comparable GAAP financial measure.

Adjusted EBITDA calculations are as follows (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Trailing-Twelve**<br>**Months Ended** | **Trailing-Twelve**<br>**Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>| **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Net loss | $(50297) | $(8646) | $(173609) | $(21498) |
| Income tax expense (benefit) | 338 | (585) | 36907 | (6472) |
| Interest expense | 13103 | 11081 | 51404 | 47150 |
| Depreciation and amortization | 11126 | 14406 | 49889 | 62240 |
| Stock-based compensation | 2827 | 3951 | 5158 | 11278 |
| Restructuring costs<sup>(1)</sup> | 21736 | 60 | 72373 | 7526 |
| Other non-recurring items<sup>(2)</sup> | 6917 | 1774 | 19841 | 2772 |
| Asset impairments |  |  |  | 1220 |
| Adjusted EBITDA | $5750 | $22041 | $61963 | $104216 |

---

<sup>(1)</sup> Represents costs related to business restructuring actions. See Note 12, *Restructuring Costs*, of the Notes to Condensed Consolidated Financial

Statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for further information on restructuring costs.

<sup>(2)</sup> Non-recurring costs represent discrete, non-operational items, including obsolete inventory associated with the Company's product transition,

strategic alternative legal and advisory fees, executive transition and search fees, proxy contest costs, public debt issuance cost write-off, tax

matters and other non-routine professional and bank fees. These amounts are treated as permitted add-backs in the calculation of Adjusted

EBITDA in accordance with the Company's Credit Agreement.

---

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|:---|:---|
| **25 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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*Free Cash Flow*

The Company's "free cash flow" data is considered a non-GAAP financial measure and is not in accordance with, or

preferable to, "net cash provided by operating activities," or GAAP financial data. However, the Company is providing this

information as it believes it facilitates analysis for investors and financial analysts.

The following table summarizes free cash flow calculations (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Trailing-Twelve**<br>**Months Ended** | **Trailing-Twelve**<br>**Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>| **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Net cash used in operating activities | $(7751) | $(2626) | $(8408) | $(9228) |
| Subtract: Purchases of property and equipment | 5441 | 4599 | 15249 | 18796 |
| Free cash flow | $(13192) | $(7225) | $(23657) | $(28024) |

---

*Return on Invested Capital (Adjusted ROIC)*

Adjusted ROIC is a financial measure the Company uses to determine how efficiently it deploys its capital. It quantifies the

return the Company earns on its adjusted invested capital. Management believes Adjusted ROIC is also a useful metric

for investors and financial analysts. The Company computes Adjusted ROIC as outlined below. Its definition and

calculation of Adjusted ROIC may not be comparable to similarly titled definitions and calculations used by other

companies.

The tables below reconcile adjusted net operating profit after taxes (Adjusted NOPAT) and total adjusted invested capital,

which are non-GAAP financial measures, to the comparable GAAP financial measures (in thousands):

---

| | | |
|:---|:---|:---|
| | **Trailing-Twelve Months Ended** | **Trailing-Twelve Months Ended** |
| | **April 4,**<br>**2026**<br>| **March 29,**<br>**2025**<br>|
| Adjusted net operating profit after taxes (Adjusted NOPAT) |  |  |
| Operating income | $(85299) | $19180 |
| Add: Operating lease expense <sup>(1)</sup> | 23832 | 26098 |
| Less: Income taxes <sup>(2)</sup> | 7902 | (10022) |
| Adjusted NOPAT | $(53565) | $35256 |
| Average adjusted invested capital |  |  |
| Total deficit | $(626317) | $(456844) |
| Add: Long-term debt <sup>(3)</sup> | 605720 | 557921 |
| Add: Operating lease obligations <sup>(4)</sup> | 348037 | 376909 |
| Total adjusted invested capital at end of period | $327440 | $477986 |
| Average adjusted invested capital <sup>(5)</sup> | $408437 | $487361 |
| Adjusted return on invested capital (Adjusted ROIC) <sup>(6)</sup> | (13.1%) | 7.2% |

---

<sup>(1)</sup> Represents the interest expense component of lease expense included in the Company's financial statements under ASC 842, *Leases*.

<sup>(2)</sup> Reflects annual effective income tax rates, before discrete adjustments, of 12.9% and 22.1% for April 4, 2026 and March 29, 2025, respectively.

