# EDGAR Filing Document

**Accession Number:** 0000827187
**File Stem:** 0000827187-25-000103
**Filing Date:** 2025-7
**Character Count:** 134287
**Document Hash:** 92021627ca6447c754981b4dbf92a97e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000827187-25-000103.hdr.sgml**: 20250731

**ACCESSION NUMBER**: 0000827187-25-000103

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 82

**CONFORMED PERIOD OF REPORT**: 20250628

**FILED AS OF DATE**: 20250731

**DATE AS OF CHANGE**: 20250731

**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:** 251171552

**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-20250628

**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 June 28, 2025

**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-20250628_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 June 28, 2025, 22,771,000 shares of the registrant's Common Stock were outstanding.

---

| | |
|:---|:---|
| **i \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**INDEX**

---

| | | |
|:---|:---|:---|
| | | **Page** |
| **[PART I: FINANCIAL INFORMATION](#i7ed2920c1cf64540a12de794b278b096_10)** | **[PART I: FINANCIAL INFORMATION](#i7ed2920c1cf64540a12de794b278b096_10)** | [1](#i7ed2920c1cf64540a12de794b278b096_10) |
| [Item 1.](#i7ed2920c1cf64540a12de794b278b096_13) | [Financial Statements (unaudited)](#i7ed2920c1cf64540a12de794b278b096_13) | [1](#i7ed2920c1cf64540a12de794b278b096_13) |
|  | [Condensed Consolidated Balance Sheets](#i7ed2920c1cf64540a12de794b278b096_16) | [1](#i7ed2920c1cf64540a12de794b278b096_16) |
|  | [Condensed Consolidated Statements of Operations](#i7ed2920c1cf64540a12de794b278b096_19) | [2](#i7ed2920c1cf64540a12de794b278b096_19) |
|  | [Condensed Consolidated Statements of Shareholders' Deficit](#i7ed2920c1cf64540a12de794b278b096_22) | [3](#i7ed2920c1cf64540a12de794b278b096_22) |
|  | [Condensed Consolidated Statements of Cash Flows](#i7ed2920c1cf64540a12de794b278b096_25) | [4](#i7ed2920c1cf64540a12de794b278b096_25) |
|  | [Notes to Condensed Consolidated Financial Statements](#i7ed2920c1cf64540a12de794b278b096_28) | [5](#i7ed2920c1cf64540a12de794b278b096_28) |
| [Item 2.](#i7ed2920c1cf64540a12de794b278b096_76) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#i7ed2920c1cf64540a12de794b278b096_76) | [16](#i7ed2920c1cf64540a12de794b278b096_76) |
| [Item 3.](#i7ed2920c1cf64540a12de794b278b096_145) | [Quantitative and Qualitative Disclosures About Market Risk](#i7ed2920c1cf64540a12de794b278b096_145) | [27](#i7ed2920c1cf64540a12de794b278b096_145) |
| [Item 4.](#i7ed2920c1cf64540a12de794b278b096_148) | [Controls and Procedures](#i7ed2920c1cf64540a12de794b278b096_148) | [27](#i7ed2920c1cf64540a12de794b278b096_148) |
| **[PART II: OTHER INFORMATION](#i7ed2920c1cf64540a12de794b278b096_151)** | **[PART II: OTHER INFORMATION](#i7ed2920c1cf64540a12de794b278b096_151)** | [28](#i7ed2920c1cf64540a12de794b278b096_151) |
| [Item 1.](#i7ed2920c1cf64540a12de794b278b096_154) | [Legal Proceedings](#i7ed2920c1cf64540a12de794b278b096_154) | [28](#i7ed2920c1cf64540a12de794b278b096_154) |
| [Item 1A.](#i7ed2920c1cf64540a12de794b278b096_157) | [Risk Factors](#i7ed2920c1cf64540a12de794b278b096_157) | [28](#i7ed2920c1cf64540a12de794b278b096_157) |
| [Item 2.](#i7ed2920c1cf64540a12de794b278b096_160) | [Unregistered Sales of Equity Securities and Use of Proceeds](#i7ed2920c1cf64540a12de794b278b096_160) | [28](#i7ed2920c1cf64540a12de794b278b096_160) |
| [Item 3.](#i7ed2920c1cf64540a12de794b278b096_163) | [Defaults Upon Senior Securities](#i7ed2920c1cf64540a12de794b278b096_163) | [28](#i7ed2920c1cf64540a12de794b278b096_163) |
| [Item 4.](#i7ed2920c1cf64540a12de794b278b096_166) | [Mine Safety Disclosures](#i7ed2920c1cf64540a12de794b278b096_166) | [28](#i7ed2920c1cf64540a12de794b278b096_166) |
| [Item 5.](#i7ed2920c1cf64540a12de794b278b096_169) | [Other Information](#i7ed2920c1cf64540a12de794b278b096_169) | [28](#i7ed2920c1cf64540a12de794b278b096_169) |
| [Item 6.](#i7ed2920c1cf64540a12de794b278b096_175) | [Exhibits](#i7ed2920c1cf64540a12de794b278b096_175) | [29](#i7ed2920c1cf64540a12de794b278b096_175) |
| **[SIGNATURES](#i7ed2920c1cf64540a12de794b278b096_178)** | **[SIGNATURES](#i7ed2920c1cf64540a12de794b278b096_178)** | [31](#i7ed2920c1cf64540a12de794b278b096_178) |

---

---

| | |
|:---|:---|
| **1 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**PART I: FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Condensed Consolidated Balance Sheets**

