Cover
Cover - USD ($) $ in Billions | 12 Months Ended | ||
Jan. 02, 2021 | Feb. 26, 2021 | Jun. 27, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jan. 2, 2021 | ||
Current Fiscal Year End Date | --01-02 | ||
Document Transition Report | false | ||
Entity File Number | 001-38257 | ||
Entity Registrant Name | National Vision Holdings, Inc. | ||
Entity Central Index Key | 0001710155 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 46-4841717 | ||
Entity Address, Address Line One | 2435 Commerce Ave | ||
Entity Address, Address Line Two | Building 2200 | ||
Entity Address, City or Town | Duluth | ||
Entity Address, State or Province | GA | ||
Entity Address, Postal Zip Code | 30096 | ||
City Area Code | 770 | ||
Local Phone Number | 822‑3600 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | EYE | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.3 | ||
Entity Common Stock, Shares Outstanding | 81,311,893 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive Proxy Statement for its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended January 2, 2021. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 373,903 | $ 39,342 |
Accounts receivable, net | 57,989 | 44,475 |
Inventories | 111,274 | 127,556 |
Prepaid expenses and other current assets | 23,484 | 23,266 |
Total current assets | 566,650 | 234,639 |
Property and equipment, net | 341,293 | 366,767 |
Other assets: | ||
Goodwill | 777,613 | 777,613 |
Trademarks and trade names | 240,547 | 240,547 |
Other intangible assets, net | 49,511 | 56,940 |
Right of use assets | 340,141 | 348,090 |
Other assets | 17,743 | 8,129 |
Total non-current assets | 1,766,848 | 1,798,086 |
Total assets | 2,333,498 | 2,032,725 |
Current liabilities: | ||
Accounts payable | 64,861 | 40,782 |
Other payables and accrued expenses | 110,309 | 82,829 |
Unearned revenue | 32,657 | 28,002 |
Deferred revenue | 58,899 | 55,870 |
Current maturities of long-term debt and finance lease obligations | 3,598 | 13,759 |
Current operating lease obligations | 58,356 | 51,937 |
Total current liabilities | 328,680 | 273,179 |
Long-term debt and finance lease obligations, less current portion and debt discount | 651,763 | 555,933 |
Non-current operating lease obligations | 327,371 | 331,769 |
Other non-current liabilities: | ||
Deferred revenue | 20,828 | 21,530 |
Other liabilities | 17,415 | 13,731 |
Deferred income taxes, net | 80,939 | 60,146 |
Total other non-current liabilities | 119,182 | 95,407 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 82,183 and 80,603 shares issued as of January 2, 2021 and December 28, 2019, respectively; 81,239 and 79,678 shares outstanding as of January 2, 2021 and December 28, 2019, respectively | 821 | 805 |
Additional paid-in capital | 795,697 | 700,121 |
Accumulated other comprehensive loss | (4,400) | (3,814) |
Retained earnings | 142,880 | 107,132 |
Treasury stock, at cost; 944 and 925 shares as of January 2, 2021 and December 28, 2019, respectively | (28,496) | (27,807) |
Total stockholders’ equity | 906,502 | 776,437 |
Total liabilities and stockholders’ equity | $ 2,333,498 | $ 2,032,725 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jan. 02, 2021 | Dec. 28, 2019 | Aug. 12, 2019 |
Statement of Financial Position [Abstract] | |||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, authorized (shares) | 200,000,000 | 200,000,000 | |
Common stock, issued (shares) | 82,183,000 | 80,603,000 | |
Common stock, outstanding (shares) | 81,239,000 | 79,678,000 | |
Treasury stock, at cost (shares) | 944,000 | 925,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Revenue: | |||
Total net revenue | $ 1,711,760 | $ 1,724,331 | $ 1,536,854 |
Costs applicable to revenue (exclusive of depreciation and amortization): | |||
Total costs applicable to revenue | 786,624 | 806,519 | 713,571 |
Operating expenses: | |||
Selling, general and administrative expenses | 720,590 | 744,488 | 687,476 |
Depreciation and amortization | 91,585 | 87,244 | 74,339 |
Asset impairment | 22,004 | 8,894 | 17,630 |
Litigation settlement | 4,395 | 0 | 0 |
Other expense (income), net | (445) | 3,611 | 1,487 |
Total operating expenses | 838,129 | 844,237 | 780,932 |
Income from operations | 87,007 | 73,575 | 42,351 |
Interest expense, net | 48,171 | 33,300 | 37,283 |
Debt issuance costs | 156 | 0 | 200 |
Loss on extinguishment of debt | 0 | 9,786 | 0 |
Earnings before income taxes | 38,680 | 30,489 | 4,868 |
Income tax provision (benefit) | 2,403 | (2,309) | (18,785) |
Net income | $ 36,277 | $ 32,798 | $ 23,653 |
Earnings per share: | |||
Basic (in usd per share) | $ 0.45 | $ 0.42 | $ 0.31 |
Diluted (in usd per share) | $ 0.44 | $ 0.40 | $ 0.30 |
Weighted average shares outstanding: | |||
Basic (shares) | 80,565 | 78,608 | 75,899 |
Diluted (shares) | 82,793 | 81,683 | 79,041 |
Comprehensive income: | |||
Net income | $ 36,277 | $ 32,798 | $ 23,653 |
Unrealized gain (loss) on hedge instruments | (780) | (1,350) | 9,488 |
Tax provision (benefit) of unrealized gain (loss) on hedge instruments | (194) | (346) | 2,430 |
Comprehensive income | 35,691 | 31,794 | 30,711 |
Products | |||
Revenue: | |||
Total net revenue | 1,418,283 | 1,426,136 | 1,269,612 |
Costs applicable to revenue (exclusive of depreciation and amortization): | |||
Total costs applicable to revenue | 551,783 | 574,351 | 511,406 |
Services and plans | |||
Revenue: | |||
Total net revenue | 293,477 | 298,195 | 267,242 |
Costs applicable to revenue (exclusive of depreciation and amortization): | |||
Total costs applicable to revenue | $ 234,841 | $ 232,168 | $ 202,165 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative effect of change in accounting principle | Balances, as adjusted | Common Stock | Common StockBalances, as adjusted | Additional Paid-In Capital | Additional Paid-In CapitalBalances, as adjusted | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossBalances, as adjusted | Retained Earnings | Retained EarningsCumulative effect of change in accounting principle | Retained EarningsBalances, as adjusted | Treasury Stock | Treasury StockBalances, as adjusted |
Beginning balance (shares) at Dec. 30, 2017 | 74,654 | 74,654 | ||||||||||||
Beginning balance at Dec. 30, 2017 | $ 654,600 | $ 19,030 | $ 673,630 | $ 746 | $ 746 | $ 631,798 | $ 631,798 | $ (9,868) | $ (9,868) | $ 32,157 | $ 19,030 | $ 51,187 | $ (233) | $ (233) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (shares) | 3,564 | |||||||||||||
Issuance of common stock | 19,802 | $ 36 | 19,766 | |||||||||||
Stock based compensation | 20,939 | 20,939 | ||||||||||||
Purchase of treasury stock (shares) | (51) | |||||||||||||
Purchase of treasury stock | (1,928) | (1,928) | ||||||||||||
Unrealized gain (loss) on hedge instruments, net of tax | 7,058 | 7,058 | ||||||||||||
Net income | 23,653 | 23,653 | ||||||||||||
Ending balance (shares) at Dec. 29, 2018 | 78,167 | 78,167 | ||||||||||||
Ending balance at Dec. 29, 2018 | 743,154 | (506) | 742,648 | $ 782 | $ 782 | 672,503 | 672,503 | (2,810) | (2,810) | 74,840 | (506) | 74,334 | (2,161) | (2,161) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (shares) | 2,357 | |||||||||||||
Issuance of common stock | 15,090 | $ 23 | 15,067 | |||||||||||
Stock based compensation | 12,551 | 12,551 | ||||||||||||
Purchase of treasury stock (shares) | (846) | |||||||||||||
Purchase of treasury stock | (25,646) | (25,646) | ||||||||||||
Unrealized gain (loss) on hedge instruments, net of tax | (1,004) | (1,004) | ||||||||||||
Net income | 32,798 | 32,798 | ||||||||||||
Ending balance (shares) at Dec. 28, 2019 | 79,678 | 79,678 | ||||||||||||
Ending balance at Dec. 28, 2019 | 776,437 | $ (529) | $ 775,908 | $ 805 | $ 805 | 700,121 | $ 700,121 | (3,814) | $ (3,814) | 107,132 | $ (529) | $ 106,603 | (27,807) | $ (27,807) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issuance of common stock (shares) | 1,580 | |||||||||||||
Issuance of common stock | 13,591 | $ 16 | 13,575 | |||||||||||
Stock based compensation | 10,616 | 10,616 | ||||||||||||
Purchase of treasury stock (shares) | (19) | |||||||||||||
Purchase of treasury stock | (689) | (689) | ||||||||||||
Conversion option related to convertible senior notes, net of allocated costs and tax | 71,385 | 71,385 | ||||||||||||
Unrealized gain (loss) on hedge instruments, net of tax | (586) | (586) | ||||||||||||
Net income | 36,277 | 36,277 | ||||||||||||
Ending balance (shares) at Jan. 02, 2021 | 81,239 | |||||||||||||
Ending balance at Jan. 02, 2021 | $ 906,502 | $ 821 | $ 795,697 | $ (4,400) | $ 142,880 | $ (28,496) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Cash flows from operating activities: | |||
Net income | $ 36,277 | $ 32,798 | $ 23,653 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization | 91,585 | 87,244 | 74,339 |
Amortization of debt discount and deferred financing costs | 11,895 | 1,289 | 1,848 |
Asset impairment | 22,004 | 8,894 | 17,630 |
Deferred income tax expense (benefit) | (233) | (2,378) | (19,340) |
Stock based compensation expense | 10,740 | 12,670 | 20,939 |
Losses (gains) on change in fair value of derivatives | 4,014 | 0 | 0 |
Inventory adjustments | 4,852 | 4,352 | 3,868 |
Credit loss expense | 671 | 8,210 | 7,107 |
Loss on extinguishment of debt | 0 | 9,786 | 0 |
Other | 1,813 | 5,309 | 2,613 |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | (13,697) | (6,925) | (14,649) |
Inventories | 11,430 | (15,886) | (28,739) |
Other assets | (4,422) | 10,103 | (7,011) |
Accounts payable | 24,079 | (2,860) | 7,934 |
Deferred revenue | 2,327 | 5,122 | 3,839 |
Other liabilities | 31,646 | 7,353 | 12,597 |
Net cash provided by operating activities | 234,981 | 165,081 | 106,628 |
Cash flows from investing activities: | |||
Purchase of property and equipment | (76,823) | (101,325) | (104,493) |
Other | 413 | 694 | 272 |
Net cash used for investing activities | (76,410) | (100,631) | (104,221) |
Cash flows from financing activities: | |||
Borrowings on long-term debt, net of discounts | 548,769 | 566,550 | 200,000 |
Repayments on long-term debt | (369,269) | (591,925) | (204,275) |
Proceeds from exercise of stock options | 13,105 | 14,767 | 19,802 |
Purchase of treasury stock | (689) | (25,646) | (1,928) |
Payments of debt issuance costs | (12,439) | (2,930) | (1,400) |
Payments on finance lease obligations | (3,196) | (2,957) | |
Payments on finance lease obligations | (1,802) | ||
Net cash provided by (used for) financing activities | 176,281 | (42,141) | 10,397 |
Net change in cash, cash equivalents and restricted cash | 334,852 | 22,309 | 12,804 |
Cash and cash equivalents and restricted cash, beginning of year | 40,307 | 17,998 | 5,194 |
Cash and cash equivalents and restricted cash, end of year | 375,159 | 40,307 | 17,998 |
Supplemental cash flow information: | |||
Cash paid for interest | 30,786 | 33,935 | 33,469 |
Cash paid (received) for taxes | 894 | 684 | 1,447 |
Capital expenditures accrued at the end of the period | 8,455 | 9,059 | 14,078 |
Right of use assets acquired under finance leases | 1,257 | 9,713 | 14,303 |
Right of use assets acquired under operating leases | 68,081 | 108,712 | 0 |
Non-cash issuance of common shares | 0 | 0 | 446 |
Non-cash purchase of treasury stock | $ 0 | $ 0 | $ (446) |
Business and Significant Accoun