<sup>(3)</sup> Long-term debt includes existing finance lease liabilities.

<sup>(4)</sup> Reflects operating lease liabilities included in the Company's financial statements under ASC 842.

<sup>(5)</sup> Average adjusted invested capital represents the average of the last five fiscal quarters' ending adjusted invested capital balances.

<sup>(6)</sup> Adjusted ROIC equals Adjusted NOPAT divided by average adjusted invested capital.

Note - the Company's adjusted ROIC calculation and data are considered non-GAAP financial measures and are not in accordance with, or preferable

to, GAAP financial data. However, the Company is providing this information as it believes it facilitates analysis of the Company's financial performance

by investors and financial analysts.

GAAP - generally accepted accounting principles in the U.S.

---

| | |
|:---|:---|
| **26 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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**Critical Accounting Policies**

The Company discusses its critical accounting policies and estimates in *Management's Discussion and Analysis of* 

*Financial Condition and Results of Operations* in the Company's Annual Report on Form 10-K for the fiscal year ended

January 3, 2026. There were no significant changes in the Company's critical accounting policies since the end of fiscal

2025. ---

| | |
|:---|:---|
| **27 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

The Company is exposed to changes in market-based short-term interest rates that will impact net interest expense. If

overall interest rates were one percentage point higher than current rates, annual net income would decrease by

$5.3 million based on the $606 million of borrowings under the credit facility at April 4, 2026. The Company does not

manage the interest-rate volatility risk of borrowings under the credit facility through the use of derivative instruments.

**ITEM 4. CONTROLS AND PROCEDURES**

**Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures**

The Company maintains disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), that are

designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under

the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time

periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated

and communicated to the Company's management, including its principal executive officer and principal financial officer,

or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The

Company's management, with the participation of its principal executive officer and principal financial officer, evaluated the

effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period

covered by this quarterly report. Based on this evaluation, its principal executive officer and principal financial officer

concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by

this quarterly report.

**Changes in Internal Control**

There were no changes in the Company's internal control over financial reporting during the fiscal quarter ended April 4,

2026, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over

financial reporting.

---

| | |
|:---|:---|
| **28 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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**PART II: OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

The Company's legal proceedings are discussed in *Note 15 – Commitments and Contingencies*, Legal Proceedings, of

the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, *Notes to Condensed Consolidated* 

*Financial Statements*, of this Quarterly Report on Form 10-Q.

**ITEM 1A. RISK FACTORS**

The Company's business, financial condition and operating results are subject to a number of risks and uncertainties,

including both those that are specific to the Company's business and others that affect all businesses operating in a global

environment. Investors should carefully consider the information in this report under the heading, *Management's* 

*Discussion and Analysis of Financial Condition and Results of Operations*, and also the information under the heading,

*Risk Factors*, in the Company's most recent Annual Report on Form 10-K and in subsequent Quarterly Reports on

Form 10-Q. The risk factors discussed in the Annual Report on Form 10-K and in subsequent Quarterly Reports on Form

10-Q including this Quarterly Report on Form 10-Q do not identify all risks that the Company faces because its business

operations could also be affected by additional risk factors that are not presently known to the Company or that it currently

considers to be immaterial to its operations.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS, AND ISSUER PURCHASES** 

**OF EQUITY SECURITIES**

(a) – (b) Not applicable.

(c) Issuer Purchases of Equity Securities

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Total Number**<br>**of Shares**<br>**Purchased**<sup>(1)(2)</sup><br>| **Average** <br>**Price**<br>**Paid per** <br>**Share**<br>| **Total Number** <br>**of**<br>**Shares** <br>**Purchased**<br>**as Part of** <br>**Publicly**<br>**Announced** <br>**Plans**<br>**or Programs**<sup>(1)</sup><br>| **Approximate** <br>**Dollar Value of** <br>**Shares that May** <br>**Yet Be** <br>**Purchased Under** <br>**the Plans or** <br>**Programs**<sup>(3)</sup><br>|
| January 4, 2026 through January 31, 2026 | 2219 | $10.49 |  | $348071000 |
| February 1, 2026 through February 28, 2026 | 320 | $9.42 |  | $348071000 |
| March 1, 2026 through April 4, 2026 | 100752 | $3.44 |  | $348071000 |
| Total | 103291 | $3.61 |  | $348071000 |

---

<sup>(1)</sup> The Company did not purchase any shares under its Board-approved $600 million share repurchase program (effective April 4, 2021), during the three

months ended April 4, 2026.

