Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 29, 2018 | Oct. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | National Vision Holdings, Inc. | |
Entity Central Index Key | 1,710,155 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 29, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 77,164,296 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 48,881 | $ 4,208 |
Accounts receivable, net | 38,875 | 43,193 |
Inventories | 99,280 | 91,151 |
Prepaid expenses and other current assets | 24,065 | 23,925 |
Total current assets | 211,101 | 162,477 |
Property and equipment, net | 340,626 | 304,132 |
Other assets: | ||
Goodwill | 792,744 | 792,744 |
Other assets | 9,052 | 10,988 |
Total non-current assets | 1,449,593 | 1,421,314 |
Total assets | 1,660,694 | 1,583,791 |
Current liabilities: | ||
Accounts payable | 30,885 | 35,708 |
Other payables and accrued expenses | 81,465 | 77,611 |
Unearned revenue | 23,035 | 27,739 |
Deferred revenue | 53,951 | 62,993 |
Current maturities of long-term debt | 7,863 | 7,258 |
Total current liabilities | 197,199 | 211,309 |
Long-term debt, less current portion and debt discount | 566,932 | 561,980 |
Other non-current liabilities: | ||
Deferred revenue | 20,723 | 31,222 |
Other liabilities | 42,291 | 46,044 |
Deferred income taxes, net | 75,378 | 73,648 |
Total other non-current liabilities | 138,392 | 150,914 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 77,136 and 74,654 shares issued as of September 29, 2018 and December 30, 2017, respectively; 77,082 and 74,654 shares outstanding as of September 29, 2018 and December 30, 2017, respectively | 770 | 746 |
Additional paid-in capital | 659,480 | 631,798 |
Accumulated other comprehensive loss | (1,059) | (9,868) |
Retained earnings | 100,113 | 37,145 |
Treasury stock, at cost; 54 and 28 shares as of September 29, 2018 and December 30, 2017, respectively | (1,133) | (233) |
Total stockholders’ equity | 758,171 | 659,588 |
Total liabilities and stockholders’ equity | 1,660,694 | 1,583,791 |
Trademarks and trade names | ||
Other assets: | ||
Intangible assets | 240,547 | 240,547 |
Other intangible assets, net | ||
Other assets: | ||
Intangible assets | $ 66,624 | $ 72,903 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 29, 2018 | Dec. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (shares) | 200,000,000 | 200,000,000 |
Common stock, issued (shares) | 77,136,000 | 74,654,000 |
Common stock, outstanding (shares) | 77,082,000 | 74,654,000 |
Treasury stock (shares) | 54,000 | 28,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Total net revenue | $ 387,425 | $ 346,089 | $ 1,180,932 | $ 1,053,489 |
Costs applicable to revenue (exclusive of depreciation and amortization): | ||||
Total costs applicable to revenue | 182,588 | 162,358 | 540,101 | 484,573 |
Operating expenses: | ||||
Selling, general and administrative expenses | 184,424 | 151,251 | 519,564 | 445,714 |
Depreciation and amortization | 19,080 | 15,352 | 54,080 | 44,404 |
Asset impairment | 2,137 | 0 | 2,137 | 1,000 |
Litigation settlement | 0 | 0 | 0 | 7,000 |
Other expense, net | 411 | 568 | 829 | 744 |
Total operating expenses | 206,052 | 167,171 | 576,610 | 498,862 |
(Loss) income from operations | (1,215) | 16,560 | 64,221 | 70,054 |
Interest expense, net | 9,407 | 14,851 | 28,144 | 40,965 |
Debt issuance costs | 0 | 0 | 0 | 2,702 |
(Loss) earnings before income taxes | (10,622) | 1,709 | 36,077 | 26,387 |
Income tax (benefit) provision | (16,438) | 163 | (7,863) | 9,267 |
Net income | $ 5,816 | $ 1,546 | $ 43,940 | $ 17,120 |
Earnings per share: | ||||
Basic (in usd per share) | $ 0.08 | $ 0.03 | $ 0.58 | $ 0.30 |
Diluted (in usd per share) | $ 0.07 | $ 0.03 | $ 0.56 | $ 0.29 |
Weighted average shares outstanding: | ||||
Basic (shares) | 76,118 | 56,414 | 75,361 | 56,363 |
Diluted (shares) | 79,710 | 58,459 | 78,571 | 58,281 |
Comprehensive income: | ||||
Net income | $ 5,816 | $ 1,546 | $ 43,940 | $ 17,120 |
Unrealized gain on hedge instruments | 2,267 | 2,255 | 11,842 | 2,176 |
Tax provision of unrealized gain on hedge instruments | (580) | (872) | (3,033) | (843) |
Comprehensive income | 7,503 | 2,929 | 52,749 | 18,453 |
Products | ||||
Revenue: | ||||
Total net revenue | 319,312 | 283,648 | 977,497 | 867,192 |
Costs applicable to revenue (exclusive of depreciation and amortization): | ||||
Total costs applicable to revenue | 130,951 | 115,752 | 389,560 | 349,099 |
Services and plans | ||||
Revenue: | ||||
Total net revenue | 68,113 | 62,441 | 203,435 | 186,297 |
Costs applicable to revenue (exclusive of depreciation and amortization): | ||||
Total costs applicable to revenue | $ 51,637 | $ 46,606 | $ 150,541 | $ 135,474 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 43,940 | $ 17,120 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 54,080 | 44,404 |
Amortization of loan costs | 1,287 | 3,075 |
Asset impairment | 2,137 | 1,000 |
Deferred income tax (benefit) expense | (8,060) | 8,922 |
Non-cash stock option compensation | 13,749 | 3,140 |
Non-cash inventory adjustments | 2,491 | 4,695 |
Bad debt expense | 4,981 | 4,513 |
Debt issuance costs | 0 | 2,702 |
Other | 1,555 | 388 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (663) | (9,254) |
Inventories | (10,620) | (7,001) |
Other assets | 381 | 2,487 |
Accounts payable | (4,823) | (5,838) |
Deferred revenue | 6,235 | 9,022 |
Other liabilities | 9,282 | 16,876 |
Net cash provided by operating activities | 115,952 | 96,251 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (78,813) | (67,135) |
Purchase of investments | 0 | (1,500) |
Other | 136 | 125 |
Net cash used for investing activities | (78,677) | (68,510) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 0 | 173,712 |
Proceeds from exercise of stock options | 0 | 1,004 |
Proceeds from exercise of stock options | 14,032 | 1,088 |
Principal payments on long-term debt | (4,275) | (6,236) |
Purchase of treasury stock | (900) | 0 |
Payments on capital lease obligations | (1,256) | (710) |
Debt issuance costs | 0 | (2,702) |
Dividend to stockholders | 0 | (170,983) |
Net cash provided by (used for) financing activities | 7,601 | (4,827) |
Net change in cash, cash equivalents and restricted cash | 44,876 | 22,914 |
Cash, cash equivalents and restricted cash, beginning of year | 5,193 | 5,687 |
Cash, cash equivalents and restricted cash, end of period | 50,069 | 28,601 |
Reconciliation of Cash, Cash Equivalents, and Restricted Cash: | ||
Total cash, cash equivalents and restricted cash | $ 5,193 | $ 5,687 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 29, 2018 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Nature of Operations National Vision Holdings, Inc. (“NVHI,” the “Company,” “we,” “our,” or “us”) is a holding company whose operating subsidiaries include its indirect wholly owned subsidiary, National Vision, Inc. (“NVI”) and NVI’s direct wholly owned subsidiaries. The Company is a leading value retailer of eyeglasses and contact lenses in the United States and its territories. We operated 1,067 and 1,013 retail optical locations as of September 29, 2018 and December 30, 2017 , respectively, through our five store brands, America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on U.S. Army/Air Force military bases and within Fred Meyer stores, and our management and services arrangement with Walmart (“legacy”). Basis of Presentation We prepared the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and, therefore, do not include all information and disclosures required by U.S. GAAP for complete consolidated financial statements. The condensed consolidated balance sheet as of December 30, 2017 has been derived from the audited consolidated balance sheet for the fiscal year then ended. These unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 29, 2018 , the consolidated results of operations and comprehensive income for the three and nine months ended September 29, 2018 and September 30, 2017 and its statements of cash flows for the nine months ended September 29, 2018 and September 30, 2017 . Certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted; however, we believe that the disclosures included herein are adequate to make the information presented not misleading. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the fiscal year ended December 30, 2017 included in the Company’s Annual Report on Form 10-K for fiscal year 2017 filed on March 8, 2018. The Company’s significant accounting policies are set forth in Note 1 within those consolidated financial statements. We use the same accounting policies in preparing interim condensed consolidated financial information and annual consolidated financial statements. There were no changes to our significant accounting policies during the nine months ended September 29, 2018 , except for the adoption of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers and ASU No. 2016-18, Restricted Cash . See “Adoption of New Accounting Pronouncements” below for further discussion. Changes to stockholders’ equity associated with changes in unrealized gains and losses on cash flow hedging instruments, exercises of stock options, and the cumulative effect of adoption of ASU No. 2014-09 are discussed in Note 3. “Fair Value Measurements of Financial Assets and Liabilities,” Note 4. “Stock Incentive Plan,” and in Note 6. “Revenue from Contracts with Customers,” respectively. The condensed consolidated financial statements include our accounts and those of our subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Year Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2018 contains 52 weeks and will end on December 29, 2018 . All three and nine month periods presented herein contain 13 and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. Seasonality The consolidated results of operations for the three and nine months ended September 29, 2018 and September 30, 2017 are not necessarily indicative of the results to be expected for the full fiscal year due to seasonality and uncertainty of general economic conditions that may impact our key end markets. Historically, our business has realized a higher portion of net revenue, income from operations, and cash flows from operations in the first fiscal quarter, and a lower portion of net revenue, income from operations, and cash flows from operations in the fourth fiscal quarter. The seasonally larger first quarter is attributable primarily to the timing of our customers’ personal income tax refunds and annual health insurance program start or reset periods. Seasonality related to fourth quarter holiday spending by retail customers generally does not impact our business. Our quarterly consolidated results can also be affected by the timing of new store openings, store closings, and certain holidays. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Asset Impairment We evaluate impairment of long-lived tangible store assets at an individual store level, which is the lowest level at which independent cash flows can be identified, when events or conditions indicate the carrying value of such assets may not be recoverable. If the store's projected undiscounted cash flows expected to be generated by the related assets over the remaining useful life are less than the carrying value of the related assets, we then measure impairment based on a discounted cash flow model (Level 3 inputs) and record an impairment charge as the difference between carrying value and estimated fair value. During the three months ended September 29, 2018 , we identified indicators of impairment in our long-lived tangible store assets classified as held and used and determined that assets belonging to certain stores with a carrying amount of $2.2 million were no longer recoverable due to underperformance. As a result of our interim tests, we recorded a $2.1 million impairment charge for the three and nine months ended September 29, 2018 . The remaining estimated fair value of the impaired assets was $0.1 million . Income Taxes Our income tax benefit for the three months ended September 29, 2018 reflected a benefit associated with pre-tax losses at our statutory federal and state rate of 25.6% , and an additional discrete benefit of $13.9 million associated primarily with the exercise of stock options. In comparison, the income tax rate associated with the three months ended September 30, 2017 primarily reflected the rate necessary to achieve our 35.2% expected annual effective income tax rate (“ETR”) for the nine months ended September 30, 2017 , as discrete items did not materially impact the rates used for those periods. Our income tax benefit for the nine months ended September 29, 2018 reflected income tax expense at our statutory federal and state rate of 25.6% , offset by a discrete benefit of $18.0 million associated primarily with the exercise of stock options. Pursuant to SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Legislation, the Company recognized provisional effects of the enactment of the Tax Cuts and Jobs Act of 2017 for which measurement could be reasonably estimated as of December 30, 2017 . For the nine months ended September 29, 2018 , the Company recorded adjustments to the provisional estimates related to depreciation expense and believes the remeasurement of its 2017 provisional amount is complete. The adjustments to the provisional estimates of December 30, 2017 did not materially impact the ETR of the Company during nine months ended September 29, 2018 . Adoption of New Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU No. 2014-09 provides new guidance related to the core principle that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. Under the new guidance, there is a five-step model to apply