Business and Significant Accounting Policies | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Business and Significant Accounting Policies | Business and Significant Accounting Policies 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 wholly owned subsidiaries. We are a leading value retailer of eyeglasses and contact lenses in the United States. We operated 1,205 and 1,151 retail optical locations in the United States and its territories as of the fiscal years ended January 2, 2021 and December 28, 2019, respectively, through our five store brands, including America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on select U.S. Army/Air Force military bases (“Military”) and within select Fred Meyer (“Fred Meyer”) stores, and our management & services arrangement with Walmart (“Legacy”). We sell contact lenses and optical accessory products to retail customers through proprietary retail web sites and web sites on behalf of certain independent retailers and insurance companies. We also distribute contact lenses to Walmart and Sam’s Club store locations. We also operate a specialized health maintenance organization (“HMO”) that is licensed as a single-service health plan under California law. The HMO issues individual vision plans in connection with our America’s Best operations in California, and provides, or arranges for the provision of, optometric services at the offices next to certain Walmart stores throughout California. Fiscal Year We operate on a retail fiscal calendar that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to December 31. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References herein to “fiscal year 2020,” relate to the 53 weeks ended January 2, 2021, and references to “fiscal year 2019,” and “fiscal year 2018,” relate to the 52 weeks ended December 28, 2019 and December 29, 2018, respectively. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. Basis of Presentation and Principles of Consolidation We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The 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. 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. Secondary Public Offerings During fiscal year 2018, we completed three underwritten public offerings in which KKR, Berkshire and certain management stockholders (“selling stockholders”) sold an aggregate of 42,914,852 shares of the Company’s common stock. The Company did not receive any proceeds from the offerings. However, the second and third offerings resulted in certain incentive compensation expenses relating to vesting of performance-based stock options and a payout under a non-executive long-term incentive plan. On August 7, 2019, the Company entered into an Underwriting Agreement by and among the Company, KKR Vision Aggregator L.P. (the “Selling Stockholder”), and Goldman Sachs & Co. LLC, as underwriter (the “Underwriter”), relating to an underwritten offering of 9,149,908 shares of the Company’s common stock, par value $0.01 per share. The offering was completed on August 12, 2019. In connection with the offering, our Board of Directors authorized, and the Company completed, a repurchase of 819,134 shares out of the 9,149,908 shares of common stock subject to the offering from the Underwriter at $30.52 per share, which was the price the Underwriter purchased the shares from the Selling Stockholder in the offering. The Company did not receive any proceeds from the offering. As a result of this underwritten offering and concurrent share repurchase, the Selling Stockholder no longer owned any shares of our common stock. The secondary offering constituted a vesting event whereby a final portion of the performance-based options vested and the remaining portion of unvested performance options awarded under the 2014 Stock Incentive Plan was forfeited. As a result of the offering, we incurred $4.2 million of non-cash stock-based compensation expense and additionally recorded $2.8 million in long-term cash incentive compensation expense and $0.4 million in offering related SG&A expenses for fiscal year end 2019. CARES Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, accelerates a company’s ability to recover Alternative Minimum Tax (“AMT”) refundable credits that otherwise could have been claimed in 2020 and 2021, to 2018 and 2019, with an option to elect recovery of the full credit amount for 2018. The Company has elected to apply the AMT refundable credit provision of the CARES Act and has reclassified $1.3 million of AMT credits from Deferred income taxes, net as of December 28, 2019 to Prepaid expenses and other assets as of January 2, 2021. The CARES Act also includes a technical correction wherein qualified improvement property placed in service in 2018 and after is eligible for 100% bonus depreciation. This provision of the CARES Act resulted in an increase in our NOL carry-forwards with an offsetting increase in our gross deferred tax liability relating to property and equipment of approximately $25.0 million ($6.4 million tax impact) as of January 2, 2021. In addition, as a result of the employee retention credits made available under the CARES Act for U.S. associates the Company recognized $0.4 million as a reduction to costs of products, $6.2 million as a reduction to costs of services and plans, and $4.4 million as a reduction to SG&A during fiscal year 2020. The Company recognizes government grants for which there is a reasonable assurance of compliance with grant conditions and receipt of credits. We believe there is a reasonable assurance that the Company will comply with the relevant conditions of the employee retention credit provision of the CARES Act, and that we will receive the credits for which we have applied. We elected to offset credits recognized under the CARES against payroll taxes that would otherwise be payable. We will continue to assess our treatment of the CARES Act to the extent additional guidance and regulations are issued, the further applicability of the CARES Act to the Company, and the potential impacts on our business. In addition to the CARES Act, the Consolidated Appropriations Act, 2021, H.R. 133 was signed into law on December 27, 2020 and, among other things, allows for 100% deductibility of meals and entertainment expenses for the tax years ending in 2021 and 2022. Cash and Cash Equivalents Cash consists of currency and demand deposits with financial institutions and money market funds. We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. We also review cash balances on a bank by bank basis to identify book overdrafts. Book overdrafts occur when the amount of outstanding checks exceed the cash deposited at a bank. We reclassify book overdrafts, if any, to accounts payable in the accompanying consolidated balance sheets. Accounts Receivable, Net 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. Accounts receivable are reduced by allowances for credit losses. Estimates of our allowance for credit losses are based on our historical and current operating, billing, and collection trends, as well as current conditions and reasonable and supportable forecasts about the future. Accounts receivable are written off after all collection attempts have been exhausted. Credit loss expense recognized on our receivables, which is presented in SG&A expenses in the Company’s consolidated statements of operations, were approximately $0.7 million, $8.2 million and $7.1 million for the fiscal years 2020, 2019 and 2018, respectively. See Note 7 “Revenues from Contracts with Customers” for further details on the allowance for expected credit losses. Inventories The cost of inventory is determined using the weighted average cost method. Inventories at retail stores consist of finished goods and are valued at the lower of cost or estimated net realizable value (“NRV”). Manufactured inventories are valued using absorption accounting which includes material, labor, other variable costs and other applicable manufacturing overhead. Inventory values are adjusted for estimated obsolescence and written down to NRV based on estimates of current and anticipated demand, customer preference, merchandise age, planned promotional activities, contact lens vendor return acceptance activity, and estimates of future retail sales prices. Shrinkage is estimated and recorded throughout the period as a percentage of cost of sales based on historical results and current inventory levels. Actual shrinkage is recorded throughout the year based upon periodic physical counts. See Note 2. “Details of Certain Balance Sheet Accounts” for further details. The Company’s inventory consists primarily of contact lenses, eyeglass frames and unprocessed eyeglass lenses. A significant portion of our inventory is supplied by a small number of key vendors. During fiscal year 2020, 93% of contact lens expenditures were with three vendors and 89% of lens expenditures were with one vendor. This exposes us to vendor concentration risk. We are less exposed to a supplier risk for our eyeglass frames as only 52% of frame expenditures were with two vendors. Property and Equipment Property and equipment (“P&E”) is stated at cost less accumulated depreciation. Depreciation associated with P&E is included in depreciation and amortization in the accompanying consolidated statements of operations. When we retire or otherwise dispose of P&E, we remove the cost and related accumulated depreciation from our accounts and recognize any gain or loss on the sale of such assets in SG&A in the consolidated statements of operations. We capitalize major replacements and remodeling, and recognize expenditures for maintenance and repairs in SG&A. We depreciate P&E for financial accounting purposes using the straight-line method over the following estimated useful lives: Buildings 34 years Equipment 3 - 7 years Information technology hardware and software (a) 2 - 5 years Furniture and fixtures 6 years Leasehold improvements (b) 5 - 10 years P&E under capital leases (b) 10 years ____________ (a) Costs of developing or obtaining software for internal use, such as direct costs of materials or services and internal payroll costs related to the software development projects, are capitalized to information technology hardware and software. (b) Depreciation of leasehold improvements is recognized over the shorter of the estimated useful life of the asset or the term of the lease. The term of the lease includes renewal options for additional periods if the exercise of the renewal is considered to be reasonably assured. Goodwill and Intangible Assets Indefinite-lived intangible assets include goodwill and our trademarks and tradenames; we evaluate these assets annually for impairment, or more frequently if events and circumstances indicate that it is more likely than not that goodwill is impaired. Our annual testing date for impairment of goodwill and indefinite-lived intangible assets is the first day of the fourth fiscal quarter, which for fiscal years 2020 and 2019 was September 27, 2020, and September 29, 2019, respectively. Finite-lived, amortizing intangible assets primarily consist of our contracts and relationships with certain retailers and our customer database tool. We amortize finite-lived intangible assets on a straight-line basis over their estimated useful lives, ranging from four Goodwill is impaired if a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. We consider each of our operating segments to be reporting units. We estimate the fair value of our reporting units using the income approach, which is based on a discounted cash flow analysis and calculate the fair value of reporting units by estimating after-tax cash flows discounted using a weighted average cost of capital. The cash flows used in the analysis are based on financial forecasts developed internally by management and require significant judgment. The significant unobservable inputs used in the fair value measurement of the reporting units are revenue growth rate, cost of sales, payroll expense growth rate and other store expenses growth rate. These assumptions are sensitive to future changes in the business profitability, changes in our business strategy and external market conditions, among other factors. A decrease to the long term revenue growth rate assumption or an increase to the expense growth rate assumptions could require us to record goodwill impairment charges. If impairment indicators related to amortizing intangible assets are present, we estimate cash flows expected to be generated over the remaining useful lives of the related assets based on current projections. If the projected net undiscounted cash flows are less than the carrying value of the related assets, we then measure impairment based on a discounted cash flow model and record an impairment charge as the excess of carrying value and estimated fair value. We use the relief-from-royalty method to estimate fair value of our trademarks and tradenames, which involves estimating a royalty rate based on comparable licensing arrangements, applying that rate to the revenue projections for the subject asset, and then estimating fair value using a discounted cash flow analysis. We record an impairment charge as the excess of carrying value over estimated fair value. See Note 3. “Goodwill and Intangible Assets” for further detail on impairment of goodwill and intangible assets. Equity Method Investment The Company has an investment in a private start-up company whose principal business is licensing software to eyeglass retailers. The carrying value of our equity method investment is $0 as of the end of the fiscal year 2020. See Note 10. “Equity in Net Assets of Non-Consolidated Investee,” for further discussion relating to this investment. Fair Value Measurement of Assets and Liabilities (Non-Recurring Basis) Non-financial assets such as P&E, ROU assets and intangible assets are subject to nonrecurring fair value measurements if impairment indicators are present. Factors we consider important that could trigger an impairment review include a significant under-performance compared to expected operating results, a significant or adverse change in customer business climate, and a significant negative industry or economic trend. Deferred Financing Costs and Loan Discounts Costs incurred in connection with long-term debt which are paid directly to the Company’s lenders and to third parties are presented as reductions to our long-term debt balance, except for the costs related to our revolving credit facility (the “Revolving Credit Facility”) which are presented as assets. These costs are amortized over the term of the related financing agreement and included in interest expense in the accompanying consolidated statements of operations. Self-Insurance Liabilities We are primarily self-insured for workers’ compensation, associate health benefits and general liability claims. We record self-insurance liabilities based on claims filed, including the development of those claims and an