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

---

| | | |
|:---|:---|:---|
| | **June 28,**<br>**2025**<br>| **December 28,**<br>**2024**<br>|
| **Assets** | | |
| Current assets: |  |  |
| Cash and cash equivalents | $1349 | $1950 |
| Accounts receivable, net of allowances of $1,127 and $1,113, respectively | 16017 | 17516 |
| Inventories | 99450 | 103152 |
| Prepaid expenses | 20824 | 14568 |
| Other current assets | 37885 | 44098 |
| Total current assets | 175525 | 181284 |
| Non-current assets: |  |  |
| Property and equipment, net | 109105 | 129574 |
| Operating lease right-of-use assets | 339149 | 356641 |
| Goodwill and intangible assets, net | 66301 | 66412 |
| Deferred income taxes | 31803 | 33575 |
| Other non-current assets | 82629 | 93324 |
| Total assets | $804512 | $860810 |
| **Liabilities and Shareholders' Deficit** |  |  |
| Current liabilities: |  |  |
| Borrowings under revolving credit facility | $563900 | $546600 |
| Accounts payable | 111212 | 107619 |
| Customer prepayments | 41141 | 46933 |
| Accrued sales returns | 15650 | 19092 |
| Compensation and benefits | 20929 | 31038 |
| Taxes and withholding | 17854 | 18619 |
| Operating lease liabilities | 82209 | 82307 |
| Other current liabilities | 50326 | 55804 |
| Total current liabilities | 903221 | 908012 |
| Non-current liabilities: |  |  |
| Operating lease liabilities | 287585 | 307201 |
| Other non-current liabilities | 94394 | 97183 |
| Total liabilities | 1285200 | 1312396 |
| Shareholders' deficit: |  |  |
| Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding |  |  |
| Common stock, $0.01 par value; 142,500 shares authorized, 22,771 and 22,388 shares issued <br>and outstanding, respectively<br>| 228 | 224 |
| Additional paid-in capital | 31942 | 27390 |
| Accumulated deficit | (512858) | (479200) |
| Total shareholders' deficit | (480688) | (451586) |
| Total liabilities and shareholders' deficit | $804512 | $860810 |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **2 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#i7ed2920c1cf64540a12de794b278b096_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** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Net sales | $327925 | $408413 | $721186 | $878862 |
| Cost of sales | 134180 | 166923 | 286906 | 361198 |
| Gross profit | 193745 | 241490 | 434280 | 517664 |
| Operating expenses: |  |  |  |  |
| Sales and marketing | 146464 | 182400 | 335567 | 390912 |
| General and administrative | 29604 | 39573 | 68223 | 78652 |
| Research and development | 9420 | 11578 | 20323 | 24019 |
| Restructuring costs | 8332 | 1819 | 8392 | 12419 |
| Total operating expenses | 193820 | 235370 | 432505 | 506002 |
| Operating (loss) income | (75) | 6120 | 1775 | 11662 |
| Interest expense, net | 11734 | 12270 | 22815 | 24569 |
| Loss before income taxes | (11809) | (6150) | (21040) | (12907) |
| Income tax expense (benefit) | 13203 | (1099) | 12618 | (374) |
| Net loss | $(25012) | $(5051) | $(33658) | $(12533) |
| Basic net loss per share: |  |  |  |  |
| Net loss per share – basic | $(1.09) | $(0.22) | $(1.48) | $(0.56) |
| Weighted-average shares – basic | 22903 | 22614 | 22804 | 22560 |
| Diluted net loss per share: |  |  |  |  |
| Net loss per share – diluted | $(1.09) | $(0.22) | $(1.48) | $(0.56) |
| Weighted-average shares – diluted | 22903 | 22614 | 22804 | 22560 |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **3 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#i7ed2920c1cf64540a12de794b278b096_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 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) |
| Net loss |  |  |  | (25012) | (25012) |
| Stock-based compensation | 149 | 1 | 1548 |  | 1549 |
| Repurchases of common stock | (38) |  | (381) |  | (381) |
| Balance at June 28, 2025 | 22771 | $228 | $31942 | $(512858) | $(480688) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **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 30, 2023 | 22235 | $222 | $16716 | $(458866) | $(441928) |
| Net loss |  |  |  | (7482) | (7482) |
| Stock-based compensation | 134 | 1 | 4116 |  | 4117 |
| Repurchases of common stock | (43) |  | (570) |  | (570) |
| Balance at March 30, 2024 | 22326 | $223 | $20262 | $(466348) | $(445863) |
| Net loss |  |  |  | (5051) | (5051) |
| Stock-based compensation | 32 | 1 | 3991 |  | 3992 |
| Repurchases of common stock | (3) |  | (42) |  | (42) |
| Balance at June 29, 2024 | 22355 | $224 | $24211 | $(471399) | $(446964) |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **4 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[Table of contents](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Condensed Consolidated Statements of Cash Flows**

**(unaudited - in thousands)**

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Cash flows from operating activities: |  |  |
| Net loss | $(33658) | $(12533) |
| Adjustments to reconcile net loss to net cash provided by operating <br>activities:<br>|  |  |
| Depreciation and amortization | 29096 | 34177 |
| Stock-based compensation | 5500 | 8109 |
| Net loss on disposals and impairments of assets | 775 | 2500 |
| Deferred income taxes | 1772 | (5144) |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable | 1499 | 6587 |
| Inventories | 3702 | 19588 |
| Income taxes | 2470 | 774 |
| Prepaid expenses and other assets | 10381 | (1483) |
| Accounts payable | 8354 | (18464) |
| Customer prepayments | (5792) | (4625) |
| Accrued compensation and benefits | (10086) | 7153 |
| Other taxes and withholding | (3235) | (1345) |
| Other accruals and liabilities | (9582) | (11776) |
| Net cash provided by operating activities | 1196 | 23518 |
| Cash flows from investing activities: |  |  |
| Purchases of property and equipment | (8052) | (14075) |
| Payment to secure contractual rights | (3280) |  |
| Issuance of note receivable |  | (2942) |
| Net cash used in investing activities | (11332) | (17017) |
| Cash flows from financing activities: |  |  |
| Net increase (decrease) in short-term borrowings | 12356 | (6408) |
| Repurchases of common stock | (944) | (612) |
| Debt issuance costs | (1877) |  |
| Net cash provided by (used in) financing activities | 9535 | (7020) |
| Net decrease in cash and cash equivalents | (601) | (519) |
| Cash and cash equivalents, at beginning of period | 1950 | 2539 |
| Cash and cash equivalents, at end of period | $1349 | $2020 |

---

See accompanying notes to condensed consolidated financial statements.

---

| | |
|:---|:---|
| **5 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_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 and six months ended

June 28, 2025 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 significant intra-entity balances

and transactions, necessary to present fairly its financial position as of June 28, 2025 and December 28, 2024, 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 December 28, 2024 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 and revenue

recognition.

*Accounting Pronouncements Issued But Not Yet Effective*

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements in Income Tax Disclosures"

to enhance the transparency and decision usefulness of income tax disclosures. This amendment requires public

companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling

items that meet a quantitative threshold. Additionally, under the amendment, entities are required to disclose the

amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as disaggregated by material

individual jurisdictions. Finally, the amendment requires entities to disclose income from continuing operations before

income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations

disaggregated by federal, state and foreign. The new rules are effective for annual periods beginning after December

15, 2024. The adoption of this standard is not expected to have a material impact on the Company's consolidated

financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense

Disaggregation Disclosures (Subtopic 220-40)", which requires public business entities to disclose in the notes to the

financial statements more detailed information about the types of expenses included in certain expense captions in the

consolidated financial statements, including purchases of inventory, employee compensation, and depreciation and

amortization. The amendments are effective for the Company beginning with the 2027 annual period and in interim

periods beginning in 2028. Early adoption is permitted. The ASU may be adopted prospectively or retrospectively. The

Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related

disclosures.

Currently, management does not believe that any other recently issued, but not yet effective accounting

pronouncements, if adopted in their current form, would have a material impact on the Company's consolidated financial

statements.

---

| | |
|:---|:---|
| **6 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

*Other Investments*

The Company made a payment of$3.3 million during the three months ended June 28, 2025to secure contractual rights

from a strategic product-development partner. This payment is included in prepaid expenses in the Company's

condensed consolidated balance sheet and as an investing activity in the Company's condensed consolidated statement

of cash flows.

 **2. Fair Value Measurements**

At both June 28, 2025 and December 28, 2024, the Company had $19 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 $19 million at both June 28, 2025 and December 28, 2024 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.

 **3. Inventories**

Inventories consisted of the following (in thousands):

---

| | | |
|:---|:---|:---|
| | **June 28,**<br>**2025**<br>| **December 28,**<br>**2024**<br>|
| Raw materials | $6415 | $11434 |
| Work in progress | 168 | 130 |
| Finished goods | 92867 | 91588 |
|  | $99450 | $103152 |

---

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

*Goodwill and Indefinite-lived Intangible Assets*

Goodwill was $64.0 million at June 28, 2025 and December 28, 2024. Indefinite-lived trade name/trademarks totaled

$1.4 million at both June 28, 2025 and December 28, 2024.

*Definite-lived Intangible Assets*

Patents were $2.0 million at both June 28, 2025 and December 28, 2024. Accumulated amortization was $1.1 million at

June 28, 2025 and $1.0 million at December 28, 2024. Amortization expense was $55 thousand for both the three

months ended June 28, 2025 and June 29, 2024, and $0.1 million for both the six months ended June 28, 2025 and

June 29, 2024.