<sup>(2)</sup> In connection with the vesting of employee restricted stock grants, the Company repurchased 103,291 shares of its common stock at a cost of

$0.4 million during the three months ended April 4, 2026.

<sup>(3)</sup> There is no expiration date governing the period over which the Company can repurchase shares under its Board-approved share repurchase

program. Any repurchased shares are constructively retired and returned to an unissued status.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

Not applicable.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

---

| | |
|:---|:---|
| **29 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**ITEM 5. OTHER INFORMATION**

**Rule 10b5-1 Trading Plan and Non-rule 10b5-1 Trading Arrangement Adoptions, Modifications and Terminations**

During the quarter ended April 4, 2026, none of the Company's directors or officers adopted, modified or terminated any

contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the

affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of

SEC Regulation S-K.

**ITEM 6. EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit**<br>**Number**<br>| **Description** |
| 10.1 | <u>[Thirteenth Amendment to Amended and Restated Credit and Security Agreement, dated as of April 27,](https://www.sec.gov/Archives/edgar/data/827187/000082718726000035/ex101thirteenthamendmentto.htm)</u><br><u>[2026 among Sleep Number Corporation, U.S. Bank National Association and the several banks and](https://www.sec.gov/Archives/edgar/data/827187/000082718726000035/ex101thirteenthamendmentto.htm)</u><br><u>[other financial institutions from time to time party thereto (incorporated by reference to Exhibit 10.1](https://www.sec.gov/Archives/edgar/data/827187/000082718726000035/ex101thirteenthamendmentto.htm)</u><br><u>[contained in Sleep Number's Current Report on Form 8-K filed April 28, 2026 (File No. 000-25121))](https://www.sec.gov/Archives/edgar/data/827187/000082718726000035/ex101thirteenthamendmentto.htm)</u><br>|
| 10.2\* | <u>[Sixth Amendment, dated April 30, 2026, to Lease Agreement between CLAR Minneapolis Lessee, LLC,](clarminneapolismnlesseellc.htm)</u><br><u>[as landlord (successor in interest to Legacy 1001 Minneapolis Venture, LLC), and Sleep Number](clarminneapolismnlesseellc.htm)</u><br><u>[Corporation, as Tenant, dated October 21, 2026, as amended](clarminneapolismnlesseellc.htm)</u><br>|
| 31.1\* | <u>[Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](a2026-q1ex311.htm)</u> |
| 31.2\* | <u>[Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](a2026-q1ex312.htm)</u> |
| 32.1\* | <u>[Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350](a2026-q1ex321.htm)</u> |
| 32.2\* | <u>[Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350](a2026-q1ex322.htm)</u> |
| 101.INS\* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File <br>because its XBRL tags are embedded within the Inline XBRL document<br>|
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104\* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |

---

\*Filed Herein.

<sup>†</sup>Management contract or compensatory plan or arrangement.

---

| | |
|:---|:---|
| **30 \| 1Q 2026 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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<u>[**Table of Contents**](#ia09d87b8cc134ec1b4f5e0236f51af25_7)</u>

**SIGNATURES**

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be

signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **SLEEP NUMBER CORPORATION** | **SLEEP NUMBER CORPORATION** |
|  |  | (Registrant) | (Registrant) |
| Dated: | May 12, 2026 | By: | /s/ Linda Findley |
|  |  |  | Linda Findley |
|  |  |  | President and Chief Executive Officer |
|  |  |  | (principal executive officer) |
|  |  | By: | /s/ Amy K. O'Keefe |
|  |  |  | Amy K. O'Keefe |
|  |  |  | Chief Financial Officer |
|  |  |  | (principal financial officer) |
|  |  | By: | /s/ Kelly F. Baker |
|  |  |  | Kelly F. Baker |
|  |  |  | Principal Accounting Officer |
|  |  |  | (principal accounting officer) |

---

## Exhibit 10.2

**Exhibit 10.2**

**SIXTH AMENDMENT TO LEASE**

**THIS SIXTH AMENDMENT TO LEASE** (this "<u>Sixth Amendment</u>" or this "<u>Amendment</u>") by and between CLAR MINNEAPOLIS MN LESSEE, LLC, a Delaware limited liability company (as successor in interest to Legacy 1001 Minneapolis Venture, LLC, a Delaware limited liability company, "<u>Landlord</u>"), and SLEEP NUMBER CORPORATION, a Minnesota corporation ("<u>Tenant</u>"), is executed as of this 30th day of April, 2026 (the "<u>Sixth Amendment Effective Date</u>").