estimate of claims incurred but not yet reported. Should a different amount of claims occur compared to what was estimated, or costs of the claims increase or decrease beyond what was anticipated, liabilities may need to be adjusted accordingly. We periodically update our estimates and record such adjustments in the period in which such determination is made. Self-insurance liabilities are recorded in Other payables and accrued expenses (current portion) and Other liabilities (non-current portion) on an undiscounted basis in the accompanying consolidated balance sheets. We reinsure worker’s compensation and medical claims above our retention levels with a highly rated financial institution that can be expected to fully perform under the terms of the arrangement. Estimated recoveries from reinsurance in the amount of $1.1 million (current portion) are included in Prepaid expenses and other current assets for both fiscal year end 2020 and fiscal year end 2019, and Other assets in the amounts of $2.3 million and $2.4 million (non-current portion) as of fiscal year end 2020 and fiscal year end 2019, respectively, in the accompanying consolidated balance sheets. The accrued obligation for self-insurance programs was $8.7 million and $8.4 million (current portion) and $7.0 million and $7.3 million (non-current portion) as of fiscal year end 2020 and fiscal year end 2019, respectively. Derivative Financial Instruments The Company uses interest rate derivatives to manage the exposure of its LIBOR-based debt to fluctuations in interest rates. We designate certain of our interest rate derivatives as cash flow hedges and formally document our hedge relationships, including identification of the hedging instruments and the hedged items, as well as our risk management objectives and strategies for undertaking the hedge transactions. We record all interest rate derivatives in our consolidated balance sheets on a gross basis at fair value. Fair value represents estimated amounts we would receive or pay upon a termination of interest rate derivatives prior to their scheduled expiration dates. The fair value was based on information that is model-driven and whose inputs were observable (Level 2 inputs). We do not hold or enter into financial instruments for trading or speculative purposes. The gain or loss res ulting from fair value adjustments for highly effective cash flow hedges is recorded in Accumulated other comprehensive loss (“AOCL”) in the accompanying consolidated balance sheets until the hedged item is recognized as interest expense in the consolidated statements of operations. The gain or loss resulting from fair value adjustments of derivatives not deemed to be highly effective cash flow hedges is recognized in interest expense immediately. We perform periodic assessments of the effectiveness of our derivative contracts designated as hedges, including the possibility of counterparty default. To manage credit risk associated with our interest rate hedging program, we select as counterparties major financial institutions with investment grade credit ratings. The impact of credit risk, as well as the ability of each party to fulfill its obligations under our derivative financial instruments, is considered in determining the fair value of the contracts. We do not have any credit risk-related contingent features or collateral requirements associated with our derivative contracts. See Note 14. “Interest Rate Derivatives” for further details. Accumulated Other Comprehensive Loss AOCL is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Accumulated other comprehensive loss, net of income tax, is entirely composed of the cumulative unrealized loss on our hedging instruments. See Note 18. “Accumulated Other Comprehensive Loss” for details of reclassifications out of AOCL. Revenue Recognition Product revenues include sales of prescription and non-prescription eyewear, contact lenses, related accessories to retail customers (including those covered by managed care) and sales of inventory in which our customer is another retail entity. Revenues from services and plans include eye exams, eyecare club membership fees, product protection plans (i.e. warranties) and HMO vision plan fees. Service revenue also includes fees we earn for managing certain Vision Centers and performing laboratory processing services for our legacy partner. At our America’s Best brand, our signature offer is two pairs of eyeglasses and a free eye exam for one low price (“two-pair offer”). 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 offer. As a result, we do not allocate revenue to the eye exam associated with the two-pair offer, and we record all revenue associated with the offer in Owned & Host net product sales when the customer has received and accepted the merchandise. 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 consolidated balance sheets. Unearned revenue at the end of a reporting period is estimated based on processing and delivery times throughout the current month which generally range from approximately seven Revenue is recognized net of sales taxes and returns and include amounts billed to customers related to shipping and handling costs. The returns allowance is based on historical return patterns. Provisions for estimated returns are established and the expected costs continue to be recognized as reductions to revenue when the products are sold. Shipping and handling costs are accounted for as fulfillment costs and are included in costs applicable to revenue. We record reductions in revenue for estimated price concessions granted to managed care providers. The Company considers its revenue from managed care customers to include variable consideration and estimates such amounts associated with managed care customer revenues using the history of concessions provided and cash receipts from managed care providers; we reduced our net revenue for variable considerations of $7.5 million during the fiscal year 2020. Refer to Note 7. “Revenue from Contracts With Customers” for further details of our revenues. Costs Applicable To Revenue Costs applicable to revenue consist primarily of cost of products sold and costs of administering services and plans. Costs of products sold include (i) costs to procure non-prescription eyewear, contacts and accessories which we purchase and sell in their finished form, (ii) costs to manufacture finished prescription eyeglasses, including direct materials, labor and overhead and (iii) remake costs, warehousing and distribution expenses and internal transfer costs. Costs of services and plans include costs associated with warranty programs, eyecare club memberships, HMO vision plan fees, eyecare practitioner and eye exam technician payroll, taxes and benefits and optometric and other service costs. Depreciation and amortization are excluded from costs applicable to revenue and are presented separately on the accompanying consolidated statements of operations. As a component of the Company’s procurement program, the Company frequently enters into contracts with its vendors that provide for payments of rebates or other allowances. These vendor payments are reflected in the carrying value of the inventory when earned or as progress is made toward earning the rebate or allowance and as a component of cost of products as the inventory is sold. Rebates that have been earned but not yet received are recognized as an increase to Accounts receivable, net or a reduction to Accounts payable, depending on the nature of the agreement with the vendor, until the rebate has been received. Selling, General and Administrative SG&A includes store associate (including optician) payroll, taxes and benefits, occupancy and other store expenses, advertising and promotion, field services, and corporate support. Advertising and promotion costs, including online marketing arrangements, newspaper, direct mail, television and radio, are recorded in SG&A and expensed at the time the advertising first occurs. Production costs of future media advertising and related promotional campaigns are deferred until the advertising events occur. Non-capital expenditures associated with opening new stores, including rent, marketing expenses, travel and relocation costs, and training costs, are recorded in SG&A as incurred. Advertising expenses were $86.5 million, $113.3 million and $107.5 million for fiscal years 2020, 2019 and 2018, respectively. Leases We lease our stores, laboratories, distribution centers, and corporate offices. These leases generally have noncancelable lease terms of between 5 years and 10 years, with an option to renew for additional terms of 1 year to 10 years or more. The lease term includes renewal option periods when the renewal is deemed reasonably certain after considering the value of the leasehold improvements at the end of the noncancelable lease period. Most leases for our stores provide for a minimum rent and typically include escalating rent over time with the exception of Military for which lease payments are variable and based on a percentage of sales. For Vista Optical locations in Fred Meyer stores, we pay fixed rent plus a percentage of sales after certain minimum thresholds are achieved. The Company’s leases generally require us to pay insurance, real estate taxes and common area maintenance expenses, substantially all of which are variable and not included in the measurement of the lease liability. Our lease arrangements frequently include tenant improvement allowances (TIAs), which are contractual amounts received or receivable from a lessor for improvements made to leased properties by the Company. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. With respect to lease accounting guidance, the Company’s management & services agreement with its legacy partner does not contain a lease arrangement. The lease liability is measured at the present value of future lease payments over the lease term less TIAs receivable, and the ROU asset is measured at the lease liability amount, adjusted for prepaid lease payments, TIAs received and the lessee’s initial direct costs. As the rate implicit in the Company’s leases is not easily determinable, the Company’s incremental borrowing rate is used in calculating the present value of the sum of the lease payments. Factors incorporated into the calculation of the lease incremental borrowing rate include lease term, borrowing rates on the Company’s long-term debt, fixed rates on the Company’s interest rate swaps, LIBOR margins for issuers of similar credit rating to NVI and effect of collateralization. For finance leases, a lease ROU asset is recorded as property and equipment and corresponding amounts are recorded as finance lease debt obligations at an amount equal to the lesser of the net present value of minimum lease payments to be made over the lease term or the fair value of the property for leases in existence as of fiscal year end 2018 and at the net present value of the minimum lease payments to be made over the lease term for new finance leases entered into subsequent to fiscal year end 2018. Stock-Based Compensation We measure stock-based compensation cost, which consists of grants of stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), performance stock options and restricted stock awards (“RSAs”) to associates and non-associate directors, based on the estimated grant date fair value of the awards. We recognize compensation expense for all awards over the requisite service period using a straight-line recognition method. Additionally, for awards that are subject to performance conditions, we recognize compensation expense once achievement of the conditions is considered to be probable. We account for forfeitures as they occur. See Note 5. “Stock Incentive Plan” for further details related to our stock-based compensation plans. Long-lived Asset Impairment We evaluate impairment of long-lived tangible and right of use (“ROU”) store assets at the store level, which is the lowest level at which independent cash flows can be identified, when events or conditions indicate the carrying values of such assets may not be recoverable. In making this evaluation, we may consider multiple factors including financial performance of the stores, regional and local business climates, future plans for the store operations and other qualitative factors. If the store’s projected undiscounted net cash flows expected to be generated by the related assets over the life of the primary asset within the asset group are less than the carrying value of the subject assets, we determine an estimate of the fair value of the asset group using an income approach based on discounted cash flows, which require estimates and assumptions related to forecasted store revenue growth rates and store profitability. The cash flows used in estimating fair value were discounted using market rates from 6.3% to 8%. If the fair value of the asset group is less than its carrying value, the loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long lived asset of the group shall not reduce the carrying