to revenue recognition, consisting of: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company adopted this new guidance in the first quarter of 2018 using the modified retrospective transition method. The adoption resulted in a $14.0 million and $11.8 million decrease in current and non-current deferred revenue, respectively, for certain contracts where we satisfy performance obligations over time and a related $6.8 million increase in deferred income tax liability, resulting in a net $19.0 million increase to retained earnings on the condensed consolidated balance sheet as of December 31, 2017. Our results of operations for the reported periods after December 31, 2017 are presented under this amended guidance, while prior period amounts are not adjusted and continue to be reported in accordance with historical accounting guidance. Adoption of this new guidance did not result in significant changes to our accounting policies, business processes, systems or controls, or have a material impact on our results of operations and cash flows. The impact of adopting the amended guidance primarily relates to the timing of revenue recognition for our eyecare club memberships, which comprised approximately 3% of our consolidated net revenue during the most recent three fiscal years. See Note 6. “Revenue From Contracts with Customers” for additional information. Restricted Cash In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash . This new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted this new guidance during the first quarter of 2018 using full retrospective application to each period presented. The adoption of this new guidance did not have a material effect on the Company’s financial condition, results of operations, or cash flows. Future Adoption of Accounting Pronouncements Leases In February 2016, the FASB issued ASU No. 2016-02, Leases . This new guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with such classification affecting the pattern of expense recognition in the statement of operations. Disclosure of key information about leasing arrangements will also be required. This new guidance is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within that fiscal year. In July 2018, the FASB issued ASU 2018-11, “ Leases: Targeted Improvements ,” as an amendment to ASU 2016-02, “ Leases ,” which provides entities with an additional transition method to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We will adopt this new guidance in the first quarter of 2019. During the first quarter of 2018, we established a cross-functional team to evaluate and implement the new guidance. The Company made progress towards implementation of the new guidance including surveying the Company’s businesses, assessing the Company’s portfolio of leases and compiling a central repository of active leases. The Company evaluated key policy elections and considerations under the new guidance and is currently updating its accounting policies and internal controls to address the new guidance requirements, including disclosures. Additionally, the Company upgraded its lease accounting software solution to support the new reporting requirements. Significant progress has been made on extracting and loading lease data elements required for lease accounting into the software solution and testing of the lease management system is nearing completion. The Company does not expect the adoption of this new guidance to have a significant impact on the recognition, measurement or presentation of lease expenses within our condensed consolidated statements of operations. While the Company continues to assess all potential impacts of the new standard, we currently believe the most significant impact relates to recording lease assets and related liabilities on the condensed consolidated balance sheets. Share Based Payment Accounting In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . This new guidance expands the scope of Topic 718 to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This new guidance is effective for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is assessing this new guidance but does not expect it to have a material impact on its statement of financial condition, results of operations, or cash flows. Cloud Computing In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This new guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. The amendments in this new guidance may be applied either retrospectively or prospectively. The Company is in the process of assessing the new guidance. |
Details of Certain Balance Shee
Details of Certain Balance Sheet Accounts | 9 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Details of Certain Balance Sheet Accounts | Details of Certain Balance Sheet Accounts In thousands As of As of Accounts receivable, net: Trade receivables $ 24,500 $ 28,862 Credit card receivables 9,289 10,459 Tenant improvement allowances receivable 4,984 4,794 Other receivables 2,626 2,936 Allowance for uncollectible accounts (2,524 ) (3,858 ) $ 38,875 $ 43,193 In thousands As of As of Inventories: Raw materials and work in process (1) $ 45,379 $ 43,953 Finished goods 53,901 47,198 $ 99,280 $ 91,151 (1) Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, the Company does not separately present raw materials and work in process. In thousands As of As of Property and equipment, net: Land and building $ 3,632 $ 3,608 Equipment 252,549 220,088 Furniture and fixtures 47,423 42,708 Leasehold improvements 178,346 155,369 Construction in progress 29,806 18,375 Property under capital leases 22,334 11,756 534,090 451,904 Less accumulated depreciation 193,464 147,772 $ 340,626 $ 304,132 2. Details of Certain Balance Sheet Accounts (continued) In thousands As of As of Other payables and accrued expenses: Employee compensation and benefits $ 32,153 $ 21,134 Advertising 1,524 2,900 Self-insurance reserves 7,102 6,854 Reserves for customer returns and remakes 6,502 4,565 Capital expenditures 9,060 10,782 Legacy management and services agreement 5,319 6,000 Fair value of derivative liabilities 3,050 6,969 Sales and use taxes 1,130 1,218 Supplies and other store support expenses 2,638 3,014 Litigation settlements 3,838 3,942 Other 9,149 10,233 $ 81,465 $ 77,611 In thousands As of As of Other non-current liabilities: Fair value of derivative liabilities $ 1,230 $ 9,155 Tenant improvements (1) 25,742 22,894 Deferred rental expenses 8,463 7,246 Self-insurance reserves 4,915 4,564 Other 1,941 2,185 $ 42,291 $ 46,044 (1) Obligations for tenant improvements are amortized as a reduction of rental expense over the respective lease term. |
Fair Value Measurements of Fina
Fair Value Measurements of Financial Assets and Liabilities | 9 Months Ended |
Sep. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Financial Assets and Liabilities | Fair Value Measurements of Financial Assets and Liabilities The Company uses a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect pricing based upon a reporting entity’s own market assumptions. Under U.S. GAAP, the Company is required to (a) measure certain assets and liabilities at fair value or (b) disclose the fair values of certain assets and liabilities recorded at cost. Accounting standards define fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated assuming the transaction occurs in the principal or most advantageous market for the asset or liability and includes consideration of non-performance risk and credit risk of both parties. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 - Valuation inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. • Level 2 - Valuation inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 - Valuation inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and Cash Equivalents The carrying amount of cash and cash equivalents approximates fair value due to the short term maturity of the instruments. All cash and cash equivalents are denominated in U.S. currency. Accounts Receivable The carrying amount of accounts receivable approximates fair value due to the short-term nature of those items and the effect of related allowances for doubtful accounts. Accounts Payable and Other Payables and Accrued Expenses The carrying amounts of accounts payable and other payables and accrued expenses approximate fair value due to the short-term nature of those items. Long-term Debt - Credit Agreement Loans under our first lien credit agreement are traded in private markets on a less-than-daily basis. Fair value is based on the average of trading prices and bid/ask quotes around period-end (Level 2 inputs). The estimated fair values of our first lien term loans were $566.5 million and $570.2 million as of September 29, 2018 and December 30, 2017 , respectively, compared to carrying values of $554.3 million and $557.3 million , respectively, which includes the current portion, and is net of unamortized discounts and deferred debt issuance costs. See Note 11. “Subsequent Events,” for details regarding Term Loan A - Joinder and Amendment Agreement completed following the third quarter. Long-term Debt - Capital Leases The fair value of capital lease obligations is based on estimated future contractual cash flows discounted at an appropriate market rate of interest (Level 2 inputs). The estimated fair values of our capital leases were $25.0 million and $14.0 million as of September 29, 2018 and December 30, 2017 , respectively, compared to carrying values of $20.5 million and $12.0 million , respectively. Interest Rate Derivatives The Company is a party to three pay-fixed and receive-floating interest rate swap agreements to offset the variability of cash flows in LIBOR-indexed debt interest payments attributable to changes in the benchmark interest rate from March 13, 2017 to March 13, 2021 related to its current first lien credit agreement. Changes in the cash flows of each derivative have historically been and are expected to be highly effective in offsetting the changes in interest payments on a principal balance equal to the derivative’s notional amount, attributable to the hedged risk. During the three months ended March 31, 2018, in accordance with the original agreements with the counterparties, the notional amount of the first derivative decreased from $175 million to $140 million . There were no other changes in the terms of the arrangements. All of our derivative instruments were deemed to be highly effective to meet the requirements for hedge accounting as of September 29, 2018 . We recognize as assets or liabilities at fair value the estimated amounts we would receive or pay upon a termination of interest rate swaps prior to their scheduled expiration dates. Fair value is based on information that is model-driven and whose inputs are observable (Level 2 inputs). Cumulative unrealized gains and losses on derivative instruments are recorded in accumulated other comprehensive loss (“AOCL”), net of tax. As of September 29, 2018 , the Company expects to reclassify $2.3 million , net of tax, of AOCL into earnings in the next 12 months . See Note 10. “Accumulated Other Comprehensive Loss” for further details. Our cash flow hedge position related to interest rate derivative contracts is as follows: In thousands Notional Amount Final Maturity Date Other Payables and Accrued Expenses Other Liabilities AOCL, Net of Tax (1) As of $ 465,000 March 2021 $ 3,050 $ 1,230 $ 1,059 As of $ 500,000 March 2021 $ 6,969 $ 9,155 $ 9,868 (1) Includes stranded tax benefit of $2.1 million within AOCL from adopting provisions of the Tax Legislation of 2017 during the year ended December 30, 2017. |
Stock Incentive Plan
Stock Incentive Plan | 9 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Incentive Plan | Stock Incentive Plan 2014 Stock Incentive Plan We have reserved an aggregate of 10,988,827 shares of our common stock for issuance under our 2014 Stock Incentive Plan. As of September 29, 2018 , 468,975 shares remained available for future grants. The following presents a roll-forward of stock options for the nine months ended September 29, 2018 : Options issued and outstanding Rollover (1) Service-Based Performance-Based Total Balance, December 30, 2017 169,049 3,822,915 6,524,152 10,516,116 Exercised (67,874 ) (1,117,583 ) (1,260,972 ) (2,446,429 ) Forfeited — (70,185 ) (329,338 ) (399,523 ) Balance, September 29, 2018 101,175 2,635,147 4,933,842 7,670,164 Options vested and exercisable Balance, December 30, 2017 169,049 1,631,023 43,478 1,843,550 Vested — 812,936 2,406,350 3,219,286 Exercised (67,874 ) (1,117,583 ) (1,260,972 ) (2,446,429 ) Forfeited — (4,548 ) — (4,548 ) Balance, September 29, 2018 101,175 1,321,828 1,188,856 2,611,859 (1) Reflects options under the Vision Holding Corp. Amended and Restated 2013 Equity Incentive Plan The weighted average price of exercises during the nine months ended September 29, 2018 was $5.74 , for a total intrinsic value of $81.6 million , resulting in an income tax benefit of $18.0 million . Compensation expense associated with stock options is presented in selling, general, and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations. The Company granted 217,390 performance based stock options to one of our named executive officers that vest as a result of certain profitability targets for fiscal years 2017 to 2021 , of which 20% have vested based on fiscal 2017 results. Vesting of all other performance-based options is conditional upon the achievement by affiliates of Kohlberg Kravis & Co. L.P. (“KKR Sponsor”), with respect to its investment in NVHI, of both a minimum internal rate of return and a minimum multiple of invested capital (“MOIC”) and then increases proportionally as the MOIC increases up to a defined target. During the three months ended September 29, 2018 , we completed an underwritten public offering in which KKR Sponsor and Berkshire Partners LLC and certain management stockholders (“selling stockholders”) sold an aggregate of 16,614,852 shares of our common stock. We did not receive any proceeds from the shares sold by the selling stockholders. The secondary offering constituted a vesting event whereby 40% of the MOIC performance-based options vested. As a result, we incurred $9.5 million of non-cash stock-based compensation expense during the three months ended September 29, 2018 . As a result of this offering, we additionally recorded $4.6 million in long-term incentives, $0.7 million in offering related expenses and $0.9 million in excess payroll taxes associated with exercises of stock options in SG&A during the three months ended September 29, 2018 . 