**WITNESSETH**

**WHEREAS**, Landlord and Tenant have entered into that certain Lease dated as of October 21, 2016 (the "<u>October Lease</u>"), subsequently amended by the First Amendment to Lease dated June 1, 2017 (the "<u>First Amendment</u>"), Second Amendment to Lease dated as May 25, 2023 (the "<u>Second Amendment</u>"), Third Amendment to Lease with an effective date of December 26, 2024 (the "<u>Third Amendment</u>"), Fourth Amendment to Lease, dated May 27, 2025 (the "<u>Fourth Amendment</u>"), and the Fifth Amendment to Lease dated as of December 2, 2025 and set to terminate by its terms on April 30, 2026 (the "<u>Fifth Amendment</u>" and collectively with the October Lease, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the "<u>Original Lease</u>" and as amended by this Sixth Amendment, the "<u>Lease</u>") for space in the building commonly known as 1001 3<sup>rd</sup> Avenue South, Minneapolis, Minnesota 55404 (the "<u>Building</u>");

**WHEREAS**, Tenant has notified Landlord that it no longer needs all of the space leased to it under the Original Lease, and in consideration for the mutual covenants contained herein, Landlord has agreed to amend the Original Lease to provide for (i) the immediate surrender by Tenant of the Fourth Floor of the Premises effective as of the Sixth Amendment Effective Date, (ii) the immediate surrender by Tenant of the Third Floor, subject to a limited right of access by Tenant to the Third Floor through May 1, 2026 for the sole purpose of removal of Tenant's property, of the Premises but the payment of a Monthly Surrender Fee (as defined below) for the Third Floor Rent Continuation Period (as defined further below), (iii) the continuation of the Original Lease with respect to the First and Second Floors of the Premises for the remainder of the Original Lease Term, (iv) certain adjustments to the timing and payment of Rent, and (v) certain related matters, all as more particularly set forth herein; and