amount of that asset below its fair value. We consider market-based indications of prevailing rental rates for retail space, market participant discount rates, and lease incentives when estimating the fair values of ROU assets. A decrease in the estimated cash flows would lead to a lower fair value measurement, as would an increase in the discount rate. These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy. We recognized impairments of $22.0 million, $8.9 million and $2.5 million in fiscal years 2020, 2019 and 2018, respectively. These impairment charges were primarily related to our long-lived tangible store assets classified as held and used, and were primarily driven by lower than projected customer sales volume in certain stores; we also considered the historical performance of the stores before the temporary store closures in response to the COVID-19 pandemic, the effect of store closures and uncertainty in store revenues over the remaining useful life of the asset group as a result of the COVID-19 pandemic. The estimated remaining fair value of the assets impaired during fiscal year 2020 was $30.6 million and the estimated remaining fair value of the assets impaired during fiscal year 2019 was $16.6 million; the estimated remaining fair values include amounts estimated at various dates during the related fiscal years. Substantially all of the remaining fair value of the impaired store assets in fiscal year 2020 represent the fair value of ROU assets. We assess non-store long-lived assets, including capitalized software costs in use or under development, for impairment if events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. The asset impairments recognized in fiscal year 2020 includes $1.1 million related to a write-off of certain capitalized software costs that were deemed to be obsolete due to a decision to cease further development. During fiscal years 2019 and 2018 there was no impairment of non-store long-lived assets or capitalized software costs. Income Taxes We account for deferred income taxes based on the asset |
Details of Certain Balance Shee
Details of Certain Balance Sheet Accounts | 12 Months Ended |
Jan. 02, 2021 | |
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 $ 28,405 $ 28,635 Credit card receivables 21,557 14,173 Other receivables 8,460 4,707 Allowance for credit losses (433) (3,040) $ 57,989 $ 44,475 In thousands As of As of Inventories: Raw materials and work in process (1) $ 55,473 $ 65,179 Finished goods 55,801 62,377 $ 111,274 $ 127,556 (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 $ 3,624 $ 3,632 Equipment 207,265 188,593 Information technology hardware and software 129,008 115,283 Furniture and fixtures 56,277 55,146 Leasehold improvements 220,720 213,124 Construction in progress 23,859 26,517 Right of use assets under finance leases 36,757 36,437 677,510 638,732 Less: Accumulated depreciation (336,217) (271,965) $ 341,293 $ 366,767 In thousands As of As of Other payables and accrued expenses: Associate compensation and benefits (1) $ 51,081 $ 28,347 Self-insurance liabilities 8,650 8,403 Capital expenditures 8,455 6,782 Advertising 2,173 2,919 Reserves for customer returns and remakes 8,084 7,158 Legacy management & services agreement 5,386 4,461 Fair value of derivative liabilities 5,116 6,382 Supplies and other store support expenses 3,461 2,926 Litigation settlements 1,107 3,840 Lease concessions 3,142 — Other 13,654 11,611 $ 110,309 $ 82,829 (1) Includes CARES Act deferred employer payroll taxes in the amount of $12.8 million as of January 2, 2021. In thousands As of As of Other non-current liabilities: Fair value of derivative liabilities $ 7,663 $ 1,603 Self-insurance liabilities 7,046 7,283 Other 2,706 4,845 $ 17,415 $ 13,731 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Jan. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets During fiscal year 2018, as a result of our annual goodwill impairment test, we fully impaired the remaining carrying value of goodwill at Fred Meyer and Military of $11.4 million and $3.7 million, respectively. Management lowered the revenue growth rate assumptions at Fred Meyer and Military resulting in the fair values at these reporting units to be lower than their carrying values. The lower revenue growth rate assumptions at Fred Meyer and Military were primarily the result of recent sales underperformance resulting from decreases in projected customer transaction volume. The gross carrying amount and accumulated impairment of the Company’s goodwill balances for 2020 and 2019 are as follows: As of As of In thousands Gross Carrying Accumulated Gross Carrying Accumulated Owned & Host Segment $ 736,901 $ (19,357) $ 736,901 $ (19,357) Legacy Segment 60,069 — 60,069 — Corporate/Other 8,107 (8,107) 8,107 (8,107) $ 805,077 $ (27,464) $ 805,077 $ (27,464) Besides the goodwill impairments noted above, no other intangible asset impairment was identified during fiscal years 2020, 2019 and 2018. Indefinite-lived intangible assets by major asset class are as follows: In thousands As of As of Trademarks and trade names: America’s Best $ 200,547 $ 200,547 Eyeglass World 40,000 40,000 $ 240,547 $ 240,547 We intend to maintain our trademarks; renewals will take place as needed. Finite-lived, amortizing intangible assets by major asset class are as follows: As of January 2, 2021 As of December 28, 2019 In thousands Gross Carrying Accumulated Remaining Life Gross Carrying Accumulated Remaining Life Contracts and relationships: Legacy $ 65,000 $ 40,154 4 $ 65,000 $ 34,247 5 Fred Meyer 35,000 10,339 16 35,000 8,820 17 Customer database 4,400 4,400 — 4,400 4,400 — Other 746 742 — 746 739 — $ 105,146 $ 55,635 $ 105,146 $ 48,206 We extended our relationship with Walmart in fiscal year 2020. Refer to Note 16. “Segment Reporting” for more information. Our current agreement with Fred Meyer expires on December 31, 2021; we intend to maintain our intangible assets and renewals will take place as needed. Aggregate amortization expense is included in depreciation and amortization in the accompanying consolidated statements of operations. Aggregate future estimated amortization expense is shown in the following table: Fiscal Year In thousands 2021 $ 7,491 2022 7,490 2023 7,488 2024 7,488 2025 2,519 Thereafter 17,035 $ 49,511 |
Long-term Debt
Long-term Debt | 12 Months Ended |
Jan. 02, 2021 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Long-term debt consists of the following: In thousands As of As of 2025 Notes, due May 15, 2025 $ 402,500 $ — Term Loan, due July 18, 2024 317,375 392,375 Revolving Credit Facility, due July 18, 2024 — 148,000 Long-term debt before debt discount 719,875 540,375 Unamortized discount and issuance costs - 2025 Notes (93,123) — Unamortized discount and issuance costs - term loan (2,141) (3,979) Long-term debt less debt discount 624,611 536,396 Less current maturities — (10,500) Long-term debt - non-current portion 624,611 525,896 Finance lease obligations 30,750 33,296 Less current maturities (3,598) (3,259) Long-term debt and finance lease obligations, less current portion and debt discount $ 651,763 $ 555,933 2025 Notes In May 2020, we completed the issuance of the 2025 Notes, pursuant to an indenture between the Company and U.S. Bank, dated as of May 12, 2020 (the “Indenture”). The 2025 Notes were sold only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2025 Notes will pay interest semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2020, at an annual rate of 2.50% and will be convertible into cash, shares of common stock or a combination of cash and shares of common stock, at our election, based on the applicable conversion rate at such time. We received proceeds from the offering of $390.9 million, net of $11.6 million in underwriter fees and other issuance costs. We used $294.3 million of the net proceeds from the offering to repay all outstanding amounts under the Revolving Credit Facility and $75.0 million to partially repay the first lien term loan in an aggregate principal amount of $420.0 million (the “Term Loan”). We intend to use the remainder of the net proceeds for general corporate purposes. Prior to February 15, 2025, the 2025 Notes will be convertible at the option of the holder only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the Last Reported Sale Price (as defined in the Indenture) per share of the Company’s common stock exceeds 130% of the Conversion Price (as defined in the Indenture) for each of at least 20 Trading Days (as defined in the Indenture), whether or not consecutive, during the 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any ten consecutive Trading Day period (such ten consecutive trading day period, the “measurement period”) in which the Trading Price (as defined in the Indenture) per $1,000 principal amount of the 2025 Notes for each Trading Day of the measurement period was less than 98% of the product of the Last Reported Sale Price per share of the Company’s common stock on such Trading Day and the conversion rate (as described below) on such Trading Day; (iii) upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the Indenture; or (iv) if the Company calls such Notes for redemption. On or after February 15, 2025 until 5:00 p.m., New York City time, on the second Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, the 2025 Notes will be convertible at the option of the holder at any time. The 2025 Notes will initially be convertible at a conversion rate of 32.0783 shares of common stock per $1,000 principal amount of 2025 Notes, which is equivalent to an initial conversion price of approximately $31.17 per share of common stock. The conversion rate is subject to adjustment upon certain events. The Company can choose to settle upon conversion in cash, shares or a combination. Based on the initial conversion rate, the 2025 Notes are convertible into 12.9 million shares of our common stock and we reserved for the possible issuance of 16.5 million shares, which is the maximum amount that could be issued upon conversion. As of January 2, 2021, the 2025 Notes can be converted by holders based on condition (i) above. The “if-converted value” exceeded the principal amount of the 2025 Notes by $182.3 million. See Note 15. “Earnings Per Share” for the treatment of earnings per share in relation to the 2025 Notes. In accordance with accounting guidance on embedded conversion features indexed to and settled in equity, the Company valued and bifurcated the conversion option associated with the 2025 Notes from the respective host debt instrument, which is referred to as debt discount, and initially recorded the post-tax conversion option of $73.5 million ($95.2 million pre-tax) for the 2025 Notes in stockholders’ equity. The resulting debt discount on the 2025 Notes is amortized to interest expense using the effective interest rate method over the contractual term of the 2025 Notes. The Company allocated post-tax debt issuance costs of $2.2 million ($2.7 million pre-tax) to the equity component and the remaining debt issuance costs of $8.9 million are amortized to interest expense under the effective interest rate method at 9.1% over the contractual term of the 2025 Notes. We recognized $17.3 million in interest expense for the interest coupon and amortization of debt discount and issuance costs during fiscal 2020. As of January 2, 2021, the remaining period for the unamortized debt discount balance was approximately four and a half years. Credit Agreement On July 18, 2019, the credit agreement, dated as of October 9, 2018 (the “Existing Credit Agreement”) was amended and restated to establish a new Term Loan of $420.0 million to repay all principal, interest fees and other amounts outstanding under the Existing Credit Agreement immediately and establish a new Revolving Credit Facility in an aggregate principal amount of $300.0 million, including a $20.0 million letter of credit sublimit. In connection with the principal repayments of our existing debt, the Company wrote off associated deferred debt issuance costs of $6.0 million and associated unamortized debt discount of $3.8 million, in the third quarter of 2019. On March 17, 2020, as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic, we borrowed the remaining $146.3 million in available funds under our Revolving Credit Facility. On May 5, 2020, certain of the Company’s subsidiaries entered into an agreement (the “Credit Agreement Amendment”) with the lenders to amend certain provisions of the Amended and Restated Credit Agreement, dated as of July 18, 2019 (as amended by the Credit Agreement Amendment, the “Credit Agreement”), by and among Nautilus Acquisition Holdings, Inc. (“Holdings”), National Vision, Inc. (“NVI”), the other subsidiaries of the Company party thereto, as guarantors, each lender party thereto and Bank of America, N.A., in its capacity as administrative agent and as collateral agent. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement and Amendment, as applicable. This Credit Agreement Amendment is intended to prevent the effects of the COVID-19 pandemic, including the temporary closure of our stores, from creating uncertainty relative to our ability to comply with certain financial covenants and allow the Company to focus on prudent management of the business over the quarters ahead. As set forth in greater detail below, the Amendment suspends certain financial maintenance covenants contained in the Credit Agreement until testing at the end of the second fiscal quarter of 2021. Based on our current plans and management operational assumptions, we anticipate we will be in compliance with these amended covenants. Pursuant to the Credit Agreement Amendment, the financial covenants relating to maintenance of a maximum Consolidated Total Debt to Consolidated EBITDA Ratio and a minimum Consolidated Interest Coverage Ratio are suspended until testing at the end of the second fiscal quarter of 2021. From and after such time, such covenants will be reinstated on a modified basis so that, subject to certain exceptions and limitations as described in the Credit Agreement Amendment, (i) with respect to the second and third fiscal quarters of 2021, the Consolidated Total Debt to Consolidated EBITDA Ratio shall not exceed 4.50 to 1.00 and, with respect to the fourth fiscal quarter of fiscal 2021 and thereafter, the Consolidated Total Debt to Consolidated EBITDA Ratio shall not exceed 4.00 to 1.00, in each case with NVI being able to elect to annualize certain quarterly periods so that quarterly performance from fiscal 2020 is excluded and (ii) with respect to the second fiscal quarter of 2021 and thereafter, the Consolidated Interest Coverage Ratio shall not be less than 3.00 to 1.00. In lieu of such financial covenants, pursuant to the Credit Agreement Amendment NVI has agreed during the suspension period, (i) not to have Consolidated EBITDA for any six fiscal quarter period be less than $0, with the second fiscal quarter of 2020 permitted to be excluded in certain circumstances, and (ii) to have a minimum level of liquidity (defined as cash and cash equivalents plus the unused portion of the Revolving Credit Facility) equal to the lesser of (x) $100,000,000 and (y) $40,000,000 plus the amount of any net proceeds from capital markets financings during such period in excess of $75,000,000. In addition, the Credit Agreement was amended pursuant to the Credit Agreement Amendment to, among other things, (i) limit the flexibility of NVI and Holdings with respect to certain transactions during the covenant suspension period, including the ability to declare or pay dividends, incur debt and make investments and dispositions, (ii) require prepayments of the term loans under certain circumstances during the covenant suspension period from the net proceeds from debt or equity capital markets transactions by the Company (with the amount of the term loans to be paid down equal to $75 million from the first $400 million of capital raised and 50% of any proceeds above such amount) and (iii) restrict NVI’s ability to borrow under the Revolving Credit Facility if unrestricted cash and cash equivalents exceeds $50 million (and, in the event of any such excess, to require a mandatory prepayment of such amount). Also pursuant to the Credit Agreement Amendment, the margins upon which interest is calculated for the term loans were amended to a range of 1.75% to 2.75% (for LIBOR Loans) and 0.75% to 1.75% (for ABR Loans), in each case based on NVI’s Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio at such time, with such margins subject to an increase of 50 basis points in the event that either (i) the Company has not raised at least $135 million in additional proceeds from certain capital markets transactions within 30 days of the date of the Credit Agreement Amendment or (ii) Consolidated EBITDA for the most recently ended four quarters is less than $0. On May 12, 2020, we fully repaid the $294.3 million outstanding under our Revolving Credit Facility and partially repaid $75 million on the Term Loan. As a result of the repayments made in 2020 and the $25.0 million principal prepayment in 2019, the Company has no additional mandatory principal payments on the Term Loan until maturity on July 18, 2024 and no amounts outstanding under the Revolving Credit Facility. The borrowing capacity remaining as of January 2, 2021 was $293.6 million due to a reduction of $6.4 million for letters of credit outstanding. As a result of the repayment of the outstanding balance on our Revolving Credit Facility, the Company reclassified a proportionate share of unamortized debt issuance costs to Other assets. The Credit Agreement Amendment also contains covenants that, among other things, limit NVI’s ability to incur additional debt, create liens against assets, make acquisitions, pay dividends or distributions on its stock, merge or consolidate with another entity and transfer or sell assets. We were in compliance with all covenants related to our long-term debt as of January 2, 2021. Scheduled annual maturities of debt are as follows: Fiscal Year In thousands 2021 $ — 2022 — 2023 — 2024 317,375 2025 402,500 $ 719,875 |
Stock Incentive Plans
Stock Incentive Plans | 12 Months Ended |
Jan. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock Incentive Plans | Stock Incentive Plans The Company has provided equity-based compensation awards to its associates under three plans. In connection with the initial public offering of our common stock (the “IPO”), on October 23, 2017, the Company’s Board of Directors adopted, and its stockholders approved, the National Vision Holdings, Inc. 2017 Omnibus Incentive Plan (the “2017 Omnibus Incentive Plan”). The total number of shares of common stock that may be issued under the plan is 4,000,000. The plan authorizes the grant of stock options, stock appreciation rights, RSAs, RSUs, PSUs, other equity-based awards and other cash-based awards to our associates, directors, officers, consultants and advisers. The Vision Holding Corp. 2013 Amended and Restated Stock Incentive Plans provided for the issuance of stock options to directors, certain associates and consultants of Vision Holding Corp., its subsidiaries and affiliates. In 2014, our Board of Directors and stockholders of the Company approved the 2014 Stock Incentive Plan for Key Employees of National Vision Holdings, Inc. (formerly known as Nautilus Parent, Inc.) and its subsidiaries (the “2014 Stock Incentive Plan”). There were 10,988,827 stock options authorized for issuance pursuant to the 2014 Stock Incentive Plan. All awards under these plans have a contractual life of 10 years. The Company also provides associates the opportunity to purchase Company common shares through the Associate Stock Purchase Plan (the “ASPP”), which the Company’s Board of Directors adopted and its stockholders approved on June 6, 2018. The ASPP provides that up to 850,000 shares of common stock, at par value of $0.01 per share, may be offered and issued under the ASPP. The following table summarizes stock compensation expense under the Company’s plans, which is included in SG&A in the accompanying statements of operations: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Stock options $ 2,827 $ 8,562 $ 19,397 RSUs and PSUs 7,201 3,655 1,386 RSAs 588 334 108 Associate stock purchase plan 124 119 48 Pre-tax stock based compensation expense $ 10,740 $ 12,670 $ 20,939 Income tax benefit (2,743) (3,237) (5,367) After-tax share based compensation expense $ 7,997 $ 9,433 $ 15,572 Stock options RSUs and PSUs RSAs Unrecognized compensation cost ( in thousands ) $ 3,248 $ 14,156 $ 366 Expected remaining weighted-average period of expense recognition (in years) 1.69 2.20 0.58 Service-based options The following table summarizes service-based stock option activity, including service-based options under the Vision Holding Corp. Amended and Restated 2013 Equity Incentive Plan, the 2014 Stock Incentive Plan, and the 2017 Omnibus Incentive Plan. Number of Options Outstanding Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (In Thousands) ($) Outstanding options at December 28, 2019 1,906,158 13.37 Granted 160,574 34.47 Exercised (823,685) 8.83 Forfeited (49,061) 23.54 Outstanding options at January 2, 2021 1,193,986 18.92 6.19 31,490 Vested and exercisable at January 2, 2021 665,781 12.94 4.94 21,540 The weighted average grant date fair value of service-based options granted during fiscal years 2020 and 2019 was $13.71 and $13.67, respectively. There were no grants of service-based options during fiscal year 2018. The fair value of service-based options vested during fiscal years 2020, 2019 and 2018 was $3.3 million, $5.7 million, and $5.9 million respectively. The aggregate intrinsic value of service-based options exercised during fiscal years 2020, 2019 and 2018 was $22.5 million, $21.4 million, and $45.7 million, respectively. The fair value of service-based options was estimated using the Black-Scholes-Merton option pricing model. The following is a summary of the assumptions used in this model for service-based options: 2020 2019 Expected volatility 39.54% to 55.81% 34.50% to 37.10% Expected term range (in years) 6.00 5.75 to 6.50 Expected risk-free interest rate 0.47% to 1.13% 1.68% to 2.94% The expected term was based on the mid-point between the weighted average time to vesting and the contractual time to maturity. Since all options granted in the 2014 Stock Incentive Plan were issued prior to the IPO, expected volatility was based on the volatility of comparable publicly traded companies. The volatility assumption subsequent to the IPO was calculated using daily closing prices of the stock. The risk free interest rate was based on the U.S. Treasury yield curve. The dividend yield was based on our expectation of not paying dividends on the common stock of NVHI for the foreseeable future. Performance-based options The following table summarizes performance-based stock option activity: Number of Options Outstanding Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (In Thousands) ($) Outstanding options at December 28, 2019 1,603,848 6.60 Exercised (705,414) 7.37 Forfeited (43,478) 15.74 Outstanding options at January 2, 2021 854,956 5.50 3.42 34,018 Vested and exercisable at January 2, 2021 854,956 5.50 3.42 34,018 There were no grants of performance-based options during fiscal years 2020, 2019, and 2018. The fair value of performance-based options vested during fiscal years 2020, 2019 and 2018 was $1.4 million, $4.4 million and $16.1 million, respectively. The aggregate intrinsic value of performance-based options exercised during fiscal years 2020, 2019, and 2018 was $20.0 million, $29.9 million, and $70.2 million, respectively. The following summarizes RSU, PSU and RSA awards activity: RSUs Weighted average grant date fair value ($) PSUs Weighted average grant date fair value ($) RSAs Weighted average grant date fair value ($) Outstanding at December 28, 2019 376,145 28.45 113,014 34.49 20,628 30.71 Granted 162,468 34.73 125,387 34.34 19,583 30.65 Vested (52,466) 25.65 — — (18,229) 29.27 Forfeited (31,656) 30.62 (18,217) 34.98 — — Outstanding at January 2, 2021 454,491 30.85 220,184 34.36 21,982 31.85 Restricted stock units (RSUs) During fiscal years 2020 and 2019, we granted 162,468 and 373,082 shares of RSUs, respectively. RSUs include 11,233 RSUs that vest in two equal installments on the first and second anniversaries of the grant date, 216,400 RSUs that vest in three equal installments on the first, second and third anniversaries of the grant date, and 226,858 RSUs that vest in three installments on the second, third and fourth anniversaries of the grant date. The RSUs outstanding as of January 2, 2021 have $20.6 million intrinsic value and remaining weighted average requisite service period of 2.36 years. Performance stock units (PSUs) During fiscal year 2020 and 2019, we granted an aggregate of 125,387 and 116,046 PSUs, respectively. The PSUs granted in fiscal 2020 and 2019 are settled after the end of the performance period (i.e., cliff vesting), which begins on the first day of the grant year and ends on the last day of our fiscal years 2022 and 2021, respectively and are based on the Company’s achievement of certain performance targets. The performance stock units outstanding as of January 2, 2021 have $10.0 million intrinsic value and remaining weighted average requisite service period of 1.75 years. Restricted stock awards (RSAs) During fiscal years 2020 and 2019, we granted an aggregate of 19,583 and 13,712 RSAs, respectively, to certain directors. These RSAs outstanding include 2,399 awards that vest proportionally over three years and 19,583 awards that vest one year from grant date. As of fiscal year end 2020, the intrinsic value of the awards was $1.0 million, the remaining requisite service period was 0.50 years. Associate Stock Purchase Plan (ASPP) Under the ASPP, eligible associates receive a 10% discount from the market trading value of common stock of the Company at the time of purchase. Participants may contribute to the ASPP, not to exceed $25,000 under the ASPP in any calendar year. As of January 2, 2021, the amount of shares held by eligible participants through the ASPP was not material. |
