Product Warranties

9 Months Ended

Jan. 28, 2012

Note 7: Product Warranties

We accrue an estimated liability for product warranties at the time the revenue is recognized. We estimate future warranty claims based on claim experience and any additional anticipated future costs on previously sold products. Our liability estimates incorporate the cost of repairs including materials consumed, labor and overhead amounts necessary to perform the repair and any costs associated with delivery of the repaired product to the customer. Over 90% of our warranty liability relates to our Upholstery Group as we generally warrant our products against defects for one year on fabric and leather, up to five years for padding and up to a lifetime on certain mechanisms and frames. Considerable judgment is used in making our estimates. Differences between actual and estimated costs are recorded when the differences are known.

A reconciliation of the changes in our product warranty liability for the quarter and nine months ended January 28, 2012, and January 22, 2011, is as follows:

	Third Quarter Ended						Nine Months Ended
(Unaudited, amounts in thousands)	1/28/12			1/22/11			1/28/12			1/22/11
Balance as of the beginning of the period	$	13,818		$	14,859		$	13,854		$	14,773
Accruals during the period		3,388			3,436			10,610			10,146
Accrual adjustments		0			(1,115	)		0			(1,115	)
Settlements during the period		(3,487	)		(3,372	)		(10,745	)		(9,996	)
Balance as of the end of the period	$	13,719		$	13,808		$	13,719		$	13,808

During the third quarter of fiscal 2011, we reduced our product warranty liability by $1.1 million. This reduction was the result of the redesign of a mechanism that had historically experienced high claims activity.

As of January 28, 2012, and April 30, 2011, $7.8 million and $8.0 million, respectively, of our product warranty liability was included in accrued expenses and other current liabilities in our consolidated balance sheet, with the remainder included in other long-term liabilities. The accruals recorded during the periods presented primarily reflect charges related to warranties issued during the respective periods.