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

---

| | |
|:---|:---|
| 2025 (excluding the six months endedJune 28, 2025) | $117 |
| 2026 | 222 |
| 2027 | 222 |
| 2028 | 155 |
| 2029 | 99 |
| 2030 | 45 |
| Total future amortization for definite-lived intangible assets | $860 |

---

---

| | |
|:---|:---|
| **7 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

 **5. Credit Agreement**

As of June 28, 2025, the Company's credit facility had a total commitment amount of $673 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), includes an accordion feature which allows the Company to increase the amount of the credit facility from

$673 million to $1.0 billion, subject to lenders' approval. 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 Company amended the Credit Agreement on March 3, 2025. The amendment, among other things: (a) adds a

definition for "Liquidity" which means, on any date of determination, the sum of (x) Borrower's and its Subsidiaries'

unrestricted cash that is free and clear of Liens (other than those in favor of the Administrative Agent) plus (y) the

aggregate amount of unused Revolving Credit Commitments available for Credit Events on such date (including the

Borrower's ability to satisfy the requirements of Section 4.1 on such date) (as each is defined in the Credit Agreement);

(b) adds a Liquidity financial covenant wherein the Borrower shall cause the Liquidity to be equal or exceed $40 million

as of the last day of each fiscal month; (c) deems our Net Leverage Ratio as greater than or equal to 4.50 to 1.00 as of

the effective date to set pricing for the Applicable Commitment Fee Rate and Applicable Margin until receipt of the

compliance certificate for the quarterly reporting period ending September 27, 2025, (d) adjusts 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 June 28, 2025, (II) 4.50 to 1.00 for the quarterly reporting period ending September 27, 2025, (III) 4.35 to 1.00 for

the quarterly reporting period ending January 3, 2026, and (IV) 4.00 to 1.00 for each quarterly reporting period occurring

thereafter, and (e) adjusts the permissible minimum Interest Coverage Ratio (as defined in the Credit Agreement) to (I)

1.90 to 1.00 for the quarterly reporting periods ending June 28, 2025 and September 27, 2025, (II) 2.10 to 1.00 for the

quarterly reporting period ending January 3, 2026, and (III) 3.00 to 1.00 for each quarterly reporting period occurring

thereafter. A fee for the amendment was paid to the approving lenders in an amount equal to 20 basis points multiplied

by the sum of such lender's Revolving Credit Commitment and outstanding Term Loans (as each is defined in the Credit

Agreement).

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 its leverage ratio. The Credit Agreement

matures in December 2026. The Company was in compliance with all financial covenants as of June 28, 2025.

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

---

| | | |
|:---|:---|:---|
| | **June 28,**<br>**2025**<br>| **December 28,**<br>**2024**<br>|
| Outstanding borrowings | $563900 | $546600 |
| Outstanding letters of credit | $6847 | $7147 |
| Additional borrowing capacity | $101753 | $123753 |
| Weighted-average interest rate | 7.9% | 7.6% |

---

Subsequent to June 28, 2025, the Company's outstanding letters of credit increased to $9 million.

 **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

---

| | |
|:---|:---|
| **8 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

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.

AtJune 28, 2025, the Company's finance right-of-use assets and lease liabilities were not significant.

Lease costs were as follows (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Operating lease costs<sup>(1)</sup> | $26649 | $26909 | $53186 | $53735 |
| Variable lease costs<sup>(2)</sup> | $37 | $8 | $140 | $(41) |

---

**___________________________**

<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):

---

| | |
|:---|:---|
| 2025 (excluding the six months endedJune 28, 2025) | $52797 |
| 2026 | 99002 |
| 2027 | 82575 |
| 2028 | 69001 |
| 2029 | 48062 |
| 2030 | 34064 |
| Thereafter | 51219 |
| Total operating lease payments<sup>(2)</sup> | 436720 |
| Less: Interest | 66926 |
| Present value of operating lease liabilities | $369794 |

---

___________________________

<sup>(1)</sup> Total operating lease payments exclude $8 million of legally binding minimum lease payments for leases signed but not yet commenced.

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

Other information related to operating leases was as follows:

---

| | | |
|:---|:---|:---|
| | **June 28,**<br>**2025**<br>| **December 28,**<br>**2024**<br>|
| Weighted-average remaining lease term (in years) | 5.2 | 5.4 |
| Weighted-average discount rate | 6.7% | 6.6% |

---

---

| | |
|:---|:---|
| **9 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| (in thousands) | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Cash paid for amounts included in present value of operating lease liabilities | $53092 | $54300 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $12752 | $16313 |

---

 **7. Repurchases of Common Stock**

For the three months ended June 28, 2025 and June 29, 2024, we repurchased $0.4 million and $42 thousand,

respectively, of common stock in connection with the vesting of restricted stock grants. For the six months ended

June 28, 2025 and June 29, 2024, we repurchased $0.9 million and $0.6 million, respectively, 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 June 28, 2025, the remaining authorization under the Board-approved $600 million share

repurchase program was $348 million.

 **8. Revenue Recognition**

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

follows (in thousands):

---

| | | |
|:---|:---|:---|
| | **June 28,**<br>**2025**<br>| **December 28,**<br>**2024**<br>|
| Deferred contract assets included in: |  |  |
| Other current assets | $28793 | $30154 |
| Other non-current assets | 45996 | 48988 |
|  | $74789 | $79142 |

---

---

| | | |
|:---|:---|:---|
| | **June 28,**<br>**2025**<br>| **December 28,**<br>**2024**<br>|
| Deferred contract liabilities included in: |  |  |
| Other current liabilities | $37008 | $38129 |
| Other non-current liabilities | 58362 | 60988 |
|  | $95370 | $99117 |

---

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 to 5.0 years because the Company's inputs are generally expended evenly throughout the

performance period. During the three months ended June 28, 2025 and June 29, 2024, the Company recognized

revenue of $7 million and $10 million, respectively, that was included in the deferred contract liability balances at the

beginning of the respective periods. During the six months ended June 28, 2025 and June 29, 2024, the Company

recognized revenue of $17 million and $19 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 98%of

revenues for both the three and sixmonths ended June 28, 2025 and June 29, 2024.

---

| | |
|:---|:---|
| **10 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

Net sales were as follows (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Retail stores | $287974 | $358584 | $632415 | $773339 |
| Online, phone, chat and other | 39951 | 49829 | 88771 | 105523 |
| Total Company | $327925 | $408413 | $721186 | $878862 |

---

*Obligation for Sales Returns*

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

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Balance at beginning of year | $19092 | $22402 |
| Additions that reduce net sales | 36098 | 46664 |
| Deductions from reserves | (39540) | (48535) |
| Balance at end of period | $15650 | $20531 |

---

 **9.** **Stock-Based Compensation Expense**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Stock awards <sup>(1)</sup> | $1064 | $3294 | $1503 | $6438 |
| Stock options | 485 | 698 | 3997 | 1671 |
| Total stock-based compensation expense <sup>(1)</sup> | $1549 | $3992 | $5500 | $8109 |

---

**___________________________**

<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. During the three months ended June 28, 2025 and June 29, 2024, the

Company's contributions, net of forfeitures, were $1.7 million and $1.2 million, respectively and during the six months

ended June 28, 2025 and June 29, 2024, were $3.5 million and $3.2 million, respectively.