Income Taxes
Income Taxes | 12 Months Ended |
Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income taxes The income tax provision (benefit) consists of: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Current income tax: Federal $ 86 $ 443 $ 174 State 2,550 864 381 Deferred income tax: Federal (219) (2,972) (15,687) State (14) (644) (3,653) Income tax provision (benefit) $ 2,403 $ (2,309) $ (18,785) Our income tax provision (benefit) differs from the amounts computed by multiplying earnings before income taxes by the statutory federal income tax rate as shown in the following table: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Federal income tax provision at statutory rate $ 8,123 $ 6,403 $ 1,022 State income tax provision, net of federal income tax 1,755 1,387 226 Increase (decrease) in deferred tax asset valuation allowance (216) (386) 318 Goodwill impairment — — 3,879 Tax benefit of equity-based compensation deductions (7,996) (10,089) (25,544) Other, net 737 376 1,314 Net income tax provision (benefit) $ 2,403 $ (2,309) $ (18,785) Effective income tax rate 6.2 % (7.6) % (385.9) % The Tax Legislation signed into law on December 22, 2017 makes broad and complex changes to the U.S. tax code including, but not limited to: (1) reducing the U.S. federal rate from 35% to 21%, effective January 1, 2018; (2) eliminating the corporate alternative minimum tax (“AMT”) and changing how the credits can be realized; (3) creating new limitations on deductions for interest expense; (4) changing rules related to limitations of net operating loss (“NOL”) carryforwards, and (5) enhancing and extending through 2026 the option to claim accelerated depreciation deductions on qualified property. 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 2017 Tax Legislation for which measurement could be reasonably estimated as of fiscal year end 2018. As of fiscal year end 2018, the Company recorded adjustments to the provisional estimates related to depreciation expense. The adjustments to the provisional estimates of December 30, 2017 did not materially impact the effective tax rate of the Company during fiscal year 2018. The sources of the differences between the financial accounting and tax bases of our assets and liabilities that give rise to the deferred tax assets and deferred tax liabilities and the tax effects of each are as follows: In thousands As of As of Deferred tax assets: NOL carry-forwards $ 10,841 $ 12,006 Deferred interest expense carry-forwards 180 3,733 AMT payment and employment credits 3,541 4,155 Deferred revenue 5,498 5,145 Accrued expenses and reserves 9,361 12,542 Loss on equity and other investments 2,135 1,960 Stock option compensation 5,135 5,505 Unrealized losses on hedging instruments 2,237 2,039 Other 15,842 942 Subtotal 54,770 48,027 Valuation allowances (3,486) (3,705) Total net deferred tax assets 51,284 44,322 Deferred tax liabilities: Depreciation of property and equipment (37,592) (27,953) Amortization of intangible assets (73,590) (74,529) Convertible debt discount (18,819) — Other (2,222) (1,986) Total deferred tax liabilities (132,223) (104,468) Net deferred tax liabilities $ (80,939) $ (60,146) As of fiscal year end 2020, we had available U.S. federal NOL carry-forwards aggregating to $46.9 million that can be utilized to reduce future federal income taxes. The Company has $44.5 million of carry-forward losses that do not expire and $0.8 million of carry-forward losses expiring at the end of fiscal year 2037, respectively. In addition, we have NOL carry-forwards in varying amounts and with varying expiration dates in various states in which we operate. We believe it is more likely than not that we will realize a tax benefit for these NOL’s in the future except for $4.2 million of NOL carry-forwards on our professional corporations where we recognized a full valuation allowance as of fiscal year end 2020. As of fiscal year end 2020, the Company has gross deferred tax assets of $100.8 million related to operating lease liabilities and gross deferred tax liabilities of $86.3 million related to ROU assets. These amounts are presented net in Other deferred tax assets as of fiscal year end 2020. As of fiscal year end 2020, previously reported Federal AMT carry-forward credits of $1.3 million were requested to be refunded in accordance with the CARES Act. Non-expiring federal and state AMT carry-forward credits and employment credits totaling $3.5 million are available to offset certain future taxes. We have a $1.9 million deferred income tax asset on losses associated with our equity method non-consolidated investee and a $0.2 million deferred income tax asset for capital losses associated with the impairment of an investment recorded during fiscal year 2018. We do not expect to generate significant capital gains from these investments, or other sources, in the near future. Therefore, we believe it is more likely than not that we will not realize a tax benefit for the majority of these deferred income tax assets, and accordingly we have established a full valuation allowance for the amount deemed unrealizable. As a result of our utilization of NOL carry-forwards to reduce or eliminate subsequent years’ tax obligations, our federal and a substantial number of our state income tax returns for fiscal years 2001 through 2020 remain open for examination by the tax authorities. The Company evaluates uncertain tax positions using a “more-likely-than-not” threshold, and recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by tax authorities. The Company evaluates uncertain tax positions on a quarterly basis and considers various factors, including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, information obtained during in-process audit activities and changes in facts or circumstances related to a tax position. |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 12 Months Ended |
Jan. 02, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue From Contracts With Customers | Revenue From Contracts With Customers 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 managed care payors having terms generally between 14 and 120 days, with most paying within 90 days. For sales of in-store non-prescription eyewear and related accessories, and paid eye exams, we recognize revenue at the point of sale. Our point in time 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. Revenues recognized over time primarily include product protection plans, eye care club memberships and management fees earned from our legacy partner. Revenues Recognized at a Point in Time 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. 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 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 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 & 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 are recognized at the point of sale which occurs immediately after the exam is performed. Corporate/Other Revenues from our non-reportable Corporate/Other segment are attributable to wholly owned subsidiaries AC Lens and FirstSight Vision Services Inc. (“FirstSight”). AC Lens sells contact lenses and optical accessory products to retail customers through e-commerce, and recognizes revenue when products have been delivered to the customer. AC Lens also distributes contact lenses at its cost to Walmart and Sam’s Club under fee for services arrangements. This revenue is recorded on a gross basis as AC Lens 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 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 vision plan 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. We offer three 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 because our right to payment corresponds directly with the value of the management services provided to our legacy partner. The following disaggregation of revenues depicts our revenues based on the timing of revenue recognition: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Revenues recognized at a point in time $ 1,569,757 $ 1,578,379 $ 1,397,801 Revenues recognized over time 142,003 145,952 139,053 Total net revenue $ 1,711,760 $ 1,724,331 $ 1,536,854 Refer to Note 16. “Segment Reporting” for the Company’s disaggregation of net revenue by reportable segment and product type. As the reportable segments are aligned by similar economic factors, trends and customers, the reportable segment disaggregation view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors. The following table summarizes the activity of allowance for expected credit losses for the fiscal year end 2020. In thousands Fiscal Year 2020 Beginning balance as of December 28, 2019 $ (3,040) Current-period provision for expected credit losses (671) Write-offs charged against the allowance 1,071 Other adjustments (1) 2,207 Ending balance as of January 2, 2021 $ (433) (1) As part of our adoption of ASU 2016-13, we adjusted the allowance for certain amounts recognized in prior periods that no longer represented an allowance for credit losses. The adjustment was immaterial to the financial results of current and prior periods. See Note 2. “Details of Certain Balance Sheet Accounts” for further details. The following depicts a roll-forward of deferred revenue: Fiscal Year 2020 In thousands Product Protection Plans Eye Care HMO Memberships Total Beginning of the year $ 30,911 $ 46,486 $ 3 $ 77,400 Sold 63,535 47,445 — 110,980 Revenue recognized (60,299) (48,351) (3) (108,653) End of year $ 34,147 $ 45,580 $ — $ 79,727 Current $ 33,810 $ 25,089 $ — $ 58,899 Non-current 337 20,491 — 20,828 $ 34,147 $ 45,580 $ — $ 79,727 Fiscal Year 2019 In thousands Product Protection Plans Eye Care HMO Memberships Total Beginning of the year $ 28,775 $ 43,488 $ 15 $ 72,278 Sold 63,105 52,438 — 115,543 Revenue recognized (60,969) (49,440) (12) (110,421) End of year $ 30,911 $ 46,486 $ 3 $ 77,400 Current $ 30,547 $ 25,320 $ 3 $ 55,870 Non-current 364 21,166 — 21,530 $ 30,911 $ 46,486 $ 3 $ 77,400 Deferred revenue recorded as of fiscal year end 2020 is expected to be reflected in future operating results as follows: Fiscal Year In thousands 2021 $ 58,899 2022 15,484 2023 5,141 2024 152 2025 51 $ 79,727 |
Leases
Leases | 12 Months Ended |
Jan. 02, 2021 | |
Leases [Abstract] | |
Leases | LeasesWe lease our stores, laboratories, distribution centers, and corporate offices. These leases generally have noncancelable lease terms of between five one our stores provide for a minimum rent and typically include escalating rent over time with the exception of Military for which lease payments are variable and based on a percentage of sales. For Vista Optical locations in Fred Meyer stores, we pay fixed rent plus a percentage of sales after certain minimum thresholds are achieved. The Company’s leases generally require us to pay insurance, real estate taxes and common area maintenance expenses, substantially all of which are variable and not included in the measurement of the lease liability. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. With respect to lease accounting guidance, the Company’s management & services agreement with its legacy partner does not contain a lease arrangement. Our lease arrangements frequently include TIAs, which are contractual amounts received from a lessor for improvements made to leased properties by the Company. For operating leases, TIAs are treated as a reduction of the lease payments used to measure the ROU assets in the accompanying consolidated balance sheet as of fiscal year 2020 and are amortized as a reduction in rental expense over the life of the respective leases. We rent or sublease certain parts of our stores to third parties. Our sublease portfolio consists mainly of operating leases with our ophthalmologists and optometrists within our stores. In response to the COVID-19 pandemic, we began seeking relief from our landlords while our stores were temporarily closed to the public. On April 10, 2020, the Financial Accounting Standards Board staff issued a question-and-answer document providing guidance for lease concessions provided to lessees in response to the effects of COVID-19. Such guidance allows lessees to make an election to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when the concessions do not result in a substantial increase in the obligations of the lessee. During the second quarter of 2020, we reached rent concession agreements where certain of these concession arrangements included lease payment and term extensions between three In thousands As of As of Type Classification ASSETS Finance Property and equipment, net (a) $ 24,373 $ 28,128 Operating Right of use assets (b) 340,141 348,090 Total leased assets $ 364,514 $ 376,218 LIABILITIES Current Liabilities: Finance Current maturities of long-term debt and finance lease obligations $ 3,598 $ 3,259 Operating Current operating lease obligations (c) 58,356 51,937 Other non-current liabilities: Finance Long-term debt and finance lease obligations, less current portion and debt discount 27,152 30,037 Operating Non-current