2017 Omnibus Incentive Plan We have reserved an aggregate of 4,000,000 shares of our common stock for issuance under our 2017 Omnibus Incentive Plan. As of September 29, 2018 , there were equity awards representing 174,298 of restricted stock and 92,443 stock options issued and outstanding, and 3,733,259 shares available for future grants. There was no material activity under the 2017 Omnibus Incentive Plan for the nine months ended September 29, 2018 . |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 29, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Transactions With Equity Sponsors We recorded the following fees paid to equity sponsors, which are presented in SG&A in the accompanying condensed consolidated statement of operations, except for $2.3 million in KKR Sponsor fees during the nine months ended September 30, 2017 , which are presented in debt issuance costs. Three Months Ended Nine Months Ended In thousands September 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 KKR Sponsor $ — $ 220 $ — $ 2,993 Berkshire Partners LLC $ — $ 52 $ — $ 156 Equity in Net Assets of Non-Consolidated Investee The Company has an investment in a private start-up company whose principal business is licensing software to eyeglass retailers. Under the equity method of accounting we are required to record our interest in the investee’s reported net income or loss for each reporting period, which is presented in other expense, net in the Company’s condensed consolidated statements of operations. Our interest in the investee’s net losses was $0.4 million and $1.0 million for the three and nine months ended September 29, 2018 and $0.4 million and $0.7 million for the three and nine months ended September 30, 2017 , respectively. After adjusting our investment for our interest in the investee’s reported net losses, our investment balance in the business was $1.4 million and $2.3 million as of September 29, 2018 and December 30, 2017 , respectively, which is included in other assets in the accompanying condensed consolidated balance sheets. In the ordinary course of business we are a licensee of our investee. We recorded licensing fees in SG&A in the accompanying condensed consolidated statements of operations in the amount of $0.2 million during the nine months ended September 29, 2018 and $0.2 million and $0.7 million during the three and nine months ended September 30, 2017 , respectively. No licensing fees were recorded during the three months ended September 29, 2018 . Additionally, on August 29, 2017 , the investee issued a secured convertible promissory note to the Company, in the principal amount of $1.5 million , due on August 29, 2020 , which is included in non-current other assets in the accompanying condensed consolidated balance sheets. Interest income associated with the note was immaterial for the three and nine months ended September 29, 2018 . |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 9 Months Ended |
Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue From Contracts With Customers | Revenue From Contracts With Customers A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under ASU 2014-09, codified in ASC 606, Revenue from Contracts With Customers . As discussed in Note 1, we adopted ASC 606 in the first quarter of fiscal year 2018 using the modified retrospective transition method. All of our revenue is derived from contracts with customers and is reported as net revenue in the condensed consolidated statements of operations. We recognize revenue from the products and services we provide in accordance with the five-step process outlined in ASC 606. We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer in an amount that reflects the consideration that we expect to receive. This revenue can be recognized at a point in time or over time. We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized. When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (accounts receivable) or a contract liability (deferred revenue or unearned revenue), as appropriate. See further discussion related to contract assets and liabilities below. The majority of our revenue arrangements generally consist of a single performance obligation to transfer promised goods or services. Based on our evaluation process and review of our contracts with customers, in most circumstances the timing and amount of revenue recognized under the new guidance is consistent with our past revenue recognition policy. The majority of our annual revenues are recognized either at the point of sale or upon delivery and customer acceptance, paid for at the time of sale in cash, credit card, or on account with health care plans and programs located throughout the United States (“managed care”) having terms generally between 14 and 120 days, with most paying within 90 days. Revenues recognized over time primarily include product protection plans, eyecare club memberships and management fees earned from our legacy partner. Refer to Note 8 for the Company’s disaggregation of net revenue by reportable segment. As the reportable segments are aligned by similar economic factors, trends and customers, this disaggregation view best depicts how the nature, amount, and uncertainty of revenue and cash flows are affected by economic factors. The following disaggregation of revenues depicts our revenues based on the timing of revenue recognition. Disaggregation of Revenues: In thousands Three Months Ended Nine Months Ended Revenues recognized at a point in time $ 352,245 $ 1,075,355 Revenues recognized over time 35,180 105,577 Total net revenue $ 387,425 $ 1,180,932 Revenues Recognized at a Point in Time The revenues include 1) retail sales of prescription and non-prescription eyewear, contact lenses, and related accessories to retail customers (including those covered by managed care), 2) eye exams and 3) wholesale sales of inventory in which our customer is another retail entity. Owned & Host Within our owned & host segment, product revenues include sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers. For sales of in-store non-prescription eyewear and related accessories, we recognize revenue at the point of sale. For sales of prescription eyewear, we recognize revenue when the performance obligations identified under the terms of contracts with our customers are satisfied, which generally occurs, for products, when those products have been delivered and accepted by our customers. Revenue is recognized net of sales taxes and returns. The returns allowance is based on historical return patterns. Provisions for estimated returns are established and the expected costs continue to be recognized as contra-revenue when the products are sold. At our America’s Best brand, our lead offer is two pairs of eyeglasses and a free eye exam for one low price (“two-pair deal”). Since an eye exam is a key component in the ability for acceptable prescription eyewear to be delivered to a customer, we concluded that the eye exam service, while capable of being distinct from the eyeglass product delivery, was not distinct in the context of the two-pair deal. As a result, we do not allocate revenue to the eye exam associated with the two-pair deal, and we record all revenue associated with the offer in owned & host net product sales when the customer has received and accepted the merchandise. Within our owned & host segment services and plans revenues, eye exam services sold on a stand-alone basis are also recognized at the point of sale which occurs immediately after the exam is performed. Legacy Within our legacy segment, product revenues include 1) sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers in transactions where the retail customer uses a managed-care payor, and 2) wholesale sales of the same inventory types to the legacy partner. The revenue recognition for the retail sales are identical to similar sales in the owned & host segment. Wholesale sales of inventory to the legacy partner are recognized at the point in time when control of the inventory has been transferred in accordance with the contractual terms and conditions of sale. Since the wholesale sales of inventory to the legacy partner are a separate performance obligation in our management and services agreement with the legacy partner, we considered the appropriate allocation of consideration to wholesale inventory sales. We concluded that the difference between the stand-alone-selling price of the wholesale inventory and the contractual prices was not material. Within our legacy segment services and plans revenues, eye exam services sold to retail customers covered by a managed care payor are recognized identically to similar sales in the owned & host segment. Corporate/Other Revenues from our non-reportable corporate/other segment are attributable to wholly owned subsidiaries Arlington Contact Lens Services, Inc. (“AC Lens”) and FirstSight Vision Services, Inc. (“FirstSight”). AC Lens sells contact lenses and optical accessory products to retail customers through e-commerce. AC Lens also distributes contact lenses to Walmart and Sam’s Club under fee for services arrangements, reports revenue on a gross basis and is the principal in the arrangement since AC Lens controls the products in those transactions before the products are transferred to the customer. FirstSight issues individual vision care benefit plans in connection with our America’s Best operations in California, and provides or arranges for the provision of optometric services at certain optometric offices next to Walmart and Sam’s Club stores in California. Revenues Recognized Over Time Owned & Host Within our owned & host segment, services and plans revenues include revenues from product protection plans (i.e. warranties), eyecare club memberships and HMO membership fees. We offer extended warranty plans in our owned & host segment that generally provide for repair and replacement of eyeglasses for primarily a one-year term after purchase. We recognize service revenue under these programs on a straight-line basis over the warranty or service period which is consistent with our efforts expended to satisfy the obligation. Amounts collected in advance for these programs are reported as deferred revenue in the accompanying condensed consolidated balance sheets. We offer three-and five-year eyecare club memberships in our owned & host segment to our contact lens customers. For these plans we apply the guidance in ASC 606 to a portfolio of contracts with similar characteristics. We use estimates and assumptions when accounting for a portfolio that reflect the size and composition of the portfolio of contracts. We selected the portfolio approach because our historical club membership data demonstrated that our club customers behave similarly, such that the difference between the portfolio approach and applying ASC 606 to each contract is not material. We recognize revenue across the contract portfolio based on the value delivered to the customers relative to the remaining services promised under the membership program. We determine the value delivered based on the expected timing and amount of customer usage of eyecare club benefits over the terms of the contracts. Under previous guidance, we recognized revenue for eyecare club memberships on a ratable basis over the service period. This change is not expected to have a significant impact on our ongoing consolidated results of operations. The cumulative effect and the impact on revenues is described in the impact section below. Legacy Sales of services and plans in our legacy segment include fees earned for managing the operations of our legacy partner. These fees are recorded on a net basis and are based primarily on sales of products and product protection plans to non-managed care customers. We determined that under the terms of the arrangement our legacy partner controls the products and services in the transaction with the retail customer and therefore we act as the agent in those transactions. We recognize this service revenue using the “right to invoice” method allowed under ASC 606 because our right to payment corresponds directly with the value of the management services provided to our legacy partner. Impact on Condensed Consolidated Financial Statements The following table summarizes the cumulative effect of adoption of ASC 606 on the Company’s condensed consolidated balance sheet as of September 29, 2018 , which reflects the change in timing of revenue recognition relating to eyecare club memberships. In thousands With ASC 606 Adoption Without ASC 606 Adoption Impact of Adoption Current liabilities: Deferred Revenue $ 53,951 $ 69,764 $ (15,813 ) Total current liabilities $ 197,199 $ 213,012 $ (15,813 ) Other non-current liabilities: Deferred Revenue $ 20,723 $ 32,515 $ (11,792 ) Deferred income