**NOW, THEREFORE**, for and in consideration of the mutual covenants contained herein and in the Original Lease, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant hereby covenant and agree to amend and modify the Original Lease as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.**DEFINED TERMS.** Unless otherwise defined herein, terms used herein with initial capital letters shall have the same meanings assigned to such terms in the Original Lease. All references in the Original Lease to the "Lease" shall mean and refer to the Original Lease as amended by this Sixth Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.**DEFAULT BY TENANT**. Section 8.1(a) of the October Lease is hereby amended and restated in its entirety as follows:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"(a) The failure of Tenant to pay any Rent within three (3) days of the date by which such Rent is due and payable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.**SURRENDER OF FOURTH FLOOR OF THE PREMISES.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Effective as of the Sixth Amendment Effective Date (the "<u>Fourth Floor Surrender Date</u>"), Tenant hereby surrenders all of Tenant's right, title, and interest in and to the Fourth Floor of the Premises (consisting of approximately 26,309 rentable square feet) (the "<u>Fourth Floor Surrendered Space</u>"), and as of the Fourth Floor Surrender Date, the Fourth Floor Surrendered Space shall no longer constitute a part of the Premises under the Lease. By the Fourth Floor Surrender Date, Tenant shall cause the Fourth Floor Surrendered Space to be vacated and surrendered to Landlord in accordance with Section 5.4 of the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.From and after the Fourth Floor Surrender Date, and provided the Fourth Floor Surrendered Space is vacated and surrendered to Landlord pursuant to the terms of this Sixth Amendment, including, without limitation, <u>Section 3.a</u>. above, no Base Rent, Additional Rent, or any other payments shall be due from Tenant to Landlord, or from Landlord to Tenant, in connection with the surrender of the Fourth Floor Surrendered Space.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.**SURRENDER OF THIRD FLOOR OF THE PREMISES.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Effective as of the Sixth Amendment Effective Date (the "<u>Third Floor Surrender Date</u>"), Tenant hereby agrees to surrender all of Tenant's right, title, and interest in and to the Third Floor of the Premises (consisting of approximately 76,645 rentable square feet) (the "<u>Third Floor Surrendered Space</u>"), and as of the Third Floor Surrender Date, the Third Floor Surrendered Space shall no longer constitute a part of the Premises under the Lease. By no later than the Third Floor Surrender Date, Tenant shall cause the Third Floor Surrendered Space to be vacated and returned to Landlord in broom-clean condition and in a good state of repair and condition, excepting only ordinary wear and tear, and upon the request of Landlord, Tenant shall demolish or remove all or any portion of any Trade Fixtures in accordance with Section 5.4 of the Lease; provided, however, notwithstanding Section 5.4 of the Lease, Landlord shall not request Tenant to demolish or remove all or any alterations, improvements, or additions to the Third Floor Surrendered Space made by or on behalf of Tenant or to restore the Third Floor Surrendered Space to the condition existing prior to the installation of any Trade Fixtures or the making of any such alterations, improvements, or additions, and Tenant shall not be asked to tag any wiring as installed by Tenant. Further, Landlord hereby agrees to provide Tenant a limited right to access the Third Floor Surrendered Space for the sole purpose of removal of Tenant's property through May 1, 2026. In consideration for Landlord's agreement to allow Tenant to vacate and surrender the Third Floor of the Premises prior to the expiration of the Term, Tenant agrees to pay to Landlord the following:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.On or prior to June 1, 2026, (1) one third of the aggregate of (a) Base Rent and Additional Rent that is past due and payable for the Third Floor of the Premises for April 2026 under the Original Lease plus (b) Base Rent and Additional Rent that would have been due and payable for May 2026 under the Original Lease, plus (2) the amount of (1) multiplied by eighteen percent (18%) (the "<u>Rent Delay Period Fee</u>") (for example, if two (2) months of Third Floor Base Rent and Additional Rent equals Three Hundred Thousand Dollars ($300,000.00), then one-third (1/3) thereof equals One Hundred Thousand Dollars ($100,000.00), and the Rent Delay Period Fee equals One Hundred Eighteen Thousand Dollars ($118,000.00)), payable to Landlord on or prior to June 1, 2026. For the avoidance of doubt, the Rent Delay Period Fee may be payable by Tenant in one lump sum on or prior to June 1, 2026. In the event that Tenant fails to pay any portion of the Rent Delay Period Fee as and when due under this Sixth Amendment, then such amount shall incur a late fee equal to eighteen percent (18%) per annum until such date that the Rent Delay Period Fee is received by Landlord; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.Commencing on June 1, 2026 and every month thereafter for a period of eighteen (18) months, ending on November 1, 2027 (the "<u>Third Floor Rent Continuation Period</u>"), a monthly surrender fee equal to the Base Rent and Additional Rent for the Third Floor of the Premises that would have been due and payable by Tenant in accordance with the Original Lease as in effect immediately prior to the Sixth Amendment Effective Date (the "<u>Monthly Surrender Fee</u>") is due to Landlord. In the event that Tenant fails to pay any portion of the Monthly Surrender Fee as and when due under this Sixth Amendment, then such amount shall incur a late fee equal to eighteen percent (18%) per annum until such date that the Monthly Surrender Fee is received by Landlord.

Any failure by Tenant to pay the Rent Delay Period Fee and/or the Monthly Surrender Fee within three (3) days of the date by which such is due and payable under this Sixth Amendment shall constitute an immediate default under the Lease, and Landlord shall be entitled to exercise all rights and remedies available under Article 8 of the Lease with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.**REDUCED PREMISES; CONTINUED PAYMENT.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.As of the Sixth Amendment Effective Date, the Premises shall be reduced to exclude the Fourth Floor Surrendered Space. As of the Third Floor Surrender Date, the Premises shall be further reduced to exclude the Third Floor Surrendered Space. From and after the Third Floor Surrender Date, the Premises shall consist solely of the First and Second Floors of the Premises (consisting of approximately 135,461 rentable square feet) (the "<u>Remaining Premises</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Tenant's Proportionate Share under the Lease shall be adjusted in accordance with the foregoing reductions, effective as of the applicable surrender dates. For clarity, Section 1.1(v) of the Original Lease is hereby amended and restated in its