---

| | |
|:---|:---|
| **11 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

 **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** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Net loss | $(25012) | $(5051) | $(33658) | $(12533) |
| **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** |  |  |  |
| Basic weighted-average shares outstanding | 22903 | 22614 | 22804 | 22560 |
| Dilutive effect of stock-based awards |  |  |  |  |
| Diluted weighted-average shares outstanding | 22903 | 22614 | 22804 | 22560 |
| Net loss per share – basic | $(1.09) | $(0.22) | $(1.48) | $(0.56) |
| Net loss per share – diluted | $(1.09) | $(0.22) | $(1.48) | $(0.56) |

---

For the three and six month periods ended June 28, 2025 and June 29, 2024, 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

1.6 million and 1.3 million for the three months ended June 28, 2025 and June 29, 2024, respectively, and 1.8 million

and 1.3 million for the six months ended June 28, 2025 and June 29, 2024, 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 $33.8 million of restructuring costs through December 28, 2024. The Company

has incurred an additional $8.4 million and of restructuring costs during the six months ended June 28, 2025. 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 the restructuring costs line in the

Company's condensed consolidated statement of operations. The Company expects approximately $8 million of

additional restructuring costs to be incurred through the remainder of 2025, primarily due to severance and employee-

related benefits, contract termination costs, and asset impairment charges.

The followingtable provides a summary of the Company's restructuring costs during the three and six months ended

June 28, 2025 and June 29, 2024 (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Cash restructuring costs: |  |  |  |  |
| Contract termination costs <sup>(1)</sup> | $1409 | $(230) | $1295 | $4183 |
| Severance and employee-related benefits | 6335 | 401 | 6492 | 1242 |
| Professional fees and other |  | 1648 | 17 | 4494 |
| Total cash restructuring costs | 7744 | 1819 | 7804 | 9919 |
| Non-cash restructuring costs: |  |  |  |  |
| Asset impairments <sup>(2)</sup> | 588 |  | 588 | 2500 |
| Total restructuring costs | $8332 | $1819 | $8392 | $12419 |

---

**____________________**

<sup>(1)</sup> Primarily comprised of lease termination costs and includes changes in estimate.

<sup>(2)</sup> Primarily comprised of impairments of property and equipment.

---

| | |
|:---|:---|
| **12 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

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):

---

| | | |
|:---|:---|:---|
| | **June 28,** <br>**2025**<br>| **December 28,**<br>**2024**<br>|
| Balance at the beginning of year | $3341 | $8720 |
| Expenses | 7804 | 14888 |
| Cash payments | (7973) | (20267) |
| Balance at the end of the period | $3172 | $3341 |

---

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

$42.2 million of restructuring costs, as follows (in thousands):

---

| | |
|:---|:---|
| | **Cumulative** |
| | **June 28,**<br>**2025**<br>|
| Cash restructuring costs: |  |
| Contract termination costs <sup>(1)</sup> | $15732 |
| Severance and employee-related benefits | 14685 |
| Professional fees and other | 5761 |
| Total cash restructuring costs | 36178 |
| Non-cash restructuring costs: |  |
| Asset impairments <sup>(2)</sup> | 6008 |
| Total restructuring costs | $42186 |

---

**____________________**

<sup>(1)</sup> Primarily comprised of lease termination costs.

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

**13. Income Taxes**

Income tax expense was $13.2 million for the three months ended June 28, 2025, compared with income tax benefit of

$1.1 million for the same period one year ago. Income tax expense totaled $12.6 million for six months ended June 28,

2025, compared with income tax benefit of $0.4 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. During the three months ended June 28, 2025,

the Company recorded a change in valuation allowance of $14 million on the basis of management's reassessment of

the amount of its deferred tax assets primarily related to interest expense that are more likely than not to not be realized.

This decreased the effective tax rate by 66.5% for the three months ended June 28, 2025. The Company continues to

assess the need for the valuation allowance and will make adjustments when appropriate.

---

| | |
|:---|:---|
| **13 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

**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 consolidated earnings and losses, as reported on the Company's condensed

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 condensed 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 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** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Net Sales | $327925 | $408413 | $721186 | $878862 |
| Less: |  |  |  |  |
| Cost of sales | (134180) | (166923) | (286906) | (361198) |
| Marketing expenses | (62427) | (89483) | (160368) | (198512) |
| Selling expenses | (84037) | (92917) | (175199) | (192400) |
| General and administrative | (29604) | (39573) | (68223) | (78652) |
| Research and development | (9420) | (11578) | (20323) | (24019) |
| Restructuring costs | (8332) | (1819) | (8392) | (12419) |
| Interest expense | (11734) | (12270) | (22815) | (24569) |
| Income tax (expense) benefit | (13203) | 1099 | (12618) | 374 |
| Net loss | $(25012) | $(5051) | $(33658) | $(12533) |

---

---

| | |
|:---|:---|
| **14 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_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):

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Balance at beginning of period | $6947 | $8503 |
| Additions charged to costs and expenses for current-year sales | 5878 | 7675 |
| Deductions from reserves | (5800) | (8048) |
| Changes in liability for pre-existing warranties during the current year, including <br>expirations<br>| (983) | (171) |
| Balance at end of period | $6042 | $7959 |

---

*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 Class Action Complaint</u>

On January 14, 2025, purported customers served a putative class action complaint on behalf of themselves and a

putative class of California consumers against Sleep Number in the United States District Court for the Central 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 brought a motion to dismiss for failure to state a claim and

a motion to transfer or, alternatively, dismiss based on the first-to-file doctrine (citing the purported class action

complaint filed on September 27, 2024 as described below). On April 8, 2025, the Court granted Sleep Number's

motion to transfer or, alternatively, dismiss and dismissed the matter in its entirety based on the first-to-file doctrine. The

plaintiffs did not appeal the dismissal.

<u>Purported 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.

---

| | |
|:---|:---|
| **15 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

**<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>**

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

**Notes to Condensed Consolidated Financial Statements**

**(unaudited)**

**16. Subsequent Event**

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. The OBBBA makes permanent key

elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the

business interest expense limitation. ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws on

deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, as of the date of

enactment, and during the third quarter of 2025, the Company will evaluate all deferred tax balances under the newly

enacted tax law and identify any other changes required to its financial statements as a result of the OBBBA. The

Company is currently evaluating the impact of the OBBBA on its consolidated financial statements and related

disclosures.

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| **16 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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**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;

• Access to alternative financing options may depend on factors beyond the Company's control or require the

Company to accept unfavorable terms;

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

• Ability to achieve cost savings, efficiencies and other benefits from its business restructuring actions and to avoid

adverse effects;

• 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 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 costs 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;

• 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 and business combinations;

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

effective personnel;

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| **17 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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• Ability to comply with existing and changing government regulations and laws, and to commercialize new products

and innovations that meet those 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 or adoption of artificial intelligence 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 a wellness company and market leader in the design, manufacturing, marketing and distribution of

highly innovative sleep solutions. The Company's purpose is to improve the health and wellbeing of society through

higher quality sleep; to date, it has improved the lives of nearly 16 million people. Sleep Number's Smart Sleepers

benefit from individualized sleep experiences, night after night, and are experiencing the physical, mental and emotional

benefits of life-changing sleep.

Sleep Number's life-changing, differentiated smart beds 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 bed to keep

the sleeper comfortable throughout the night. Active temperature balancing technology supports the ideal climate for

each sleeper and solves a prevalent sleep challenge. Additionally, the smart beds are an exceptional value, with

personalized sleep insights delivered daily, new features regularly added to all smart beds through over-the-air updates

and prices to meet most budgets. Sleep Number<sup>®</sup> smart beds 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 culture of individuality, with an ambitious vision to become one of the

world's most beloved brands.