taxes, net $ 75,378 $ 68,306 $ 7,072 Total other non-current liabilities $ 138,392 $ 143,112 $ (4,720 ) Stockholders' equity: Retained earnings $ 100,113 $ 79,580 $ 20,533 Total stockholders' equity $ 758,171 $ 737,638 $ 20,533 The following table summarizes the impact of adoption on the Company’s condensed consolidated statement of operations for the three months ended September 29, 2018 : In thousands, except earnings per share With ASC 606 Adoption Without ASC 606 Adoption Impact of Adoption Net sales of services and plans $ 68,113 $ 67,651 $ 462 Total net revenue $ 387,425 $ 386,963 $ 462 Loss from operations $ (1,215 ) $ (1,677 ) $ 462 Loss before income taxes $ (10,622 ) $ (11,084 ) $ 462 Income tax benefit $ (16,438 ) $ (16,556 ) $ 118 Net income $ 5,816 $ 5,472 $ 344 Earnings per share: Basic $ 0.08 $ 0.07 $ 0.01 Diluted $ 0.07 $ 0.07 $ — The following table summarizes the impact of adoption on the Company’s condensed consolidated statement of operation for the nine months ended September 29, 2018 : In thousands, except earnings per share With ASC 606 Adoption Without ASC 606 Adoption Impact of Adoption Net sales of services and plans $ 203,435 $ 201,606 $ 1,829 Total net revenue $ 1,180,932 $ 1,179,103 $ 1,829 Income from operations $ 64,221 $ 62,392 $ 1,829 Earnings before income taxes $ 36,077 $ 34,248 $ 1,829 Income tax benefit $ (7,863 ) $ (8,331 ) $ 468 Net income $ 43,940 $ 42,579 $ 1,361 Earnings per share: Basic $ 0.58 $ 0.57 $ 0.01 Diluted $ 0.56 $ 0.54 $ 0.02 There were no other material impacts on our condensed consolidated financial statements as a result of our adoption of this new guidance. Contract Assets and Liabilities The Company’s contract assets and contract liabilities primarily result from timing differences between the performance of our obligations and the customer’s payment. Accounts Receivable Accounts receivable associated with revenues consist primarily of trade receivables and credit card receivables. Trade receivables consist primarily of receivables from managed care payors and receivables from major retailers. While we have relationships with almost all vision care insurers in the United States and with all of the major carriers, currently, a relatively small number of payors comprise the majority of our managed care revenues, subjecting us to concentration risk. Trade receivables and credit card receivables are included in accounts receivable, net, on our condensed consolidated balance sheets, and are presented separately in Note 2. “Details of Certain Balance Sheet Accounts.” Accounts receivable are reduced by allowances for amounts that may become uncollectible. Estimates of our allowance for uncollectible accounts are based on our historical and current operating, billing, and collection trends. Impairment losses recognized on our receivables were approximately $1.7 million and $5.0 million for the three and nine months ended September 29, 2018 and $1.9 million and $4.5 million for the three and nine months ended September 30, 2017 , respectively. There was no impact of adoption of ASC 606 on accounts receivable, net. Unsatisfied Performance Obligations (Contract Liabilities) Our retail customers generally make payments for prescription eyewear products at the time they place an order. Amounts we collect in advance for undelivered merchandise are reported as unearned revenue in the accompanying condensed consolidated balance sheets. Unearned revenue at the end of a reporting period is estimated based on delivery times throughout the current month and generally ranges from four to ten days. All unearned revenue at the end of a reporting period is recognized in the next fiscal period. There was no impact of adoption of ASC 606 on our unearned revenue accounts. Our contract liabilities also consist of deferred revenue on services and plans obligations, primarily product protection plans and eyecare club memberships. The unamortized portion of amounts we collect in advance for these services and plans are reported as deferred revenue in the accompanying condensed consolidated balance sheets (current and non- current portions). Our deferred revenue balance as of September 29, 2018 was $74.7 million . We expect future revenue recognition of this balance of $19.2 million , $39.7 million , $12.5 million , $3.0 million , $0.2 million and $0.1 million in fiscal years 2018 , 2019 , 2020 , 2021 , 2022 and thereafter , respectively. We recognized $26.5 million and $78.5 million of previously deferred revenues for the three and nine months ended September 29, 2018 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies From time to time, the Company is involved in various legal proceedings incidental to its business. The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that both a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s FirstSight subsidiary is a defendant in a purported class action in the U.S. District Court for the Southern District of California that alleges that FirstSight participated in arrangements that caused the illegal delivery of eye examinations and that FirstSight thereby violated, among other laws, the corporate practice of optometry and the unfair competition and false advertising laws of California. The lawsuit was filed in 2013 and FirstSight was added as a defendant in 2016. In March 2017, the court granted the motion to dismiss previously filed by FirstSight and dismissed the complaint with prejudice. The plaintiffs filed an appeal to the U.S. Court of Appeals for the Ninth Circuit in April 2017. In July 2018, the U.S. Court of Appeals for the Ninth Circuit vacated in part, and reversed in part, the district court’s dismissal and remanded for further proceedings. In October 2018, the plaintiffs filed a second amended complaint with the district court. The Company believes that the claims are without merit and intends to continue to defend the litigation vigorously. In May 2017 , a complaint was filed against the Company and other defendants alleging, on behalf of a proposed class of consumers who purchased contact lenses online, that 1-800 Contacts, Inc. entered into a series of agreements with the other defendants, including the Company’s AC Lens subsidiary, to suppress certain online advertising and that each defendant thereby engaged in anticompetitive conduct in violation of the Sherman Antitrust Act (the “1-800 Contacts Matter”). The Company has settled the 1-800 Contacts Matter for $7.0 million , without admitting liability. Accordingly, the Company recorded a $7.0 million charge in the second quarter of fiscal year 2017. On November 8, 2017 , the court in the 1-800 Contacts Matter entered an order preliminarily approving the settlement agreement, subject to a settlement hearing. Pursuant to this order, the Company deposited 50% of the settlement amount, or $3.5 million , into an escrow account, to be distributed subject to and in accordance with the terms of the settlement agreement and any further order of the court. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 29, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | The Company’s reportable segments were determined on the same basis as used by the Chief Operating Decision Maker (“CODM”) to evaluate performance internally. Our operations consist of two reportable segments: • Owned & host store brands - Our owned brands consist of our America’s Best and Eyeglass World operating segments. Our host brands consist of our Vista Optical operating segments at certain U.S. Military Branches and inside Fred Meyer stores. We have aggregated our owned and host operating segments into a single reportable segment due to similar economic characteristics and similarity of the nature of products and services, production processes, class of customers, regulatory environment, and distribution methods of those brands. • Legacy - The Company manages the operations of 227 legacy retail vision centers within Walmart stores. We earn management fees as a result of providing such services and therefore we record revenue related to sales of products and product protection plans to our legacy partner’s customers on a net basis. We also sell to our legacy partner wholesale merchandise that is stocked in retail locations, and provide central lab processing services for the finished eyeglasses and frames expected to be sold to our legacy partner’s customers. We lease space from our legacy partner within or adjacent to each of the locations we manage and use this space for the provision of optometric examination services. Our legacy agreements were renewed on January 13, 2017 , and expire on August 23, 2020 , subject to extension pursuant to the terms of the agreements. Sales of services and plans in our legacy segment consist of fees earned for managing the operations of our legacy partner and revenues associated with the provision of eye exams. Revenue associated with managing operations of our legacy partner were $8.6 million and $27.0 million for the three and nine months ended September 29, 2018 and $9.1 million and $28.3 million for the three and nine months ended September 30, 2017 , respectively. During the nine months ended September 29, 2018 , sales associated with our legacy partner arrangement represented 10.1% of consolidated net revenue. This exposes us to concentration of customer risk. The “Corporate/Other” category includes the results of operations of our other operating segments and corporate overhead support. The “Reconciliations” category represents other adjustments to reportable segment results necessary for the presentation of consolidated financial results in accordance with U.S. GAAP for the two reportable segments. Revenues from the Corporate/Other segments are attributable to the AC Lens and FirstSight operating segments. AC Lens primarily sells contact lenses, eyeglasses and optical accessory products to retail customers through e-commerce. AC Lens also distributes contact lenses to Walmart and Sam’s Club under fee for services arrangements. FirstSight sells single service health plans in connection with the operations of America’s Best in California, arranges for the provision of eye exams at retail locations throughout California and also sells contact lenses to its members in certain locations. None of those segments met the quantitative thresholds for determining reportable segments for any of the periods presented. Our reportable segment profit measure is EBITDA, or net revenue, less costs applicable to revenue, less selling, general and administrative costs. Depreciation and amortization, asset impairment, litigation settlement and other corporate costs that are not allocated to the reportable segments, including interest expense and debt issuance costs are excluded from segment EBITDA. There are no transactions between our reportable segments. There are no differences between the measurement of our reportable segments’ assets and consolidated assets. There have been no changes from prior periods in the measurement methods used to determine reportable segment profit or loss, and there have been no asymmetrical allocations to segments. The following is a summary of certain financial data for each of our segments. Reportable segment information is presented on the same basis as our condensed consolidated financial statements, except for net revenue and associated costs applicable to revenue, which is presented on a cash basis, excluding the effects of unearned and deferred revenue, consistent with the basis on which the CODM regularly reviews segment performance. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments. Three Months Ended September 29, 2018 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 240,882 $ 24,739 $ 53,286 $ 405 $ 319,312 Segment services and plans revenues 55,673 12,489 912 (961 ) 68,113 Total net revenue 296,555 37,228 54,198 (556 ) 387,425 Cost of products 72,532 11,328 46,881 210 130,951 Cost of services and plans 45,581 5,124 932 — 51,637 Total costs applicable to revenue 118,113 16,452 47,813 210 182,588 SG&A 118,384 13,621 52,419 — 184,424 Asset impairment — — 2,137 — 2,137 Other expense, net — — 411 — 411 EBITDA $ 60,058 $ 7,155 $ (48,582 ) $ (766 ) 17,865 Depreciation and amortization 19,080 Interest expense, net 9,407 Loss before income taxes $ (10,622 ) Three Months Ended September 30, 2017 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 211,035 $ 24,503 $ 46,421 $ 1,689 $ 283,648 Segment services and plans revenues 48,119 12,864 3,110 (1,652 ) 62,441 Total net revenue 259,154 37,367 49,531 37 346,089 Cost of products 63,159 11,427 40,699 467 115,752 Cost of services and plans 39,395 4,579 2,632 — 46,606 Total costs applicable to revenue 102,554 16,006 43,331 467 162,358 SG&A 103,851 12,904 34,496 — 151,251 Other expense, net — — 568 — 568 EBITDA $ 52,749 $ 8,457 $ (28,864 ) $ (430 ) 31,912 Depreciation and amortization 15,352 Interest expense, net 14,851 Income before income taxes $ 1,709 Nine Months Ended September 29, 2018 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 738,886 $ 80,004 $ 153,856 $ 4,751 $ 977,497 Segment services and plans revenues 167,679 39,088 2,939 (6,271 ) 203,435 Total net revenue 906,565 119,092 156,795 (1,520 ) 1,180,932 Costs of products 217,195 36,356 134,731 1,278 389,560 Costs of services and plans 132,708 14,965 2,868 — 150,541 Total costs applicable to revenue 349,903 51,321 137,599 1,278 540,101 SG&A 349,239 40,519 129,806 — 519,564 Asset impairment — — 2,137 — 2,137 Other expense, net — — 829 — 829 EBITDA $ 207,423 $ 27,252 $ (113,576 ) $ (2,798 ) 118,301 Depreciation and amortization 54,080 Interest expense, net 28,144 Income before income taxes $ 36,077 Nine Months Ended September 30, 2017 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 649,526 $ 78,828 $ 134,371 $ 4,467 $ 867,192 Segment services and plans revenues 146,415 37,840 11,274 (9,232 ) 186,297 Total net revenue 795,941 116,668 145,645 (4,765 ) 1,053,489 Costs of products 190,604 37,138 120,116 1,241 349,099 Costs of services and plans 113,902 11,909 9,663 — 135,474 Total costs applicable to revenue 304,506 49,047 129,779 1,241 484,573 SG&A 304,168 39,087 102,459 — 445,714 Asset impairment — — 1,000 — 1,000 Debt issuance costs — — 2,702 — 2,702 Litigation settlement — — 7,000 — 7,000 Other expense, net — — 744 — 744 EBITDA $ 187,267 $ 28,534 $ (98,039 ) $ (6,006 ) 111,756 Depreciation and amortization 44,404 Interest expense, net 40,965 Income before income taxes $ 26,387 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted average common shares outstanding for the period and includes the dilutive impact of potential new common shares issuable upon vesting and exercise of stock options and vesting of restricted stock units. Potentially dilutive securities are excluded from the computation of diluted EPS if their effect is anti-dilutive. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows: Three Months Ended Nine Months Ended In thousands, except EPS data September 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 Net income $ 5,816 $ 1,546 $ 43,940 $ 17,120 Weighted average shares outstanding for basic EPS 76,118 56,414 75,361 56,363 Effect of dilutive securities: Stock options 3,485 2,045 3,119 1,918 Restricted stock 107 — 91 — Weighted average shares outstanding for diluted EPS 79,710 58,459 78,571 58,281 Basic EPS $ 0.08 $ 0.03 $ 0.58 $ 0.30 Diluted EPS $ 0.07 $ 0.03 $ 0.56 $ 0.29 Anti-dilutive options outstanding excluded from EPS — — — 339 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 29, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in the fair value of the Company’s cash flow hedge derivative instruments since inception are recorded in AOCL. The following table presents the change in AOCL during the three and nine months ended September 29, 2018 and September 30, 2017 , respectively: Three Months Ended Nine Months Ended In thousands September 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 Cash flow hedging activity: Balance at beginning of period $ (2,746 ) $ (14,605 ) $ (9,868 ) $ (14,556 ) Other comprehensive income (loss) before reclassification 854 (371 ) 6,696 (3,950 ) Tax effect of other comprehensive income (loss) before reclassification (218 ) 143 (1,715 ) 1,526 Amount reclassified from AOCL 1,413 2,625 5,146 6,126 Tax effect of amount reclassified from AOCL (362 ) (1,015 ) (1,318 ) (2,369 ) Net current period other comprehensive income, net of tax 1,687 1,382 8,809 1,333 Balance at end of period $ (1,059 ) $ (13,223 ) $ (1,059 ) $ (13,223 ) Amounts reclassified from AOCL are included in interest expense in the accompanying condensed consolidated statements of operations. See Note 3. “Fair Value Measurements of Financial Assets and Liabilities” for a description of the Company’s use of cash flow hedging derivatives. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 29, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Term Loan A - Joinder and Amendment Agreement On October 9, 2018 (the “Closing Date”), our first lien credit agreement dated as of March 13, 2014 (as amended, the “Credit Agreement”), was amended pursuant to a joinder and amendment agreement (the “October 2018 Joinder”) to, among other things, (i) establish new first lien term loans in an aggregate principal amount of $200,000,000 (“Term A Loans”) to prepay a portion of the first lien term loans outstanding immediately prior to the Closing Date, (ii) set the maturity of such term loans to October 9, 2023 and (iii) set the rates applicable to such term loans. Pursuant to the October 2018 Joinder, the initial new Applicable Margins are (i) 1.75% for the new first lien term loans that are LIBOR Loans (as defined in the Credit Agreement) and (ii) 0.75% for the new first lien term loans that are ABR Loans (as defined in the Credit Agreement). The October 2018 Joinder further provides that following the Closing Date, the above Applicable Margins for the new first lien term loans will be based on (x) NVI’s total leverage ratio or (y) NVI’s public corporate credit rating from Moody’s and/or NVI’s public corporate credit rating from S&P as follows: (a) if NVI’s total leverage ratio is less than 2.00 to 1.00 or NVI’s rating is either Ba2 (stable) or better from Moody’s or BB (stable) or better from S&P, the Applicable Margin will be 1.25% for LIBOR Loans and 0.25% for ABR Loans, (b) if NVI’s total leverage ratio is equal to or greater than 2.00 to 1.00 , but less than 2.50 to 1.00 , or NVI’s rating is BB- (stable) from S&P, the Applicable Margin will be 1.50% for LIBOR Loans and 0.50% for ABR Loans and (c) if NVI’s total leverage ratio is greater than 2.50 to 1.00 and NVI’s rating is not BB- (stable) or better from S&P, the Applicable Margin will be 1.75% for LIBOR Loans and 0.75% for ABR Loans, as specified in the October 2018 Joinder. The new first lien term loans will amortize in equal quarterly installments equal to 2.5% per annum in the first three years of the loan and 5% per annum thereafter. In addition, pursuant to the October 2018 Joinder, solely with respect to the Term A Loans, commencing on the fiscal quarter ending on December 29, 2018, the Company will not permit (i) the Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter of the Company to be greater than 4.75 to 1.00 or (ii) the Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of the Company as of the last day of any fiscal quarter of the Company to be less than 3.00 to 1.00 . Agreement with Esslior of America On November 12, 2018, the Company entered into a new letter agreement (the “Agreement”) with Essilor of America, Inc. (“Essilor”), which, when effective, will replace the current letter agreement, dated May 25, 2011, between the Company and Essilor. Under our agreement with Essilor, Essilor has the sole and exclusive right to supply certain lenses for eyeglasses to the Company. The Agreement extends the term of the Company’s contractual arrangement with Essilor from June 1, 2019 until May 31, 2023. Thereafter, the Agreement will automatically renew on a month-to-month basis unless either party gives 30 days’ prior written notice of termination. The Company also has the ability to unilaterally extend the Agreement an additional calendar quarter after the proposed termination date. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 29, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepared the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and, therefore, do not include all information and disclosures required by U.S. GAAP for complete consolidated financial statements. The condensed consolidated balance sheet as of December 30, 2017 has been derived from the audited consolidated balance sheet for the fiscal year then ended. These unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 29, 2018 , the consolidated results of operations and comprehensive income for the three and nine months ended September 29, 2018 and September 30, 2017 and its statements of cash flows for the nine months ended September 29, 2018 and September 30, 2017 . Certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted; however, we believe that the disclosures included herein are adequate to make the information presented not misleading. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the fiscal year ended December 30, 2017 included in the Company’s Annual Report on Form 10-K for fiscal year 2017 filed on March 8, 2018. The Company’s significant accounting policies are set forth in Note 1 within those consolidated financial statements. We use the same accounting policies in preparing interim condensed consolidated financial information and annual consolidated financial statements. There were no changes to our significant accounting policies during the nine months ended September 29, 2018 , except for the adoption of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers and ASU No. 2016-18, Restricted Cash . See “Adoption of New Accounting Pronouncements” below for further discussion. Changes to stockholders’ equity associated with changes in unrealized gains and losses on cash flow hedging instruments, exercises of stock options, and the cumulative effect of adoption of ASU No. 2014-09 are discussed in Note 3. “Fair Value Measurements of Financial Assets and Liabilities,” Note 4. “Stock Incentive Plan,” and in Note 6. “Revenue from Contracts with Customers,” respectively. The condensed consolidated financial statements include our accounts and those of our subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2018 contains 52 weeks and will end on December 29, 2018 . All three and nine month periods presented herein contain 13 and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Asset Impairment | Asset Impairment We evaluate impairment of long-lived tangible store assets at an individual store level, which is the lowest level at which independent cash flows can be identified, when events or conditions indicate the carrying value of such assets may not be recoverable. If the store's projected undiscounted cash flows expected to be generated by the related assets over the remaining useful life are less than the carrying value of the related assets, we then measure impairment based on a discounted cash flow model (Level 3 inputs) and record an impairment charge as the difference between carrying value and estimated fair value. |
Income Taxes | Income Taxes Our income tax benefit for the three months ended September 29, 2018 reflected a benefit associated with pre-tax losses at our statutory federal and state rate of 25.6% , and an additional discrete benefit of $13.9 million associated primarily with the exercise of stock options. In comparison, the income tax rate associated with the three months ended September 30, 2017 primarily reflected the rate necessary to achieve our 35.2% expected annual effective income tax rate (“ETR”) for the nine months ended September 30, 2017 , as discrete items did not materially impact the rates used for those periods. Our income tax benefit for the nine months ended September 29, 2018 reflected income tax expense at our statutory federal and state rate of 25.6% , offset by a discrete benefit of $18.0 million associated primarily with the exercise of stock options. Pursuant to SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Legislation, the Company recognized provisional effects of the enactment of the Tax Cuts and Jobs Act of 2017 for which measurement could be reasonably estimated as of December 30, 2017 . For the nine months ended September 29, 2018 , the Company recorded adjustments to the provisional estimates related to depreciation expense and believes the remeasurement of its 2017 provisional amount is complete. The adjustments to the provisional estimates of December 30, 2017 did not materially impact the ETR of the Company during nine months ended September 29, 2018 . |
Recently Issued Accounting Pronouncements | Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU No. 2014-09 provides new guidance related to the core principle that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. Under the new guidance, there is a five-step model to apply to revenue recognition, consisting of: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company adopted this new guidance in the first quarter of 2018 using the modified retrospective transition method. The adoption resulted in a $14.0 million and $11.8 million decrease in current and non-current deferred revenue, respectively, for certain contracts where we satisfy performance obligations over time and a related $6.8 million increase in deferred income tax liability, resulting in a net $19.0 million increase to retained earnings on the condensed consolidated balance sheet as of December 31, 2017. Our results of operations for the reported periods after December 31, 2017 are presented under this amended guidance, while prior period amounts are not adjusted and continue to be reported in accordance with historical accounting guidance. Adoption of this new guidance did not result in significant changes to our accounting policies, business processes, systems or controls, or have a material impact on our results of operations and cash flows. The impact of adopting the amended guidance primarily relates to the timing of revenue recognition for our eyecare club memberships, which comprised approximately 3% of our consolidated net revenue during the most recent three fiscal years. See Note 6. “Revenue From Contracts with Customers” for additional information. Restricted Cash In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash . This new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted this new guidance during the first quarter of 2018 using full retrospective application to each period presented. The adoption of this new guidance did not have a material effect on the Company’s financial condition, results of operations, or cash flows. Future Adoption of Accounting Pronouncements Leases In February 2016, the FASB issued ASU No. 2016-02, Leases . This new guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with such classification affecting the pattern of expense recognition in the statement of operations. Disclosure of key information about leasing arrangements will also be required. This new guidance is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within that fiscal year. In July 2018, the FASB issued ASU 2018-11, “ Leases: Targeted Improvements ,” as an amendment to ASU 2016-02, “ Leases ,” which provides entities with an additional transition method to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We will adopt this new guidance in the first quarter of 2019. During the first quarter of 2018, we established a cross-functional team to evaluate and implement the new guidance. The Company made progress towards implementation of the new guidance including surveying the Company’s businesses, assessing the Company’s portfolio of leases and compiling a central repository of active leases. The Company evaluated key policy elections and considerations under the new guidance and is currently updating its accounting policies and internal controls to address the new guidance requirements, including disclosures. Additionally, the Company upgraded its lease accounting software solution to support the new reporting requirements. Significant progress has been made on extracting and loading lease data elements required for lease accounting into the software solution and testing of the lease management system is nearing completion. The Company does not expect the adoption of this new guidance to have a significant impact on the recognition, measurement or presentation of lease expenses within our condensed consolidated statements of operations. While the Company continues to assess all potential impacts of the new standard, we currently believe the most significant impact relates to recording lease assets and related liabilities on the condensed consolidated balance sheets. Share Based Payment Accounting In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . This new guidance expands the scope of Topic 718 to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This new guidance is effective for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is assessing this new guidance but does not expect it to have a material impact on its statement of financial condition, results of operations, or cash flows. Cloud Computing In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This new guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. The amendments in this new guidance may be applied either retrospectively or prospectively. The Company is in the process of assessing the new guidance. |
Details of Certain Balance Sh_2
Details of Certain Balance Sheet Accounts (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable, Net | In thousands As of As of Accounts receivable, net: Trade receivables $ 24,500 $ 28,862 Credit card receivables 9,289 10,459 Tenant improvement allowances receivable 4,984 4,794 Other receivables 2,626 2,936 Allowance for uncollectible accounts (2,524 ) (3,858 ) $ 38,875 $ 43,193 |
Schedule of Inventories | In thousands As of As of Inventories: Raw materials and work in process (1) $ 45,379 $ 43,953 Finished goods 53,901 47,198 $ 99,280 $ 91,151 (1) Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, the Company does not separately present raw materials and work in process. |
Schedule of Property and Equipment, Net | In thousands As of As of Property and equipment, net: Land and building $ 3,632 $ 3,608 Equipment 252,549 220,088 Furniture and fixtures 47,423 42,708 Leasehold improvements 178,346 155,369 Construction in progress 29,806 18,375 Property under capital leases 22,334 11,756 534,090 451,904 Less accumulated depreciation 193,464 147,772 $ 340,626 $ 304,132 |
Schedule of Other Payables and Accrued Expenses | In thousands As of As of Other payables and accrued expenses: Employee compensation and benefits $ 32,153 $ 21,134 Advertising 1,524 2,900 Self-insurance reserves 7,102 6,854 Reserves for customer returns and remakes 6,502 4,565 Capital expenditures 9,060 10,782 Legacy management and services agreement 5,319 6,000 Fair value of derivative liabilities 3,050 6,969 Sales and use taxes 1,130 1,218 Supplies and other store support expenses 2,638 3,014 Litigation settlements 3,838 3,942 Other 9,149 10,233 $ 81,465 $ 77,611 |
Schedule of Other Non-current Liabilities | In thousands As of As of Other non-current liabilities: Fair value of derivative liabilities $ 1,230 $ 9,155 Tenant improvements (1) 25,742 22,894 Deferred rental expenses 8,463 7,246 Self-insurance reserves 4,915 4,564 Other 1,941 2,185 $ 42,291 $ 46,044 (1) Obligations for tenant improvements are amortized as a reduction of rental expense over the respective lease term. |
Fair Value Measurements of Fi_2
Fair Value Measurements of Financial Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Cash Flow Hedge Derivative Contracts | Our cash flow hedge position related to interest rate derivative contracts is as follows: In thousands Notional Amount Final Maturity Date Other Payables and Accrued Expenses Other Liabilities AOCL, Net of Tax (1) As of $ 465,000 March 2021 $ 3,050 $ 1,230 $ 1,059 As of $ 500,000 March 2021 $ 6,969 $ 9,155 $ 9,868 (1) Includes stranded tax benefit of $2.1 million within AOCL from adopting provisions of the Tax Legislation of 2017 during the year ended December 30, 2017. |
Stock Incentive Plan (Tables)
Stock Incentive Plan (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following presents a roll-forward of stock options for the nine months ended September 29, 2018 : Options issued and outstanding Rollover (1) Service-Based Performance-Based Total Balance, December 30, 2017 169,049 3,822,915 6,524,152 10,516,116 Exercised (67,874 ) (1,117,583 ) (1,260,972 ) (2,446,429 ) Forfeited — (70,185 ) (329,338 ) (399,523 ) Balance, September 29, 2018 101,175 2,635,147 4,933,842 7,670,164 Options vested and exercisable Balance, December 30, 2017 169,049 1,631,023 43,478 1,843,550 Vested — 812,936 2,406,350 3,219,286 Exercised (67,874 ) (1,117,583 ) (1,260,972 ) (2,446,429 ) Forfeited — (4,548 ) — (4,548 ) Balance, September 29, 2018 101,175 1,321,828 1,188,856 2,611,859 (1) Reflects options under the Vision Holding Corp. Amended and Restated 2013 Equity Incentive Plan |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Agreements with Equity Sponsors | We recorded the following fees paid to equity sponsors, which are presented in SG&A in the accompanying condensed consolidated statement of operations, except for $2.3 million in KKR Sponsor fees during the nine months ended September 30, 2017 , which are presented in debt issuance costs. Three Months Ended Nine Months Ended In thousands September 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 KKR Sponsor $ — $ 220 $ — $ 2,993 Berkshire Partners LLC $ — $ 52 $ — $ 156 |
Revenue From Contracts With C_2
Revenue From Contracts With Customers (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenues | The following disaggregation of revenues depicts our revenues based on the timing of revenue recognition. Disaggregation of Revenues: In thousands Three Months Ended Nine Months Ended Revenues recognized at a point in time $ 352,245 $ 1,075,355 Revenues recognized over time 35,180 105,577 Total net revenue $ 387,425 $ 1,180,932 |
Schedule of Impact of Adoption of New Accounting Pronouncement | The following table summarizes the cumulative effect of adoption of ASC 606 on the Company’s condensed consolidated balance sheet as of September 29, 2018 , which reflects the change in timing of revenue recognition relating to eyecare club memberships. In thousands With ASC 606 Adoption Without ASC 606 Adoption Impact of Adoption Current liabilities: Deferred Revenue $ 53,951 $ 69,764 $ (15,813 ) Total current liabilities $ 197,199 $ 213,012 $ (15,813 ) Other non-current liabilities: Deferred Revenue $ 20,723 $ 32,515 $ (11,792 ) Deferred income taxes, net $ 75,378 $ 68,306 $ 7,072 Total other non-current liabilities $ 138,392 $ 143,112 $ (4,720 ) Stockholders' equity: Retained earnings $ 100,113 $ 79,580 $ 20,533 Total stockholders' equity $ 758,171 $ 737,638 $ 20,533 The following table summarizes the impact of adoption on the Company’s condensed consolidated statement of operations for the three months ended September 29, 2018 : In thousands, except earnings per share With ASC 606 Adoption Without ASC 606 Adoption Impact of Adoption Net sales of services and plans $ 68,113 $ 67,651 $ 462 Total net revenue $ 387,425 $ 386,963 $ 462 Loss from operations $ (1,215 ) $ (1,677 ) $ 462 Loss before income taxes $ (10,622 ) $ (11,084 ) $ 462 Income tax benefit $ (16,438 ) $ (16,556 ) $ 118 Net income $ 5,816 $ 5,472 $ 344 Earnings per share: Basic $ 0.08 $ 0.07 $ 0.01 Diluted $ 0.07 $ 0.07 $ — The following table summarizes the impact of adoption on the Company’s condensed consolidated statement of operation for the nine months ended September 29, 2018 : In thousands, except earnings per share With ASC 606 Adoption Without ASC 606 Adoption Impact of Adoption Net sales of services and plans $ 203,435 $ 201,606 $ 1,829 Total net revenue $ 1,180,932 $ 1,179,103 $ 1,829 Income from operations $ 64,221 $ 62,392 $ 1,829 Earnings before income taxes $ 36,077 $ 34,248 $ 1,829 Income tax benefit $ (7,863 ) $ (8,331 ) $ 468 Net income $ 43,940 $ 42,579 $ 1,361 Earnings per share: Basic $ 0.58 $ 0.57 $ 0.01 Diluted $ 0.56 $ 0.54 $ 0.02 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Financial Data by Segment | The following is a summary of certain financial data for each of our segments. Reportable segment information is presented on the same basis as our condensed consolidated financial statements, except for net revenue and associated costs applicable to revenue, which is presented on a cash basis, excluding the effects of unearned and deferred revenue, consistent with the basis on which the CODM regularly reviews segment performance. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments. Three Months Ended September 29, 2018 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 240,882 $ 24,739 $ 53,286 $ 405 $ 319,312 Segment services and plans revenues 55,673 12,489 912 (961 ) 68,113 Total net revenue 296,555 37,228 54,198 (556 ) 387,425 Cost of products 72,532 11,328 46,881 210 130,951 Cost of services and plans 45,581 5,124 932 — 51,637 Total costs applicable to revenue 118,113 16,452 47,813 210 182,588 SG&A 118,384 13,621 52,419 — 184,424 Asset impairment — — 2,137 — 2,137 Other expense, net — — 411 — 411 EBITDA $ 60,058 $ 7,155 $ (48,582 ) $ (766 ) 17,865 Depreciation and amortization 19,080 Interest expense, net 9,407 Loss before income taxes $ (10,622 ) Three Months Ended September 30, 2017 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 211,035 $ 24,503 $ 46,421 $ 1,689 $ 283,648 Segment services and plans revenues 48,119 12,864 3,110 (1,652 ) 62,441 Total net revenue 259,154 37,367 49,531 37 346,089 Cost of products 63,159 11,427 40,699 467 115,752 Cost of services and plans 39,395 4,579 2,632 — 46,606 Total costs applicable to revenue 102,554 16,006 43,331 467 162,358 SG&A 103,851 12,904 34,496 — 151,251 Other expense, net — — 568 — 568 EBITDA $ 52,749 $ 8,457 $ (28,864 ) $ (430 ) 31,912 Depreciation and amortization 15,352 Interest expense, net 14,851 Income before income taxes $ 1,709 Nine Months Ended September 29, 2018 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 738,886 $ 80,004 $ 153,856 $ 4,751 $ 977,497 Segment services and plans revenues 167,679 39,088 2,939 (6,271 ) 203,435 Total net revenue 906,565 119,092 156,795 (1,520 ) 1,180,932 Costs of products 217,195 36,356 134,731 1,278 389,560 Costs of services and plans 132,708 14,965 2,868 — 150,541 Total costs applicable to revenue 349,903 51,321 137,599 1,278 540,101 SG&A 349,239 40,519 129,806 — 519,564 Asset impairment — — 2,137 — 2,137 Other expense, net — — 829 — 829 EBITDA $ 207,423 $ 27,252 $ (113,576 ) $ (2,798 ) 118,301 Depreciation and amortization 54,080 Interest expense, net 28,144 Income before income taxes $ 36,077 Nine Months Ended September 30, 2017 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 649,526 $ 78,828 $ 134,371 $ 4,467 $ 867,192 Segment services and plans revenues 146,415 37,840 11,274 (9,232 ) 186,297 Total net revenue 795,941 116,668 145,645 (4,765 ) 1,053,489 Costs of products 190,604 37,138 120,116 1,241 349,099 Costs of services and plans 113,902 11,909 9,663 — 135,474 Total costs applicable to revenue 304,506 49,047 129,779 1,241 484,573 SG&A 304,168 39,087 102,459 — 445,714 Asset impairment — — 1,000 — 1,000 Debt issuance costs — — 2,702 — 2,702 Litigation settlement — — 7,000 — 7,000 Other expense, net — — 744 — 744 EBITDA $ 187,267 $ 28,534 $ (98,039 ) $ (6,006 ) 111,756 Depreciation and amortization 44,404 Interest expense, net 40,965 Income before income taxes $ 26,387 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic and Diluted EPS Calculations | A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows: Three Months Ended Nine Months Ended In thousands, except EPS data September 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 Net income $ 5,816 $ 1,546 $ 43,940 $ 17,120 Weighted average shares outstanding for basic EPS 76,118 56,414 75,361 56,363 Effect of dilutive securities: Stock options 3,485 2,045 3,119 1,918 Restricted stock 107 — 91 — Weighted average shares outstanding for diluted EPS 79,710 58,459 78,571 58,281 Basic EPS $ 0.08 $ 0.03 $ 0.58 $ 0.30 Diluted EPS $ 0.07 $ 0.03 $ 0.56 $ 0.29 Anti-dilutive options outstanding excluded from EPS — — — 339 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following table presents the change in AOCL during the three and nine months ended September 29, 2018 and September 30, 2017 , respectively: Three Months Ended Nine Months Ended In thousands September 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 Cash flow hedging activity: Balance at beginning of period $ (2,746 ) $ (14,605 ) $ (9,868 ) $ (14,556 ) Other comprehensive income (loss) before reclassification 854 (371 ) 6,696 (3,950 ) Tax effect of other comprehensive income (loss) before reclassification (218 ) 143 (1,715 ) 1,526 Amount reclassified from AOCL 1,413 2,625 5,146 6,126 Tax effect of amount reclassified from AOCL (362 ) (1,015 ) (1,318 ) (2,369 ) Net current period other comprehensive income, net of tax 1,687 1,382 8,809 1,333 Balance at end of period $ (1,059 ) $ (13,223 ) $ (1,059 ) $ (13,223 ) |