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entirety as follows: "**<u>Tenant's Proportionate Share</u>** shall mean a fraction, the numerator of which is the number of Rentable Square Feet within the Remaining Premises (135,461 RSF), and the denominator of which is the number of Rentable Square Feet on floors one (1) through six (6) of the Building (327,844 RSF). Both Landlord and Tenant acknowledge that neither of the foregoing figures was calculated by measuring the Common Areas, Service Areas and other non-tenant spaces in the Building and that neither Landlord nor Tenant shall have a right to demand remeasurement or recalculation of the Rentable Square Feet applicable to the Premises or the Building. Additionally, Tenant's Proportionate Share shall be increased to account for additional common areas for which Tenant agreed to pay the Tenant Proportionate Share under Exhibit D(1)(c) of the October Lease. Accordingly, the parties acknowledge and agree that Tenant's Proportionate Share under this Lease is 42.7%."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.From and after the Sixth Amendment Effective Date, Tenant shall continue to pay Base Rent and Additional Rent attributable to the Remaining Premises in accordance with the terms of the Lease, through and including the expiration of the Lease Term. Notwithstanding the foregoing, in consideration for the mutual covenants contained in this Sixth Amendment, Landlord agrees to accept Base Rent and Additional Rent for April 2026 and May 2026 shall be due from Tenant with respect to the Remaining Premises on May 15, 2026 (the "<u>Delayed Rent Payment</u>"). Landlord's acceptance of such payment shall not constitute a waiver of any rights or remedies of Landlord set forth in the Lease with respect to Tenant's payment of Base Rent and Additional Rent from and after May 15, 2026. Any failure by Tenant to pay the Delayed Rent Payment when due shall constitute an immediate default under the Lease, and Landlord shall be entitled to exercise all rights and remedies available under Article 8 of the Original Lease with respect thereto, including the accrual of interest and late charges under Section 3.2 of the Original Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Notwithstanding anything to the contrary in the Lease, including but not limited to Section 3.2 of the Original Lease, beginning on the Sixth Amendment Effective Date, Tenant shall be required to make all Rent payments and any other amounts and/or fees payable under the Lease, including but not limited to all Rent, fees, and/or any other amounts under this Sixth Amendment, by ACH payment to the below account:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HSBC BANK USA, N.A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CLAR Minneapolis MN Lessee LLC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;239 Van Rensselaer Street, Buffalo, NY 14210

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACCOUNT NUMBER - 189024836

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ROUTING NUMBER - 022000020

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ABA - 021001088

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.**PARKING**. Section 9.30 of the Original Lease is amended and restated in its entirety as follows:

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"Landlord will make 185 stalls located in the underground garage space available onsite at no additional cost for the duration of the Lease Term, including options. Landlord retains the option of offering valet service in the lower level parking garage at no charge to Tenant, at any time, in order to maximize parking options and efficiency."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.**NO WAIVER**. Notwithstanding anything to the contrary in this Sixth Amendment, in no event shall Landlord's acceptance of any amounts, payments, and/or fees payable under this Sixth Amendment shall constitute a waiver of Tenant's covenants contained in the Lease nor of Tenant's defaults under the Lease, a release of Tenant from any obligation or liability of Tenant under the Lease, or a waiver of any of Landlord's rights and remedies under the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.**NO TENANT IMPROVEMENTS**. Notwithstanding any provision of the Lease or any prior amendment to the contrary, no tenant improvement allowance, contribution, or credit of any kind shall be provided by Landlord to Tenant in connection with Tenant's consolidation of its operations onto the First and Second Floors of the Building or otherwise in connection with the transactions contemplated by this Sixth Amendment. Effective immediately upon the Third Floor Surrender Date, Landlord shall have the right, at Landlord's sole option and in Landlord's sole discretion, to either (i) remove the interior staircase connecting the Third Floor to other floors of the Building, or (ii) fill in and restore the floor slab at the location of the interior staircase on the Third Floor (or on any other floor as may be necessary to separate the Third Floor from the Remaining Premises) to a condition consistent with the structural integrity and building standards of the Building ((i) and/or (ii) in this Section 8 shall be referred to as the "<u>Third Floor Staircase Removal</u>"). The Third Floor Staircase Removal shall be at Landlord's sole cost and expense; provided, however, (i) such Third Floor Staircase Removal shall not materially interfere with Tenant's permitted use or quiet enjoyment of the Remaining Premises consistent with Section 6.1 of the October Lease, (ii) any construction plans will be communicated in writing to Tenant at least five (5) business days in advance, and (iii) in no event will any construction take place on the dates of: (x) Tenant's publicly announced earnings calls or (y) annual or special shareholder meetings, provided Tenant provides Landlord notice of the events set forth in (x) and (y) not less than five (5) business days before such event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.**EFFECT OF AMENDMENT**. Except as expressly amended by this Sixth Amendment, the terms and provisions contained in the Lease shall continue to govern the rights and obligations of the parties; and all provisions and covenants in the Lease shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.**SEVERABILITY OF PROVISIONS**. A determination that any provision of this Amendment is unenforceable or invalid shall not affect the enforceability or validity of any other provision hereof, and any determination that the application of any provision of this Amendment to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.**COUNTERPARTS**. This Sixth Amendment may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document.