The Company's 3,400 mission-driven team members are dedicated to the Company's mission of improving lives by

individualizing sleep experiences. They passionately innovate to drive value creation, including our exclusive direct-to-

consumer selling in630stores and online, which meets customers whenever and wherever they choose to provide an

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

bring the power of 34 billion hours of longitudinal sleep data to sleep science and research.

The bedding industry has been in a sector level recession for three years with mattress industry unit volumes returning to

an estimated 24 million units in 2024, the lowest level since 2015. Consumer sentiment remains well below historical

averages, and high interest rates are putting ongoing pressure on the housing market. Consumers continue to scrutinize

spending, with inflation and other factors weighing on their purchasing power. Since initiating the Company's operating

model transformation in the fourth quarter of 2023, the Company has executed structural changes to reduce fixed

expenses, while prioritizing improving margins and generating cash to create greater financial resilience across market

cycles.

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| **18 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. The OBBBA makes permanent key

elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the

business interest expense limitation. The Company is currently evaluating the impact of the OBBBA on its consolidated

financial statements and related disclosures.

**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 June 28, 2025 were as follows:

• Net sales for the three months ended June 28, 2025 of $328 million decreased 20% from $408 million for the same

period one year ago driven by lower volume and reduced store count.

• The net sales change resulted from a 19% Total Retail comparable sales decrease. For additional details, see the

components of total net sales change on page [20](#i7ed2920c1cf64540a12de794b278b096_97).

• 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 June 28, 2025 totaled $2.4 million, compared with $2.7 million for

the same period one year ago.

• Operating loss for the three months ended June 28, 2025 was $0.1 million, compared with operating income of

$6.1 million for the same period one year ago. The $6 million decrease in operating income was driven by the lower

net sales and an increase in restructuring expenses of $7 million; partially offset by a $42 million reduction in

operating expenses.

• Adjusted EBITDA for the three months ended June 28, 2025 was $24 million, compared to $28 million for the same

period one year ago. The decrease was primarily due a higher level of net loss.

• Gross profit rate of 59.1% for both the three months ended June 28, 2025 and June 29, 2024. See the gross profit

discussion on page [21](#i7ed2920c1cf64540a12de794b278b096_112) for additional details.

• The $42 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 June 28, 2025 was $25 million, compared with $5 million for the same period

one year ago. Net loss per diluted share was $1.09, compared with $0.22for the same period one year ago.

• The Company's adjusted return on invested capital (Adjusted ROIC) was 8.4% on a trailing twelve-month basis for

the period ended June 28, 2025, compared with 3.7% for the comparable period one year ago.

• The Company provided $1 million in cash from operating activities for the six months ended June 28, 2025,

compared with $24 million for the same period one year ago.

• Free cash flow used $7 million for the six months ended June 28, 2025, compared with providing $9 million for the

same period one year ago.

• As of June 28, 2025, the Company had $564 million of borrowings under its revolving credit facility.

---

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| **19 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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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** | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025** | **June 28,**<br>**2025** | **June 29,**<br>**2024** | **June 29,**<br>**2024** | **June 28,**<br>**2025** | **June 28,**<br>**2025** | **June 29,**<br>**2024** | **June 29,**<br>**2024** |
| Net sales | $327.9 | 100.0% | $408.4 | 100.0% | $721.2 | 100.0% | $878.9 | 100.0% |
| Cost of sales | 134.2 | 40.9% | 166.9 | 40.9% | 286.9 | 39.8% | 361.2 | 41.1% |
| Gross profit | 193.7 | 59.1% | 241.5 | 59.1% | 434.3 | 60.2% | 517.7 | 58.9% |
| Operating expenses: |  |  |  |  |  |  |  |  |
| Sales and marketing | 146.5 | 44.7% | 182.4 | 44.7% | 335.6 | 46.5% | 390.9 | 44.5% |
| General and administrative | 29.6 | 9.0% | 39.6 | 9.7% | 68.2 | 9.5% | 78.7 | 8.9% |
| Research and development | 9.4 | 2.9% | 11.6 | 2.8% | 20.3 | 2.8% | 24.0 | 2.7% |
| Restructuring costs | 8.3 | 2.5% | 1.8 | 0.4% | 8.4 | 1.2% | 12.4 | 1.4% |
| Total operating expenses | 193.8 | 59.1% | 235.4 | 57.6% | 432.5 | 60.0% | 506.0 | 57.6% |
| Operating (loss) income | (0.1) | —% | 6.1 | 1.5% | 1.8 | 0.2% | 11.7 | 1.3% |
| Interest expense, net | 11.7 | 3.6% | 12.3 | 3.0% | 22.8 | 3.2% | 24.6 | 2.8% |
| Loss before income taxes | (11.8) | (3.6%) | (6.2) | (1.5%) | (21.0) | (2.9%) | (12.9) | (1.5%) |
| Income tax expense (benefit) | 13.2 | 4.0% | (1.1) | (0.3%) | 12.6 | 1.7% | (0.4) | 0.0% |
| Net loss | $(25.0) | (7.6%) | $(5.1) | (1.2%) | $(33.7) | (4.7%) | $(12.5) | (1.4%) |
| Net loss per share: |  |  |  |  |  |  |  |  |
| Basic | $(1.09) |  | $(0.22) |  | $(1.48) |  | $(0.56) |  |
| Diluted | $(1.09) |  | $(0.22) |  | $(1.48) |  | $(0.56) |  |
| Weighted-average number of <br>common shares:<br>|  |  |  |  |  |  |  |  |
| Basic | 22.9 |  | 22.6 |  | 22.8 |  | 22.6 |  |
| Diluted | 22.9 |  | 22.6 |  | 22.8 |  | 22.6 |  |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Retail stores | 87.8% | 87.8% | 87.7% | 88.0% |
| Online, phone, chat and other | 12.2% | 12.2% | 12.3% | 12.0% |
| Total Company | 100.0% | 100.0% | 100.0% | 100.0% |

---

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| **20 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| **Sales change rates:** | | | | |
| Retail comparable-store sales <sup>(1)</sup> | (18%) | (11%) | (17%) | (10%) |
| Online, phone and chat | (19%) | (13%) | (16%) | (16%) |
| Total Retail comparable sales change <sup>(1)</sup> | (19%) | (11%) | (17%) | (11%) |
| Net opened/closed stores and other | (1%) | 0% | (1%) | 0% |
| Total Company | (20%) | (11%) | (18%) | (11%) |

---

**___________________________**

<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:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Average sales per store <sup>(1)</sup> (in thousands) | $2395 | $2732 |  |  |
| Average sales per square foot <sup>(1)</sup> | $775 | $883 |  |  |
| Stores > $2 million in net sales <sup>(2)</sup> | 47% | 62% |  |  |
| Stores > $3 million in net sales <sup>(2)</sup> | 13% | 21% |  |  |
| Average revenue per smart bed unit – Total <br>Retail <sup>(3)</sup><br>| $5880 | $5802 | $5940 | $5782 |

---

**___________________________**

<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 smart bed units.

The number of retail stores operating was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Beginning of period | 637 | 661 | 640 | 672 |
| Opened | 1 | 4 | 3 | 10 |
| Closed | (8) | (19) | (13) | (36) |
| End of period | 630 | 646 | 630 | 646 |

---

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| **21 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**Comparison of Three Months Ended June 28, 2025 with Three Months Ended June 29, 2024**

*Net sales*

Net sales for the three months ended June 28, 2025 of $328 million decreased 20% from $408 million for the same

period one year ago driven by lower volume and reduced store count. The net sales change consisted primarily of a 19%

Total Retail comparable sales decrease.