Description of Business and B_3
Description of Business and Basis of Presentation - Nature of Operations (Details) | Sep. 29, 2018storestore_brand | Dec. 30, 2017store |
Accounting Policies [Abstract] | ||
Number of retail optical locations | store | 1,067 | 1,013 |
Number of store brands | store_brand | 5 |
Description of Business and B_4
Description of Business and Basis of Presentation - Asset Impairment (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 29, 2018USD ($) | Sep. 29, 2018USD ($) | |
Accounting Policies [Abstract] | ||
Carrying amount of impaired long-lived assets held and used | $ 2.2 | $ 2.2 |
Impairment charge on long-lived assets held and used | 2.1 | 2.1 |
Estimated fair value of impaired long-lived assets held and used | $ 0.1 | $ 0.1 |
Description of Business and B_5
Description of Business and Basis of Presentation - Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 29, 2018 | Sep. 29, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | |||
Effective income tax rate (percent) | 25.60% | 25.60% | 35.20% |
Tax benefit associated primarily with exercise of stock options | $ 13.9 | $ 18 |
Description of Business and B_6
Description of Business and Basis of Presentation - Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 29, 2018 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Decrease in deferred revenue, current | $ (53,951) | $ (62,993) | ||
Decrease in deferred revenue, noncurrent | (20,723) | (31,222) | ||
Increase in deferred income taxes, net | 75,378 | 73,648 | ||
Increase in retained earnings | 100,113 | $ 37,145 | ||
Impact of Adoption | ASU No. 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Decrease in deferred revenue, current | 15,813 | $ 14,000 | ||
Decrease in deferred revenue, noncurrent | 11,792 | 11,800 | ||
Increase in deferred income taxes, net | 7,072 | 6,800 | ||
Increase in retained earnings | $ 20,533 | $ 19,000 | ||
Eyecare Club Memberships | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Percentage of consolidated net revenue | 3.00% | 3.00% | 3.00% |
Details of Certain Balance Sh_3
Details of Certain Balance Sheet Accounts - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Accounts receivable, net: | ||
Allowance for uncollectible accounts | $ (2,524) | $ (3,858) |
Accounts receivable, net of allowances | 38,875 | 43,193 |
Trade receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 24,500 | 28,862 |
Credit card receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 9,289 | 10,459 |
Tenant improvement allowances receivable | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 4,984 | 4,794 |
Other receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | $ 2,626 | $ 2,936 |
Details of Certain Balance Sh_4
Details of Certain Balance Sheet Accounts - Inventories (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Inventories: | ||
Raw materials and work in process | $ 45,379 | $ 43,953 |
Finished goods | 53,901 | 47,198 |
Inventories | $ 99,280 | $ 91,151 |
Details of Certain Balance Sh_5
Details of Certain Balance Sheet Accounts - Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Property and equipment, net: | ||
Property and equipment, gross | $ 534,090 | $ 451,904 |
Less accumulated depreciation | 193,464 | 147,772 |
Property and equipment, net | 340,626 | 304,132 |
Land and building | ||
Property and equipment, net: | ||
Property and equipment, gross | 3,632 | 3,608 |
Equipment | ||
Property and equipment, net: | ||
Property and equipment, gross | 252,549 | 220,088 |
Furniture and fixtures | ||
Property and equipment, net: | ||
Property and equipment, gross | 47,423 | 42,708 |
Leasehold improvements | ||
Property and equipment, net: | ||
Property and equipment, gross | 178,346 | 155,369 |
Construction in progress | ||
Property and equipment, net: | ||
Property and equipment, gross | 29,806 | 18,375 |
Property under capital leases | ||
Property and equipment, net: | ||
Property and equipment, gross | $ 22,334 | $ 11,756 |
Details of Certain Balance Sh_6
Details of Certain Balance Sheet Accounts - Other Payables and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Other payables and accrued expenses: | ||
Employee compensation and benefits | $ 32,153 | $ 21,134 |
Advertising | 1,524 | 2,900 |
Self-insurance reserves | 7,102 | 6,854 |
Reserves for customer returns and remakes | 6,502 | 4,565 |
Capital expenditures | 9,060 | 10,782 |
Legacy management and services agreement | 5,319 | 6,000 |
Fair value of derivative liabilities | 3,050 | 6,969 |
Sales and use taxes | 1,130 | 1,218 |
Supplies and other store support expenses | 2,638 | 3,014 |
Litigation settlements | 3,838 | 3,942 |
Other | 9,149 | 10,233 |
Total other payables and accrued expenses | $ 81,465 | $ 77,611 |
Details of Certain Balance Sh_7
Details of Certain Balance Sheet Accounts - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Other non-current liabilities: | ||
Fair value of derivative liabilities | $ 1,230 | $ 9,155 |
Tenant improvements | 25,742 | 22,894 |
Deferred rental expenses | 8,463 | 7,246 |
Self-insurance reserves | 4,915 | 4,564 |
Other | 1,941 | 2,185 |
Total other non-current liabilities | $ 42,291 | $ 46,044 |
Fair Value Measurements of Fi_3
Fair Value Measurements of Financial Assets and Liabilities - Narrative (Details) - Level 2 - USD ($) $ in Millions | Sep. 29, 2018 | Dec. 30, 2017 |
Term Loan | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | $ 566.5 | $ 570.2 |
Term Loan | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | 554.3 | 557.3 |
Capital Lease Obligations | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | 25 | 14 |
Capital Lease Obligations | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | $ 20.5 | $ 12 |
Fair Value Measurements of Fi_4
Fair Value Measurements of Financial Assets and Liabilities - Interest Rate Derivatives (Details) | Sep. 29, 2018USD ($)agreement | Mar. 31, 2018USD ($) | Dec. 30, 2017USD ($) |
Derivative [Line Items] | |||
Estimated reclassification from AOCL to earnings in next 12 months | $ 2,300,000 | ||
Interest Rate Swap | Cash Flow Hedges | |||
Derivative [Line Items] | |||
Number of interest rate swap agreements | agreement | 3 | ||
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedges | |||
Derivative [Line Items] | |||
Notional amount | $ 465,000,000 | $ 500,000,000 | |
Interest Rate Swap One | Designated as Hedging Instrument | Cash Flow Hedges | |||
Derivative [Line Items] | |||
Notional amount | $ 140,000,000 | $ 175,000,000 |
Fair Value Measurements of Fi_5
Fair Value Measurements of Financial Assets and Liabilities - Cash Flow Hedge Position of Interest Rate Derivative Contracts (Details) - USD ($) | Sep. 29, 2018 | Dec. 30, 2017 |
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities, current | $ 3,050,000 | $ 6,969,000 |
Fair value of derivative liabilities, noncurrent | 1,230,000 | 9,155,000 |
Stranded tax benefit in AOCL | 2,100,000 | |
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedges | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount | 465,000,000 | 500,000,000 |
Hedge position in AOCL, net of tax | $ 1,059,000 | $ 9,868,000 |
Stock Incentive Plan - Narrativ
Stock Incentive Plan - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 29, 2018 | Sep. 29, 2018 | Sep. 30, 2017 | Dec. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Tax benefit from option exercises | $ 13,900 | $ 18,000 | ||
Non-cash stock-based compensation expense | 9,500 | $ 13,749 | $ 3,140 | |
Long-term incentive expense | 4,600 | |||
Offering-related expenses | 700 | |||
Excess payroll taxes associated with exercises of stock options | $ 900 | |||
Number of option awards issued and outstanding (shares) | 7,670,164 | 7,670,164 | 10,516,116 | |
Underwritten Public Offering | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares sold (shares) | 16,614,852 | |||
2014 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate number of shares reserved under stock incentive plan (shares) | 10,988,827 | 10,988,827 | ||
Number of shares available for future grants (shares) | 468,975 | 468,975 | ||
2017 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate number of shares reserved under stock incentive plan (shares) | 4,000,000 | 4,000,000 | ||
Number of shares available for future grants (shares) | 3,733,259 | 3,733,259 | ||
Number of option awards issued and outstanding (shares) | 92,443 | 92,443 | ||
Service-Based and Performance-Based | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price of options exercised (in usd per share) | $ 5.74 | |||
Intrinsic value of options exercised | $ 81,600 | |||
Performance-Based | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of option awards issued and outstanding (shares) | 4,933,842 | 4,933,842 | 6,524,152 | |
Performance-Based | 2014 Stock Incentive Plan | Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted (shares) | 217,390 | |||
Percentage of performance-based grant that vested due to targets met (percent) | 20.00% | |||
MOIC Performance-Based | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage of performance-based grant that vested due to targets met (percent) | 40.00% | |||
Service-Based | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of option awards issued and outstanding (shares) | 2,635,147 | 2,635,147 | 3,822,915 | |
Restricted Stock Units | 2017 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of restricted stock unit awards issued and outstanding (shares) | 174,298 | 174,298 |
Stock Incentive Plan - Stock Op
Stock Incentive Plan - Stock Option Activity (Details) | 9 Months Ended |
Sep. 29, 2018shares | |
Options issued and outstanding | |
Outstanding, beginning balance (shares) | 10,516,116 |
Exercised (shares) | (2,446,429) |
Forfeited (shares) | (399,523) |
Outstanding, ending balance (shares) | 7,670,164 |
Options vested and exercisable | |
Exercisable, beginning balance (shares) | 1,843,550 |
Vested (shares) | 3,219,286 |
Exercised (shares) | (2,446,429) |
Forfeited (shares) | (4,548) |
Exercisable, ending balance (shares) | 2,611,859 |
Rollover | |
Options issued and outstanding | |
Outstanding, beginning balance (shares) | 169,049 |
Exercised (shares) | (67,874) |
Forfeited (shares) | 0 |
Outstanding, ending balance (shares) | 101,175 |
Options vested and exercisable | |
Exercisable, beginning balance (shares) | 169,049 |
Vested (shares) | 0 |
Exercised (shares) | (67,874) |
Forfeited (shares) | 0 |
Exercisable, ending balance (shares) | 101,175 |
Service-Based | |
Options issued and outstanding | |
Outstanding, beginning balance (shares) | 3,822,915 |
Exercised (shares) | (1,117,583) |
Forfeited (shares) | (70,185) |
Outstanding, ending balance (shares) | 2,635,147 |
Options vested and exercisable | |
Exercisable, beginning balance (shares) | 1,631,023 |
Vested (shares) | 812,936 |
Exercised (shares) | (1,117,583) |
Forfeited (shares) | (4,548) |
Exercisable, ending balance (shares) | 1,321,828 |
Performance-Based | |
Options issued and outstanding | |
Outstanding, beginning balance (shares) | 6,524,152 |
Exercised (shares) | (1,260,972) |
Forfeited (shares) | (329,338) |
Outstanding, ending balance (shares) | 4,933,842 |
Options vested and exercisable | |
Exercisable, beginning balance (shares) | 43,478 |
Vested (shares) | 2,406,350 |
Exercised (shares) | (1,260,972) |
Forfeited (shares) | 0 |
Exercisable, ending balance (shares) | 1,188,856 |
Related Party Transactions - Tr
Related Party Transactions - Transactions With Equity Sponsors (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
KKR Sponsor | ||||
Related Party Transaction [Line Items] | ||||
Fees paid to equity sponsors | $ 0 | $ 220 | $ 0 | $ 2,993 |
Sponsor fees presented in debt issuance costs | 2,300 | |||
Berkshire Partners LLC | ||||
Related Party Transaction [Line Items] | ||||
Fees paid to equity sponsors | $ 0 | $ 52 | $ 0 | $ 156 |
Related Party Transactions - Eq
Related Party Transactions - Equity in Net Assets of Non-Consolidated Investee (Details) - Equity Method Investee - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | Dec. 30, 2017 | Aug. 29, 2017 | |
Related Party Transaction [Line Items] | ||||||
Interest in investee's net losses | $ 0.4 | $ 0.4 | $ 1 | $ 0.7 | ||
Equity method investment | $ 1.4 | 1.4 | $ 2.3 | |||
Licensing fees in SG&A | $ 0.2 | $ 0.2 | $ 0.7 | |||
Loan receivable | $ 1.5 |
Revenue From Contracts With C_3
Revenue From Contracts With Customers - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 387,425 | $ 346,089 | $ 1,180,932 | $ 1,053,489 |
Revenues recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 352,245 | 1,075,355 | ||
Revenues recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 35,180 | $ 105,577 |
Revenue From Contracts With C_4
Revenue From Contracts With Customers - Effect of Adoption on Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Jan. 01, 2018 | Dec. 30, 2017 |
Current liabilities: | |||
Deferred revenue, current | $ 53,951 | $ 62,993 | |
Total current liabilities | 197,199 | 211,309 | |
Other non-current liabilities: | |||
Deferred revenue, noncurrent | 20,723 | 31,222 | |
Deferred income taxes, net | 75,378 | 73,648 | |
Total other non-current liabilities | 138,392 | 150,914 | |
Stockholders’ equity: | |||
Retained earnings | 100,113 | 37,145 | |
Total stockholders’ equity | 758,171 | $ 659,588 | |
Without ASC 606 Adoption | |||
Current liabilities: | |||
Deferred revenue, current | 69,764 | ||