------

All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.**GOVERNING LAW**. The terms and conditions of this Sixth Amendment shall be governed by the applicable laws of the State of Minnesota.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.**INTERPRETATION**. Within this Amendment, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires. The section headings used herein are intended for reference purposes only and shall not be considered in the interpretation of the terms and conditions hereof. The parties acknowledge that the parties and their counsel have reviewed and revised this Amendment and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Sixth Amendment or any exhibits or amendments hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.**SUCCESSORS AND ASSIGNS**. The terms and conditions of this Amendment shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.**TIME OF ESSENCE**. Landlord and Tenant agree that time is of the essence of this Sixth Amendment.

------

**IN WITNESS WHEREOF**, Landlord and Tenant have executed this Amendment as of the day and year first above written.

---

| | |
|:---|:---|
| &nbsp;&nbsp;LANDLORD:<br>CLAR MINNEAPOLIS MN LESSEE, LLC, a Delaware limited liability company | &nbsp;&nbsp;LANDLORD:<br>CLAR MINNEAPOLIS MN LESSEE, LLC, a Delaware limited liability company |
| By:&nbsp;&nbsp;&nbsp;&nbsp; | /s/ Kristin Leung |
| Name: | Kristin Leung |
| Title: | Authorized Signatory |

---

---

| | |
|:---|:---|
| TENANT:<br>SLEEP NUMBER CORPORATION, a Minnesota corporation | TENANT:<br>SLEEP NUMBER CORPORATION, a Minnesota corporation |
| By:&nbsp;&nbsp;&nbsp;&nbsp; | /s/ Amy O'Keefe |
| Name: | Amy O'Keefe |
| Title: | CFO |

---

## Exhibit 31.1

**Exhibit 31.1**

**Certification by Chief Executive Officer**

I, Linda Findley, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Quarterly report on Form 10-Q of Sleep Number Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date:&nbsp;&nbsp;&nbsp;&nbsp;May 12, 2026 | |
| | /s/ Linda Findley |
| | Linda Findley |
| | Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**Certification by Chief Financial Officer**

I, Amy K. O'Keefe, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Quarterly report on Form 10-Q of Sleep Number Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date:&nbsp;&nbsp;&nbsp;&nbsp;May 12, 2026 | |
| | /s/ Amy K. O'Keefe |
| | Amy K. O'Keefe |
| | Chief Financial Officer |

---

## Exhibit 32.1

**Exhibit 32.1**

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sleep Number Corporation (the "Company") on Form 10-Q for the period ended April 4, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Linda Findley, Chief Executive Officer of the Company, solely for the purposes of 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, does hereby certify, to her knowledge, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date:&nbsp;&nbsp;&nbsp;&nbsp;May 12, 2026 | |
| | /s/ Linda Findley |
| | Linda Findley |
| | Chief Executive Officer |

---

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

## Exhibit 32.2

**Exhibit 32.2**

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sleep Number Corporation (the "Company") on Form 10-Q for the period ended April 4, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Amy K. O'Keefe, Chief Financial Officer of the Company, solely for the purposes of 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, does hereby certify, to his knowledge, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date:&nbsp;&nbsp;&nbsp;&nbsp;May 12, 2026 | |
| | /s/ Amy K. O'Keefe |
| | Amy K. O'Keefe |
| | Chief Financial Officer |

---

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

<br>