The $80 million net sales decrease compared with the same period one year ago was comprised of the following: (i) a

$64 million decrease in Retail comparable net sales; (ii) a $9 million decrease from online, phone and chat; and (iii) a $7

million decrease from net store closings and other. Total Retail smart bed unit sales decreased 20% compared with the

prior year. Total Retail average revenue per smart bed unit increased by 1% to $5,880, compared with $5,802 in the

prior-year period.

*Gross profit*

Gross profit of $194 million for the three months ended June 28, 2025 decreased by $48 million, or 20%, compared with

$241 million for the same period one year ago. The gross profit rate totaled 59.1% of net sales for both the three months

ended June 28, 2025 and June 29, 2024.

The current-year gross profit rate was consistent with the prior-year period and was affected by the following items: (i)

year-over-year product cost reductions through value engineering and ongoing supplier negotiations, increased the rate

by 1.4 ppt; offset by (ii) an unfavorable product mix which deleveraged the rate by 1.1 ppt; and (iii) warranty expenses

along with return and exchange costs which deleveraged the rate by 0.3 ppt.

*Sales and marketing expenses*

Sales and marketing expenses for the three months ended June 28, 2025 were $146 million, or 44.7% of net sales,

compared with $182 million, or 44.7% of net sales, for the same period one year ago. The current-year sales and

marketing expenses rate was consistent with the same period one year ago primarily due to the deleveraging impact of

an 20% net sales decline, partially offset by a 20% decrease in sales and marketing expenses including a 32% lower

media spend.

*General and administrative expenses*

General and administrative (G&A) expenses totaled $30 million, or 9.0% of net sales, for the three months ended

June 28, 2025, compared with $40 million, or 9.7% of net sales, in the prior-year period. The changes in G&A expenses

consisted mainly of: (i) a $6.1 million year-over-year decrease in company-wide, performance-based incentive

compensation and (ii) a $1.7 million decrease in employee compensation; (iii) a $1.1 million decrease in depreciation and

amortization; and(iv) a $1.0 million decrease in professional and consulting fees. The G&A expenses rate decreased 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 $9 million for the three months ended June 28, 2025, compared

with $12 million with the same period one year ago. The changes in R&D expenses were primarily due to lower

headcount and outside services. 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 $12 million for both the three months ended June 28, 2025, and June 29, 2024.

The increase in the average debt outstanding compared to the same period one year ago was offset by a lower

weighted-average interest rate.

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| **22 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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*Restructuring Costs*

Restructuring costs for the three months ended June 28, 2025 were $8 million , compared with $2 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 and are included in the

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

additional $8 million of restructuring costs to be incurred through the remainder of 2025, 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 $13.2 million for the three months ended June 28, 2025, compared with income tax benefit of

$1.1 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. During the three months ended June 28, 2025,

the Company recorded a change in valuation allowance of $14 million on the basis of management's reassessment of

the amount of its deferred tax assets primarily related to interest expense that are more likely than not to not be realized.

This decreased the effective tax rate by 66.5% for the three months ended June 28, 2025. The Company continues to

assess the need for the valuation allowance and will make adjustments when appropriate.

**Comparison of Six Months EndedJune 28, 2025 with Six Months EndedJune 29, 2024**

*Net sales*

Net sales for the six months ended June 28, 2025 decreased by $158 million, or 18%, to $721 million, compared with

$879 million for the same period one year ago driven by lower volume and reduced store count.

The net sales decrease consisted primarily of a17% comparable sales decrease in Total Retail. For additional details, see

the components of total net sales change on page [20](#i7ed2920c1cf64540a12de794b278b096_97).

The $158 million net sales decrease compared with the same period one year ago was comprised of the following: (i) a

$124 million decrease in Retail comparable net sales; (ii) a $17 million decrease in online, phone and other sales; and (iii)

a $17 million decrease resulting from net store closings. Total smart bed unit sales declined20% compared with the

same period one year ago. Average revenue per smart bed unit in Total Retail increased by 3% to $5,940, compared

with $5,782 in the prior-year period.

*Gross profit*

Gross profit of $434 million for the six months ended June 28, 2025 decreased by $83 million, or 16%, compared with

$518 million for the same period one year ago. The gross profit rate increased to 60.2% of net sales for the six months

ended June 28, 2025, compared to 58.9% in the prior-year comparable period.

The current-year gross profit rate increase of 1.3 ppt. was impacted by: (i) year-over-year product cost reductions

through value engineering and ongoing supplier negotiations, increased the rate by 2.3 ppt; offset by (ii) an unfavorable

product mix which deleveraged the rate by 1.0 ppt

*Sales and marketing expenses*

Sales and marketing expenses for the six months ended June 28, 2025 were $336 million, or 46.5% of net sales,

compared with $391 million, or 44.5% of net sales, for the same period one year ago. The current-year sales and

marketing expenses rate increase of 2.0 ppt. was primarily due to deleveraging impact of an 18% net sales decline offset

by a 14% decrease in expenses including 19% lower media spend.

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| **23 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

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*General and administrative expenses*

General and administrative (G&A) expenses totaled $68 million, or 9.5% of net sales, for the six months ended June 28,

2025, compared with $79 million, or 8.9% of net sales, in the prior-year period. The $11 million decrease in G&A

expenses consisted of: (i) a $7.5 million year-over-year decrease in company-wide, performance-based incentive

compensation and (ii) a $2.0 million decrease in depreciation and amortization; and (iii) a $1.5 million decrease in

employee compensation; offset by a (iv) a $0.6 million increase in professional and consulting fees primarily related to

proxy contest and CEO search costs that occurred during the first quarter of 2025. The G&A expenses rate increased by

0.6 ppt. in the current-year period, compared with the same period one year ago due to the deleveraging impact of

the 18% net sales decrease.

*Research and development expenses*

Research and development (R&D) expenses decreased by 15% to $20 million for the six months ended June 28, 2025,

compared with $24 million for the same period one year ago on lower outside services and headcount. 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 decreased to $23 million for the six months ended June 28, 2025, compared with $25 million for

the same period one year ago. The $2 million decrease was primarily driven by a lower weighted-average interest rate

compared with the same period one year ago.

*Restructuring costs*

Restructuring costs for the six months ended June 28, 2025 were $8 million, compared with $12 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 and are included in the

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

additional $8 million of restructuring costs to be incurred through the remainder of 2025, 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 totaled $12.6 million for the six months ended June 28, 2025, compared with income tax benefit of

$0.4 million for the same period one year ago.

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. A valuation allowance of $14 million

that was recorded during the six months ended June 28, 2025. The valuation allowance primarily related to deferred tax

assets on interest expense that are more likely than not to not be realized. The Company continues to assess the need

for the valuation allowance and will make adjustments when appropriate.

---

| | |
|:---|:---|
| **24 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**Liquidity and Capital Resources**

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

$673 million revolving credit facility, as amended. As of June 28, 2025, the Company does not have any off-balance

sheet financing other than its $7 million in outstanding letters of credit. The cash generated from ongoing operations

and cash available under the revolving credit facility are expected to be adequate to maintain operations, and fund

anticipated expansion, strategic initiatives and contractual obligations such as lease payments and capital commitments

for new retail stores for the foreseeable future.

Cash and cash equivalents totaled $1.3 million and $2.0 million at June 28, 2025 and December 28, 2024, respectively.

Significant changes in cash and cash equivalents during the six months ended June 28, 2025 primarily consisted of

$1 million of cash provided by operating activities, $11 million of cash used in investing activities, a $12 million increase

in short-term borrowings, offset by $2 million used for debt issuance costs.