operating lease obligations 327,371 331,769 Total lease liabilities $ 416,477 $ 417,002 As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the net present value of minimum lease payments. We used the incremental borrowing rate on December 30, 2018 for operating leases that commenced prior to that date. _________ (a) Finance lease assets are recorded net of accumulated amortization of $12.4 million and $8.3 million as of January 2, 2021 and December 28, 2019, respectively. (b) TIA of $36.0 million and $35.2 million are treated as reductions of lease payments used to measure ROU assets as of January 2, 2021 and December 28, 2019, respectively. Deferred rent of $17.5 million and $15.0 million are treated as reductions of lease payments used to measure ROU assets as of January 2, 2021 and December 28, 2019, respectively. (c) Current operating lease liabilities are measured net of TIA receivables of $3.8 million and $5.9 million as of January 2, 2021 and December 28, 2019, respectively. In thousands Fiscal Year 2020 Fiscal Year 2019 Operating lease cost Fixed lease cost (a) $ 79,387 $ 73,971 Variable lease cost (b) 28,158 26,466 Sublease income (c) (2,700) (2,930) Finance lease cost Amortization of finance lease assets 4,561 4,418 Interest expense, net: Interest on finance lease liabilities 3,656 3,573 Net lease cost $ 113,062 $ 105,498 (a) Includes short-term leases, which are immaterial. (b) Includes costs for insurance, real estate taxes and common area maintenance expenses, which are variable as well as lease costs above minimum thresholds for Fred Meyer stores and lease costs for Military stores. (c) Income from sub-leasing of stores includes rental income from operating lease properties to ophthalmologists and optometrists who are independent contractors. Lease Term and Discount Rate As of As of Weighted average remaining lease term (months) Operating leases 77 82 Finance leases 79 88 Weighted average discount rate (a) Operating leases 4.7 % 4.6 % Finance leases (b) 12.3 % 13.1 % (a) The discount rate used to determine the lease assets and lease liabilities was derived upon considering (i) incremental borrowing rates on our term loan and revolving credit facility; (ii) fixed rates we pay on our interest rate swaps; (iii) LIBOR margins for issuers of similar credit rating; and (iv) effect of collateralization. As a majority of our leases are five-year and 10-year leases, we determined a lease discount rate for such tenors and determined this discount rate is reasonable for leases that were entered into during the period. (b) The discount rate on finance leases is higher than operating leases because the present value of minimum lease payments was higher than the fair value of leased properties for certain leases entered into prior to adoption of ASC 842. The discount rate differential for those leases is not material to our results of operations. In thousands Fiscal Year 2020 Fiscal Year 2019 Other Information Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows - operating leases $ 84,913 $ 75,330 The following table summarizes the maturity of our lease liabilities as of January 2, 2021: In thousands Operating Leases (a) Finance Leases (b) Fiscal Year 2021 $ 73,867 $ 6,676 2022 77,874 7,215 2023 70,103 6,241 2024 60,998 4,673 2025 51,974 4,451 Thereafter 116,272 12,008 Total lease liabilities 451,088 41,264 Less: Interest 65,361 10,514 Present value of lease liabilities (c) $ 385,727 $ 30,750 _________ (a) Operating lease payments include $60.8 million related to options to extend lease terms that are reasonably certain of being exercised. (b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised. (c) The present value of lease liabilities excludes $26.4 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Leases | LeasesWe lease our stores, laboratories, distribution centers, and corporate offices. These leases generally have noncancelable lease terms of between five one our stores provide for a minimum rent and typically include escalating rent over time with the exception of Military for which lease payments are variable and based on a percentage of sales. For Vista Optical locations in Fred Meyer stores, we pay fixed rent plus a percentage of sales after certain minimum thresholds are achieved. The Company’s leases generally require us to pay insurance, real estate taxes and common area maintenance expenses, substantially all of which are variable and not included in the measurement of the lease liability. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. With respect to lease accounting guidance, the Company’s management & services agreement with its legacy partner does not contain a lease arrangement. Our lease arrangements frequently include TIAs, which are contractual amounts received from a lessor for improvements made to leased properties by the Company. For operating leases, TIAs are treated as a reduction of the lease payments used to measure the ROU assets in the accompanying consolidated balance sheet as of fiscal year 2020 and are amortized as a reduction in rental expense over the life of the respective leases. We rent or sublease certain parts of our stores to third parties. Our sublease portfolio consists mainly of operating leases with our ophthalmologists and optometrists within our stores. In response to the COVID-19 pandemic, we began seeking relief from our landlords while our stores were temporarily closed to the public. On April 10, 2020, the Financial Accounting Standards Board staff issued a question-and-answer document providing guidance for lease concessions provided to lessees in response to the effects of COVID-19. Such guidance allows lessees to make an election to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when the concessions do not result in a substantial increase in the obligations of the lessee. During the second quarter of 2020, we reached rent concession agreements where certain of these concession arrangements included lease payment and term extensions between three In thousands As of As of Type Classification ASSETS Finance Property and equipment, net (a) $ 24,373 $ 28,128 Operating Right of use assets (b) 340,141 348,090 Total leased assets $ 364,514 $ 376,218 LIABILITIES Current Liabilities: Finance Current maturities of long-term debt and finance lease obligations $ 3,598 $ 3,259 Operating Current operating lease obligations (c) 58,356 51,937 Other non-current liabilities: Finance Long-term debt and finance lease obligations, less current portion and debt discount 27,152 30,037 Operating Non-current operating lease obligations 327,371 331,769 Total lease liabilities $ 416,477 $ 417,002 As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the net present value of minimum lease payments. We used the incremental borrowing rate on December 30, 2018 for operating leases that commenced prior to that date. _________ (a) Finance lease assets are recorded net of accumulated amortization of $12.4 million and $8.3 million as of January 2, 2021 and December 28, 2019, respectively. (b) TIA of $36.0 million and $35.2 million are treated as reductions of lease payments used to measure ROU assets as of January 2, 2021 and December 28, 2019, respectively. Deferred rent of $17.5 million and $15.0 million are treated as reductions of lease payments used to measure ROU assets as of January 2, 2021 and December 28, 2019, respectively. (c) Current operating lease liabilities are measured net of TIA receivables of $3.8 million and $5.9 million as of January 2, 2021 and December 28, 2019, respectively. In thousands Fiscal Year 2020 Fiscal Year 2019 Operating lease cost Fixed lease cost (a) $ 79,387 $ 73,971 Variable lease cost (b) 28,158 26,466 Sublease income (c) (2,700) (2,930) Finance lease cost Amortization of finance lease assets 4,561 4,418 Interest expense, net: Interest on finance lease liabilities 3,656 3,573 Net lease cost $ 113,062 $ 105,498 (a) Includes short-term leases, which are immaterial. (b) Includes costs for insurance, real estate taxes and common area maintenance expenses, which are variable as well as lease costs above minimum thresholds for Fred Meyer stores and lease costs for Military stores. (c) Income from sub-leasing of stores includes rental income from operating lease properties to ophthalmologists and optometrists who are independent contractors. Lease Term and Discount Rate As of As of Weighted average remaining lease term (months) Operating leases 77 82 Finance leases 79 88 Weighted average discount rate (a) Operating leases 4.7 % 4.6 % Finance leases (b) 12.3 % 13.1 % (a) The discount rate used to determine the lease assets and lease liabilities was derived upon considering (i) incremental borrowing rates on our term loan and revolving credit facility; (ii) fixed rates we pay on our interest rate swaps; (iii) LIBOR margins for issuers of similar credit rating; and (iv) effect of collateralization. As a majority of our leases are five-year and 10-year leases, we determined a lease discount rate for such tenors and determined this discount rate is reasonable for leases that were entered into during the period. (b) The discount rate on finance leases is higher than operating leases because the present value of minimum lease payments was higher than the fair value of leased properties for certain leases entered into prior to adoption of ASC 842. The discount rate differential for those leases is not material to our results of operations. In thousands Fiscal Year 2020 Fiscal Year 2019 Other Information Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows - operating leases $ 84,913 $ 75,330 The following table summarizes the maturity of our lease liabilities as of January 2, 2021: In thousands Operating Leases (a) Finance Leases (b) Fiscal Year 2021 $ 73,867 $ 6,676 2022 77,874 7,215 2023 70,103 6,241 2024 60,998 4,673 2025 51,974 4,451 Thereafter 116,272 12,008 Total lease liabilities 451,088 41,264 Less: Interest 65,361 10,514 Present value of lease liabilities (c) $ 385,727 $ 30,750 _________ (a) Operating lease payments include $60.8 million related to options to extend lease terms that are reasonably certain of being exercised. (b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised. (c) The present value of lease liabilities excludes $26.4 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jan. 02, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Transactions with KKR During fiscal years 2019 and 2018, KKR Capital Markets LLC acted as a lead arranger with respect to debt issuance and refinancing transactions, and received $1.0 million and $1.2 million in fees, respectively, in connection therewith. See Note 1. “Description of Business and Basis of Presentation-Secondary Public Offerings” for details on a common stock offering in 2019 through which KKR ceased to be a related party. |
Equity in Net Assets of Non-Con
Equity in Net Assets of Non-Consolidated Investee | 12 Months Ended |
Jan. 02, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity in Net Assets of Non-Consolidated Investee | Equity in Net Assets of Non-Consolidated Investee From time to time the Company invests in technological innovators across the optical retail industry. One of these investments is a nonconsolidated investee (the “investee”) in which an equity ownership interest is maintained and for which the equity method of accounting is used due to our ability to exert significant influence over decisions relating to our investee’s operations and financial affairs. We hold a 24% equity interest in our investee as of fiscal year end 2020. Revenues and expenses of the investee are not consolidated into our financial statements; rather, our proportionate share of the earnings or losses of the investee is reflected as equity income or loss in Other expense (income), net in the Company’s consolidated statements of operations. We have determined that we should not consolidate our investee because, although it is a variable interest entity, we are not the primary beneficiary. After adjusting the carrying value of our interest in the investee’s reported net losses, there is no remaining equity investment balance associated with this investee as of January 2, 2021. Our investee’s fiscal year ends on December 31 of each year. The investee recognized no material transactions on the days between its fiscal year end and our fiscal year end for all periods presented below. Summarized balance sheet information for our investee is as follows: In thousands As of January 2, 2021 As of December 28, 2019 Current assets $ 1,815 $ 1,351 Non-current assets 387 450 Total assets 2,202 1,801 Current liabilities 3,464 3,821 Non-current liabilities 4,421 8,200 Total liabilities 7,885 12,021 Net assets $ (5,683) $ (10,220) Summarized income statement information for our investee is as follows: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Revenues $ 6,771 $ 6,046 $ 3,871 Net loss $ (5,739) $ (5,481) $ (5,632) Our share of net loss (1) $ (1,383) $ (1,804) $ (1,304) (1) We did not record our share of the 2020 net loss as there is no obligation to absorb losses in excess of the equity investment. In the ordinary course of business we are a licensee of our investee. Upon adoption of ASU 2016-13 in 2020, the Company wrote-off the carrying value of the secured convertible promissory note held by the Company for estimated credit losses. In April 2020, the Company converted the promissory note to an equity investment. The equity investment has a carrying value of zero as of January 2, 2021. Interest income associated with the note was immaterial for the 2019 fiscal year. Balances and transactions related to our non-consolidated investee included in our consolidated balance sheets and statements of operations were as follows: In thousands As of As of Balance sheets Other assets (1) $ — $ 704 (1) Other assets represent a loan receivable from our investee. In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Statements of operations Licensing fees (SG&A) $ 151 $ 132 $ 172 |