Total current liabilities | 213,012 | ||
Other non-current liabilities: | |||
Deferred revenue, noncurrent | 32,515 | ||
Deferred income taxes, net | 68,306 | ||
Total other non-current liabilities | 143,112 | ||
Stockholders’ equity: | |||
Retained earnings | 79,580 | ||
Total stockholders’ equity | 737,638 | ||
Impact of Adoption | ASU No. 2014-09 | |||
Current liabilities: | |||
Deferred revenue, current | (15,813) | $ (14,000) | |
Total current liabilities | (15,813) | ||
Other non-current liabilities: | |||
Deferred revenue, noncurrent | (11,792) | (11,800) | |
Deferred income taxes, net | 7,072 | 6,800 | |
Total other non-current liabilities | (4,720) | ||
Stockholders’ equity: | |||
Retained earnings | 20,533 | $ 19,000 | |
Total stockholders’ equity | $ 20,533 |
Revenue From Contracts With C_5
Revenue From Contracts With Customers - Effect of Adoption on Statements of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenue | $ 387,425 | $ 346,089 | $ 1,180,932 | $ 1,053,489 |
Income from operations | (1,215) | 16,560 | 64,221 | 70,054 |
Earnings before income taxes | (10,622) | 1,709 | 36,077 | 26,387 |
Income tax (benefit) provision | (16,438) | 163 | (7,863) | 9,267 |
Net income | $ 5,816 | $ 1,546 | $ 43,940 | $ 17,120 |
Earnings per share: | ||||
Basic (in usd per share) | $ 0.08 | $ 0.03 | $ 0.58 | $ 0.30 |
Diluted (in usd per share) | $ 0.07 | $ 0.03 | $ 0.56 | $ 0.29 |
Net sales of services and plans | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenue | $ 68,113 | $ 62,441 | $ 203,435 | $ 186,297 |
Without ASC 606 Adoption | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenue | 386,963 | 1,179,103 | ||
Income from operations | (1,677) | 62,392 | ||
Earnings before income taxes | (11,084) | 34,248 | ||
Income tax (benefit) provision | (16,556) | (8,331) | ||
Net income | $ 5,472 | $ 42,579 | ||
Earnings per share: | ||||
Basic (in usd per share) | $ 0.07 | $ 0.57 | ||
Diluted (in usd per share) | $ 0.07 | $ 0.54 | ||
Without ASC 606 Adoption | Net sales of services and plans | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenue | $ 67,651 | $ 201,606 | ||
Impact of Adoption | ASU No. 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenue | 462 | 1,829 | ||
Income from operations | 462 | 1,829 | ||
Earnings before income taxes | 462 | 1,829 | ||
Income tax (benefit) provision | 118 | 468 | ||
Net income | $ 344 | $ 1,361 | ||
Earnings per share: | ||||
Basic (in usd per share) | $ 0.01 | $ 0.01 | ||
Diluted (in usd per share) | $ 0 | $ 0.02 | ||
Impact of Adoption | ASU No. 2014-09 | Net sales of services and plans | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenue | $ 462 | $ 1,829 |
Revenue From Contracts With C_6
Revenue From Contracts With Customers - Unsatisfied Performance Obligations (Details) $ in Millions | 9 Months Ended |
Sep. 29, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-09-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 19.2 |
Performance obligations expected to be satisfied, expected timing | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 39.7 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 12.5 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 3 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 0.2 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 0.1 |
Performance obligations expected to be satisfied, expected timing |
Revenue From Contracts With C_7
Revenue From Contracts With Customers - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Time frame for majority of payments on health care plans and programs accounts (in days) | 90 days | |||
Bad debt expense | $ 1,700 | $ 1,900 | $ 4,981 | $ 4,513 |
Deferred revenue | 74,700 | 74,700 | ||
Previously deferred revenue recognized | $ 26,500 | $ 78,500 | ||
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
General payment terms for accounts on health care plans and programs (in days) | 14 days | |||
Unearned revenue, estimated delivery time for period end calculation (in days) | 4 days | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
General payment terms for accounts on health care plans and programs (in days) | 120 days | |||
Unearned revenue, estimated delivery time for period end calculation (in days) | 10 days | |||
Owned & Host | ||||
Disaggregation of Revenue [Line Items] | ||||
Extended warranty plan, term (in years) | 1 year | |||
Owned & Host | Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Eyecare club membership, term (in years) | 3 years | |||
Owned & Host | Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Eyecare club membership, term (in years) | 5 years |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands | Nov. 08, 2017 | May 31, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | Jul. 01, 2017 | Sep. 29, 2018 | Sep. 30, 2017 |
Loss Contingencies [Line Items] | |||||||
Litigation settlement | $ 0 | $ 0 | $ 0 | $ 7,000 | |||
1-800 Contacts Matter | |||||||
Loss Contingencies [Line Items] | |||||||
Amount of litigation settlement | $ 7,000 | ||||||
Litigation settlement | $ 7,000 | ||||||
Percent of settlement award deposited in escrow account (percent) | 50.00% | ||||||
Amount of settlement deposited in escrow account | $ 3,500 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 29, 2018USD ($)store | Sep. 30, 2017USD ($) | Sep. 29, 2018USD ($)storesegment | Sep. 30, 2017USD ($) | Dec. 30, 2017store | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Number of retail vision centers | store | 1,067 | 1,067 | 1,013 | ||
Net revenue | $ | $ 387,425 | $ 346,089 | $ 1,180,932 | $ 1,053,489 | |
Legacy | |||||
Segment Reporting Information [Line Items] | |||||
Number of retail vision centers | store | 227 | 227 | |||
Legacy | Management of operations | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | $ | $ 8,600 | $ 9,100 | $ 27,000 | $ 28,300 | |
Customer Concentration Risk | Sales revenue | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (percent) | 10.10% |
Segment Reporting - Financial D
Segment Reporting - Financial Data by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Total net revenue | $ 387,425 | $ 346,089 | $ 1,180,932 | $ 1,053,489 |
Total costs applicable to revenue | 182,588 | 162,358 | 540,101 | 484,573 |
SG&A | 184,424 | 151,251 | 519,564 | 445,714 |
Asset impairment | 2,137 | 0 | 2,137 | 1,000 |
Debt issuance costs | 0 | 0 | 0 | 2,702 |
Litigation settlement | 0 | 0 | 0 | 7,000 |
Other expense, net | 411 | 568 | 829 | 744 |
EBITDA | 17,865 | 31,912 | 118,301 | 111,756 |
Depreciation and amortization | 19,080 | 15,352 | 54,080 | 44,404 |
Interest expense, net | 9,407 | 14,851 | 28,144 | 40,965 |
(Loss) earnings before income taxes | (10,622) | 1,709 | 36,077 | 26,387 |
Products | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 319,312 | 283,648 | 977,497 | 867,192 |
Total costs applicable to revenue | 130,951 | 115,752 | 389,560 | 349,099 |
Services and plans | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 68,113 | 62,441 | 203,435 | 186,297 |
Total costs applicable to revenue | 51,637 | 46,606 | 150,541 | 135,474 |
Operating Segments | Owned & Host | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 296,555 | 259,154 | 906,565 | 795,941 |
Total costs applicable to revenue | 118,113 | 102,554 | 349,903 | 304,506 |
SG&A | 118,384 | 103,851 | 349,239 | 304,168 |
Asset impairment | 0 | 0 | 0 | |
Debt issuance costs | 0 | |||
Litigation settlement | 0 | |||
Other expense, net | 0 | 0 | 0 | 0 |
EBITDA | 60,058 | 52,749 | 207,423 | 187,267 |
Operating Segments | Owned & Host | Products | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 240,882 | 211,035 | 738,886 | 649,526 |
Total costs applicable to revenue | 72,532 | 63,159 | 217,195 | 190,604 |
Operating Segments | Owned & Host | Services and plans | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 55,673 | 48,119 | 167,679 | 146,415 |
Total costs applicable to revenue | 45,581 | 39,395 | 132,708 | 113,902 |
Operating Segments | Legacy | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 37,228 | 37,367 | 119,092 | 116,668 |
Total costs applicable to revenue | 16,452 | 16,006 | 51,321 | 49,047 |
SG&A | 13,621 | 12,904 | 40,519 | 39,087 |
Asset impairment | 0 | 0 | 0 | |
Debt issuance costs | 0 | |||
Litigation settlement | 0 | |||
Other expense, net | 0 | 0 | 0 | 0 |
EBITDA | 7,155 | 8,457 | 27,252 | 28,534 |
Operating Segments | Legacy | Products | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 24,739 | 24,503 | 80,004 | 78,828 |
Total costs applicable to revenue | 11,328 | 11,427 | 36,356 | 37,138 |
Operating Segments | Legacy | Services and plans | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 12,489 | 12,864 | 39,088 | 37,840 |
Total costs applicable to revenue | 5,124 | 4,579 | 14,965 | 11,909 |
Operating Segments | Corporate/Other | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 54,198 | 49,531 | 156,795 | 145,645 |
Total costs applicable to revenue | 47,813 | 43,331 | 137,599 | 129,779 |
SG&A | 52,419 | 34,496 | 129,806 | 102,459 |
Asset impairment | 2,137 | 2,137 | 1,000 | |
Debt issuance costs | 2,702 | |||
Litigation settlement | 7,000 | |||
Other expense, net | 411 | 568 | 829 | 744 |
EBITDA | (48,582) | (28,864) | (113,576) | (98,039) |
Operating Segments | Corporate/Other | Products | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 53,286 | 46,421 | 153,856 | 134,371 |
Total costs applicable to revenue | 46,881 | 40,699 | 134,731 | 120,116 |
Operating Segments | Corporate/Other | Services and plans | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 912 | 3,110 | 2,939 | 11,274 |
Total costs applicable to revenue | 932 | 2,632 | 2,868 | 9,663 |
Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | (556) | 37 | (1,520) | (4,765) |
Total costs applicable to revenue | 210 | 467 | 1,278 | 1,241 |
SG&A | 0 | 0 | 0 | 0 |
Asset impairment | 0 | 0 | 0 | |
Debt issuance costs | 0 | |||
Litigation settlement | 0 | |||
Other expense, net | 0 | 0 | 0 | 0 |
EBITDA | (766) | (430) | (2,798) | (6,006) |
Reconciling Items | Products | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | 405 | 1,689 | 4,751 | 4,467 |
Total costs applicable to revenue | 210 | 467 | 1,278 | 1,241 |
Reconciling Items | Services and plans | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenue | (961) | (1,652) | (6,271) | (9,232) |
Total costs applicable to revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic and Diluted EPS Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 5,816 | $ 1,546 | $ 43,940 | $ 17,120 |
Weighted average shares outstanding for basic EPS | 76,118 | 56,414 | 75,361 | 56,363 |
Effect of dilutive securities: | ||||
Stock options | 3,485 | 2,045 | 3,119 | 1,918 |
Restricted stock | 107 | 0 | 91 | 0 |
Weighted average shares outstanding for diluted EPS | 79,710 | 58,459 | 78,571 | 58,281 |
Basic EPS (in usd per share) | $ 0.08 | $ 0.03 | $ 0.58 | $ 0.30 |
Diluted EPS (in usd per share) | $ 0.07 | $ 0.03 | $ 0.56 | $ 0.29 |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive options outstanding excluded from EPS | 0 | 0 | 0 | 339 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 659,588 | |||
Ending balance | $ 758,171 | 758,171 | ||
Cash Flow Hedges | ||||
Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Beginning balance | (2,746) | $ (14,605) | (9,868) | $ (14,556) |
Other comprehensive income (loss) before reclassification | 854 | (371) | 6,696 | (3,950) |
Tax effect of other comprehensive income (loss) before reclassification | (218) | 143 | (1,715) | 1,526 |
Amount reclassified from AOCL | 1,413 | 2,625 | 5,146 | 6,126 |
Tax effect of amount reclassified from AOCL | (362) | (1,015) | (1,318) | (2,369) |
Net current period other comprehensive income, net of tax | 1,687 | 1,382 | 8,809 | 1,333 |
Ending balance | $ (1,059) | $ (13,223) | $ (1,059) | $ (13,223) |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Subsequent Event - October 2018 Joinder - Term A Loans | Oct. 09, 2018USD ($) |
Subsequent Event [Line Items] | |
Aggregate principal amount | $ 200,000,000 |
Amortization per annum, year one through year three (percent) | 2.50% |
Amortization per annum, year four and thereafter (percent) | 5.00% |
Maximum allowable quarter end Consolidated Total Debt To Consolidated EBITDA Ratio | 4.75 |
Maximum allowable quarter end Consolidated Interest Coverage Ratio | 3 |
LIBOR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 1.75% |
ABR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 0.75% |
Total Leverage Ratio Less Than 2.00 | Maximum | |
Subsequent Event [Line Items] | |
Total leverage ratio | 2 |
Total Leverage Ratio Less Than 2.00 | LIBOR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 1.25% |
Total Leverage Ratio Less Than 2.00 | ABR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 0.25% |
Total Leverage Ratio Between 2.00 and 2.50 | Minimum | |
Subsequent Event [Line Items] | |
Total leverage ratio | 2 |
Total Leverage Ratio Between 2.00 and 2.50 | Maximum | |
Subsequent Event [Line Items] | |
Total leverage ratio | 2.50 |
Total Leverage Ratio Between 2.00 and 2.50 | LIBOR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 1.50% |
Total Leverage Ratio Between 2.00 and 2.50 | ABR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 0.50% |
Total Leverage Ratio Greater Than 2.50 | Minimum | |
Subsequent Event [Line Items] | |
Total leverage ratio | 2.50 |
Total Leverage Ratio Greater Than 2.50 | LIBOR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 1.75% |
Total Leverage Ratio Greater Than 2.50 | ABR | |
Subsequent Event [Line Items] | |
Applicable margin (percent) | 0.75% |
Uncategorized Items - eye-20180
Label | Element | Value |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 980,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 1,188,000 |