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

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Total cash provided by (used in) : |  |  |
| Operating activities | $1.2 | $23.5 |
| Investing activities | (11.3) | (17.0) |
| Financing activities | 9.5 | (7.0) |
| Net decrease in cash and cash equivalents | $(0.6) | $(0.5) |

---

Net cash provided by operating activities for the six months ended June 28, 2025 was $1 million, compared with net

cash provided by operating activities of $24 million for the six months ended June 29, 2024. Significant components of

the year-over-year change in cash provided by operating activities included: (i) a $21 million year-over-year increase in

net loss; (ii) a $17 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; (iii) a

$16 million fluctuation in inventory as last year benefited from reduction in inventory levels driven by operational

improvements; (iv) a $5 million decrease in depreciation and amortization due to recent lower capital spending levels

and restructuring related fixed asset impairments, and (iv) a $5 million fluctuation in accounts receivable due to lower

sales volumes and timing of orders; offset by (v) a $27 million fluctuation in accounts payable due to lower expenses in

the current year and timing of payments; (vi) a $12 million fluctuation in prepaid expenses.

Net cash used in investing activities for the six months ended June 28, 2025 was $11 million, compared with $17 million

for the six months ended June 29, 2024. Cash used to purchase property and equipment was $8 million for the six

months ended June 28, 2025, compared with $14 million for the same period one year ago. In addition, the Company

used $3 million cash for payment to secure contractual rights during the six months ended June 29, 2024.

Net cash provided by financing activities was $10 million for the six months ended June 28, 2025, compared with net

cash used in financing activities of $7 million for the same period one year ago. Short-term borrowings increased by

$12 million during the current-year period due to an $17 million increase in borrowings under the revolving credit facility

to $564 million and a $5 million decrease in book overdrafts, which are included in the net change in short-term

borrowings. During the six months ended June 28, 2025, the Company used $2 million of cash for debt issuance costs

related to the credit facility amendment during the first quarter of 2025. During both the six months ended June 28,

2025 and June 29, 2024, the Company repurchased $1 million of its stock in connection with the vesting of employee

restricted stock awards.

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

repurchase program. At June 28, 2025, 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.

---

| | |
|:---|:---|
| **25 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>

At June 28, 2025, the Company had $564 million of borrowings under its revolving credit facility, $7 million in

outstanding letters of credit and net liquidity available under the credit facility of $102 million. Total availability under its

revolving credit facility was $673 million, which amortizes by $2.5 million per quarter through December 2026. At

June 28, 2025, the Company's leverage ratio as defined in the credit agreement was 4.6x versus the permissible net

leverage ratio of 4.75x, the weighted-average interest rate on borrowings under the credit facility was 7.9% and the

Company was in compliance with all financial covenants.

**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, CEO transition/proxy contest costs 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** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Net loss | $(25012) | $(5051) | $(41459) | $(40039) |
| Income tax expense (benefit) | 13203 | (1099) | 7830 | (10730) |
| Interest expense | 11734 | 12270 | 46614 | 48214 |
| Depreciation and amortization | 13697 | 16347 | 59590 | 69676 |
| Stock-based compensation | 1549 | 3992 | 8835 | 13073 |
| Restructuring costs <sup>(1)</sup> | 8332 | 1819 | 14039 | 28147 |
| CEO transition/Proxy contest costs<sup>(2)</sup> | 53 |  | 2825 |  |
| Asset impairments |  |  | 1220 | 490 |
| Adjusted EBITDA | $23556 | $28278 | $99494 | $108831 |

---

**_____________________**

<sup>(1)</sup> Represents costs related to business restructuring actions initiated in the fourth quarter of fiscal 2023.

<sup>(2)</sup> Represents costs related to CEO transition activities and proxy contest costs of $0.1 million and $0, respectively, for the three months ended

June 28, 2025 and $0.8 million and $2.0 million, respectively, for the trailing twelve months ended June 28, 2025. These costs were both initiated in

the fourth quarter of fiscal 2024.

*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):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** | **Trailing-Twelve**<br>**Months Ended** | **Trailing-Twelve**<br>**Months Ended** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>| **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Net cash provided by (used in) operating <br>activities<br>| $1196 | $23518 | $(9228) | $(4230) |
| Subtract: Purchases of property and <br>equipment<br>| 8052 | 14075 | 18796 | 41232 |
| Free cash flow | $(6856) | $9443 | $(28024) | $(45462) |

---

---

| | |
|:---|:---|
| **26 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**Non-GAAP Data Reconciliations (continued)**

*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** |
| | **June 28,**<br>**2025**<br>| **June 29,**<br>**2024**<br>|
| Adjusted net operating profit after taxes (Adjusted NOPAT) |  |  |
| Operating income | $12983 | $(2555) |
| Add: Operating lease expense <sup>(1)</sup> | 25535 | 27750 |
| Less: Income taxes <sup>(2)</sup> | 1500 | (6104) |
| Adjusted NOPAT | $40018 | $19091 |
| Average adjusted invested capital |  |  |
| Total deficit | $(480688) | $(446964) |
| Add: Long-term debt <sup>(3)</sup> | 564101 | 540480 |
| Add: Operating lease obligations <sup>(4)</sup> | 369794 | 408724 |
| Total adjusted invested capital at end of period | $453207 | $502240 |
| Average adjusted invested capital <sup>(5)</sup> | $477676 | $509369 |
| Adjusted return on invested capital (Adjusted ROIC) <sup>(6)</sup> | 8.4% | 3.7% |

---

___________________________

<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 (3.9)% and 24.2% for June 28, 2025 and June 29, 2024, 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.

**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

December 28, 2024. There were no significant changes in the Company's critical accounting policies since the end of

fiscal 2024.

---

| | |
|:---|:---|
| **27 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_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

$5.9 million based on the $564 million of borrowings under the credit facility at June 28, 2025. 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

June 28, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control

over financial reporting.

---

| | |
|:---|:---|
| **28 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**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** <br>**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 Purchased** <br>**Under the Plans** <br>**or Programs**<sup>(3)</sup><br>|
| March 29, 2025 through April 26, 2025 | 4459 | $5.03 |  | $348071000 |
| April 27, 2025 through May 24, 2025 | 426 | $8.87 |  | $348071000 |
| May 25, 2025 through June 28, 2025 | 33573 | $10.57 |  | $348071000 |
| Total | 38458 | $9.91 |  | $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 June 28, 2025.

<sup>(2)</sup> In connection with the vesting of employee restricted stock grants, the Company repurchased 38,458 shares of its common stock at a cost of

$0.4 million during the three months ended June 28, 2025.

<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 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_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 June 28, 2025, 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.

---

| | |
|:---|:---|
| **30 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_7)</u>

**ITEM 6. EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit**<br>**Number**<br>| **Description** |
| 10.1\* | <u>[Fourth Amendment, dated May 27, 2025, to Lease Agreement between Legacy 1001 Minneapolis](a2025-q2ex101.htm)</u><br><u>[Venture, LLC, as Landlord, and Sleep Number Corporation, as Tenant, dated October 21, 2016, as](a2025-q2ex101.htm)</u><br><u>[amended](a2025-q2ex101.htm)</u><br>|
| 10.2<sup>†</sup> | <u>[Amendment No. 2 to the Sleep Number Corporation 2020 Equity Incentive Plan (incorporated by](https://www.sec.gov/Archives/edgar/data/827187/000082718725000070/amendmentno2tothesleepnumb.htm)</u><br><u>[reference to Exhibit 10.1 contained in Sleep Number's Current Report on Form 8-K filed May 29, 2025](https://www.sec.gov/Archives/edgar/data/827187/000082718725000070/amendmentno2tothesleepnumb.htm)</u><br><u>[(File No. 000-25121))](https://www.sec.gov/Archives/edgar/data/827187/000082718725000070/amendmentno2tothesleepnumb.htm)</u><br>|
| 10.3<sup>†</sup> | <u>[Interim Chief Financial Officer Agreement (incorporated by reference to Exhibit 10.1 contained in Sleep](https://www.sec.gov/Archives/edgar/data/827187/000082718725000084/exhibit101-interimcfocontr.htm)</u><br><u>[Number's Current Report on Form 8-K filed July 22, 2025 (File No. 000-25121))](https://www.sec.gov/Archives/edgar/data/827187/000082718725000084/exhibit101-interimcfocontr.htm)</u><br>|
| 31.1\* | <u>[Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](a2025-q2ex311.htm)</u> |
| 31.2\* | <u>[Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](a2025-q2ex312.htm)</u> |
| 32.1\* | <u>[Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section](a2025-q2ex321.htm)</u><br><u>[1350](a2025-q2ex321.htm)</u><br>|
| 32.2\* | <u>[Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section](a2025-q2ex322.htm)</u><br><u>[1350](a2025-q2ex322.htm)</u><br>|
| 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.

---

| | |
|:---|:---|
| **31 \| 2Q 2025 FORM 10-Q** | **SLEEP NUMBER CORPORATION** |

---

<u>[**Table of Contents**](#i7ed2920c1cf64540a12de794b278b096_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: | July 31, 2025 | By: | /s/ Linda Findley |
|  |  |  | Linda Findley |
|  |  |  | Chief Executive Officer |
|  |  |  | (principal executive officer) |
|  |  | By: | /s/ Kelly F. Baker |
|  |  |  | Kelly F. Baker |
|  |  |  | Interim Principal Accounting Officer |
|  |  |  | (principal accounting officer) |

---

## Exhibit 10.1

Exhibit 10.1

**FOURTH AMENDMENT TO LEASE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**THIS FOURTH AMENDMENT TO LEASE** (this "Fourth Amendment" or this "Amendment") by and between Legacy 1001 MINNEAPOLIS VENTURE, LLC, a Delaware limited liability company ("Landlord"), and SLEEP NUMBER CORPORATION, a Minnesota corporation ("Tenant"), is executed as of this 27th day of May, 2025 (the "Fourth Amendment Effective Date").

**WITNESSETH**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**WHEREAS**, Landlord and Tenant have entered into that certain Lease dated as of October 21, 2016, subsequently amended by the First Amendment (the "First Amendment") to Lease dated June 1, 2017, Second Amendment to Lease dated as May 25, 2023, and Third Amendment to Lease with an effective date of December 26, 2024 (collectively the "Lease") for space in the building commonly known as 1001 3<sup>rd</sup> Avenue South, Minneapolis, Minnesota 55404 (the "Building");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**WHEREAS**, Landlord and Tenant have agreed to amend the Lease so as to permit Landlord the ability to terminate all or a portion of the Fourth Floor of the Premises upon written notice as further provided herein; and

 **NOW, THEREFORE**, for and in consideration of the mutual covenants contained herein and in the 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 Lease as follows:

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 Lease.

2.**PARTIAL SURRENDER OF PREMISES**. Solely in respect of either or both "wings" of the Fourth Floor of the Premises (which is approximately 26,309 rentable square feet) depicted in the dark blue shaded areas on Exhibit A (the "Surrendered Portion of the Premises") and labeled as "Wing 1" and "Wing 2" on Exhibit A, Landlord shall have the unilateral (and revocable) right upon not less than thirty (30) days prior written notice to Tenant (each a "Surrender Notice") to cause the surrender of one or both of such wings by Tenant such that the Leased Premises shall no longer include the applicable Surrendered Portion of the Premises following the Effective Date (as defined below). For the avoidance of doubt, the Landlord may deliver one or more Surrender Notices that may include all or a portion of Wing 1 and/or Wing 2 (but not in the aggregate for more than the entirety of the Surrendered Portion of the Premises). The Surrender Notice shall set forth the effective date of such forced surrender, which shall not be less than thirty (30) days after the date of the Surrender Notice, and identify the applicable Surrendered Portion of the Premises (the "Effective Date"). On or prior to the Effective Date, Tenant shall cause the applicable portion of the Surrendered Portion of the Premises to be returned to Landlord in accordance with Section 5.4 of the Lease. From and after the Effective Date, (i) Tenant shall automatically be deemed to have surrendered and forfeited all rights to possess and/or access the Surrendered Portion of the Premises subject to the Surrender Notice for the remainder of the Lease Term and (ii) no Base Rent

------

or Additional Rent shall be due and owing in respect of the Surrendered Portion of the Premises subject to the Surrender Notice for the remainder of the Lease Term, by reducing the amount of Base Rent and Additional Rent on a pro rata basis based on the applicable square footage of the Surrendered Portion of the Premises relative to the Premises then being paid by Tenant (without reduction to Base Rent or Additional Rent for the Surrendered Portion of the Premises to the extent subject to any rent abatement for such surrendered portion). For the avoidance of doubt, (i) nothing herein shall restrict or impair Landlord's rights and remedies in respect of a default by Tenant under the Lease that is beyond the expiration of any applicable cure period as to the space other than the Surrendered Portion of the Premises, and (ii) no portion of the Premises other than the Surrendered Portion of the Premises shall be subject to surrender in respect of this Fourth Amendment.

3.**EFFECT OF AMENDMENT**. Except as expressly amended by this Fourth 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.

4.**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.

5.**COUNTERPARTS**. This 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.

6.**GOVERNING LAW**. The terms and conditions of this Amendment shall be governed by the applicable laws of the State of Minnesota.

7.**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 Amendment or any exhibits or amendments hereto.

8.**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.

------

9.**TIME OF ESSENCE**. Landlord and Tenant agree that time is of the essence of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;

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

 **L A N D L O R D:**

**Legacy 1001 Minneapolis Venture LLC,**

a Delaware limited partnership

&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;&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: /s/ <u>Jay Rappaport</u>____________________________

&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;&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;&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;&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;Name: Jay Rappaport

&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;&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;&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;&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;Name: Jay Rappaport

&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;&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;&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;&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;Title: Managing Partner

&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;&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;&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;&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;Date of Execution: <u>5/29/2025</u>__________________

 **T E N A N T:**

**SLEEP NUMBER CORPORATION**

a Minnesota corporation

&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;&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: <u>/s/ Joel Laing</u>_______________________________

&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;&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;&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;&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;Name: Joel Laing

&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;&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;&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;&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;Title: VP, Chief Accounting Officer

&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;&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;&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;&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;Date of Execution: <u>5/27/2025</u>__________________

------

![imagea.jpg](imagea.jpg)

## 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;July 31, 2025 | |
| | /s/ Linda Findley |
| | Linda Findley |
| | Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**Certification by Chief Financial Officer**

I, Robert P. Ryder, 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;July 31, 2025 | |
| | /s/ Robert P. Ryder |
| | Robert P. Ryder |
| | Interim 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 June 28, 2025, 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;July 31, 2025 | |
| | /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 June 28, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Robert P. Ryder, Interim 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;July 31, 2025 | |
| | /s/ Robert P. Ryder |
| | Robert P. Ryder |
| | Interim 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>