Fair Value Measurement of Finan
Fair Value Measurement of Financial Assets and Liabilities | 12 Months Ended |
Jan. 02, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement of Financial Assets and Liabilities | Fair Value Measurement 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 a reporting entity’s own market assumptions. The Company is required to measure certain assets and liabilities at fair value or disclose the fair values of certain assets and liabilities recorded at cost. Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer 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 instruments. • 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 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 impact on the estimated fair value amounts. Cash Equivalents and Restricted Cash The carrying amount of 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, Net 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 credit losses. 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. Tangible Long-lived and Right of Use (“ROU”) Store Assets The non-recurring fair value measurements associated with these tangible long-lived and ROU store assets are classified as Level 3 measurements in the fair value hierarchy. Refer to Note 1. “Description of Business and Basis of Presentation”. Long-term Debt - Term Loan and Revolving Credit Facility Since the borrowings under the Term Loan and Revolving Credit Facility utilize variable interest rate setting mechanisms such as LIBOR, the fair values of these borrowings are deemed to approximate the carrying values. We also considered the effect of our own credit risk on the fair values of our Term Loan and Revolving Credit Facility. Refer to Note 4. “Long-term Debt”. Long-term Debt - 2025 Notes The Company has $402.5 million in aggregate principal amount of 2.50% convertible senior notes due on May 15, 2025 issued and outstanding as of January 2, 2021. The estimated fair value of the 2025 Notes was approximately $655.3 million as of January 2, 2021. The estimated fair value of the 2025 Notes is based on the prices the 2025 Notes have traded in the market as of January 2, 2021, as well as overall market conditions on the date of valuation, stated coupon rates, the number of coupon payments each year and the maturity dates, and represents a Level 2 measurement. Refer to Note 4. “Long-term Debt” for more information on the 2025 Notes. Interest Rate Derivatives |
Deferred Revenue
Deferred Revenue | 12 Months Ended |
Jan. 02, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue | Revenue From Contracts With Customers 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 managed care payors having terms generally between 14 and 120 days, with most paying within 90 days. For sales of in-store non-prescription eyewear and related accessories, and paid eye exams, we recognize revenue at the point of sale. Our point in time 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. Revenues recognized over time primarily include product protection plans, eye care club memberships and management fees earned from our legacy partner. Revenues Recognized at a Point in Time 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. 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 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 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 & 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 are recognized at the point of sale which occurs immediately after the exam is performed. Corporate/Other Revenues from our non-reportable Corporate/Other segment are attributable to wholly owned subsidiaries AC Lens and FirstSight Vision Services Inc. (“FirstSight”). AC Lens sells contact lenses and optical accessory products to retail customers through e-commerce, and recognizes revenue when products have been delivered to the customer. AC Lens also distributes contact lenses at its cost to Walmart and Sam’s Club under fee for services arrangements. This revenue is recorded on a gross basis as AC Lens 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 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 vision plan 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. We offer three 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 because our right to payment corresponds directly with the value of the management services provided to our legacy partner. The following disaggregation of revenues depicts our revenues based on the timing of revenue recognition: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Revenues recognized at a point in time $ 1,569,757 $ 1,578,379 $ 1,397,801 Revenues recognized over time 142,003 145,952 139,053 Total net revenue $ 1,711,760 $ 1,724,331 $ 1,536,854 Refer to Note 16. “Segment Reporting” for the Company’s disaggregation of net revenue by reportable segment and product type. As the reportable segments are aligned by similar economic factors, trends and customers, the reportable segment disaggregation view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors. The following table summarizes the activity of allowance for expected credit losses for the fiscal year end 2020. In thousands Fiscal Year 2020 Beginning balance as of December 28, 2019 $ (3,040) Current-period provision for expected credit losses (671) Write-offs charged against the allowance 1,071 Other adjustments (1) 2,207 Ending balance as of January 2, 2021 $ (433) (1) As part of our adoption of ASU 2016-13, we adjusted the allowance for certain amounts recognized in prior periods that no longer represented an allowance for credit losses. The adjustment was immaterial to the financial results of current and prior periods. See Note 2. “Details of Certain Balance Sheet Accounts” for further details. The following depicts a roll-forward of deferred revenue: Fiscal Year 2020 In thousands Product Protection Plans Eye Care HMO Memberships Total Beginning of the year $ 30,911 $ 46,486 $ 3 $ 77,400 Sold 63,535 47,445 — 110,980 Revenue recognized (60,299) (48,351) (3) (108,653) End of year $ 34,147 $ 45,580 $ — $ 79,727 Current $ 33,810 $ 25,089 $ — $ 58,899 Non-current 337 20,491 — 20,828 $ 34,147 $ 45,580 $ — $ 79,727 Fiscal Year 2019 In thousands Product Protection Plans Eye Care HMO Memberships Total Beginning of the year $ 28,775 $ 43,488 $ 15 $ 72,278 Sold 63,105 52,438 — 115,543 Revenue recognized (60,969) (49,440) (12) (110,421) End of year $ 30,911 $ 46,486 $ 3 $ 77,400 Current $ 30,547 $ 25,320 $ 3 $ 55,870 Non-current 364 21,166 — 21,530 $ 30,911 $ 46,486 $ 3 $ 77,400 Deferred revenue recorded as of fiscal year end 2020 is expected to be reflected in future operating results as follows: Fiscal Year In thousands 2021 $ 58,899 2022 15,484 2023 5,141 2024 152 2025 51 $ 79,727 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 02, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contractual Commitments As of January 2, 2021, the Company had contractual commitments of approximately $62.9 million consisting of agreements for merchandise purchases, technology and advertising. Warranty Costs The Company records an allowance for the estimated amount of future warranty costs when the related revenue is recognized, which is recorded in other payables and accrued expenses on the accompanying consolidated balance sheets. Expense associated with warranty costs is presented in cost of services and plans in the accompanying consolidated statements of operations. Estimated future warranty costs are primarily based on historical experience of identified warranty claims. However, there can be no assurance that future warranty costs will not exceed historical amounts. The following details the activity in our product warranty liability accounts: In thousands Fiscal Year 2020 Fiscal Year 2019 Beginning of year balance $ 1,881 $ 1,742 Accrued obligation 28,415 33,014 Claims paid (28,067) (32,875) End of year balance $ 2,229 $ 1,881 401(k) Plan The Company sponsors a 401(k) plan into which associates may defer a portion of their wages. We match a portion of such deferred wages. The expense for the plan was $5.3 million, $5.3 million and $4.2 million in the fiscal years ended 2020, 2019 and 2018, respectively. Expense associated with our 401(k) plan is presented in SG&A in the consolidated statements of operations. Legal Proceedings From time to time, the Company is involved in various legal proceedings incidental to its business. Because of the nature and inherent uncertainties of litigation, we cannot predict with certainty the ultimate resolution of these actions and, should the outcome of these actions be unfavorable, the Company’s business, financial position, results of operations or cash flows could be materially and adversely affected. 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. This review is updated periodically as additional information becomes available. If either or both of the criteria are not met, we reassess whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, we disclose the estimate of the amount of the loss or range of losses, or that an estimate of loss cannot be made. The Company expenses its legal fees as incurred. We are currently and may in the future become subject to various claims and pending or threatened lawsuits in the ordinary course of our business. Our subsidiary, FirstSight, 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 with 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, and, in November 2018, FirstSight filed a motion to dismiss. On March 23, 2020, the district court granted FirstSight’s motion to dismiss the second amended complaint. On April 24, 2020, the plaintiffs filed a third amended complaint. FirstSight filed a motion to dismiss the third amended complaint on May 8, 2020. O n February 4, 2021, the district court granted FirstSight’s motion in part and denied it in part. FirstSight’s answer to the remaining claims was filed February 18, 2021. We believe that the claims alleged are without merit and intend to continue to defend the litigation vigorously. In May 2017, a complaint was filed against us 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 our wholly-owned subsidiary, Arlington Contact Lens Service, Inc. (“AC Lens”), to suppress certain online advertising and that each defendant thereby engaged in anticompetitive conduct in violation of the Sherman Antitrust Act. We have settled this litigation for $7.0 million, without admitting liability. Accordingly, we recorded a charge for this amount in litigation settlement in the consolidated statement of operations during 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, we deposited 50% of the settlement amount, or $3.5 million, into an escrow account, to be distributed subject to and in accordance the terms of the settlement agreement and any further order of the court. On May 15, 2020, the plaintiffs filed a motion seeking preliminary approval of their settlement with the remaining defendant, 1-800 Contacts, Inc., as well as conditional certification of the class and approval of the plan of distribution of settlement funds. This motion was granted by the court on June 3, 2020. The court held a hearing on plaintiffs’ motion for final approval of class action settlements, approval of the plan of distribution, and final certification of the settlement classes on October 20, 2020. There were no objections and the court entered final judgment and order of dismissal following the hearing. Based on that order, we deposited the final 50% of the settlement amount, $3.5 million, into the designated escrow account to be distributed subject to and in accordance with the settlement agreement. In February 2019, we were served with a lawsuit by a former associate who alleged, on behalf of himself and a proposed class, several violations of California wage and hour laws and sought unspecified alleged unpaid wages, monetary damages, injunctive relief and attorneys’ fees. On March 21, 2019, we removed the lawsuit from state court to the United States District Court for the Northern District of California. The plaintiff moved to remand the action to state court on April 18, 2019, and the Court denied this motion on July 8, 2019. On July 22, 2019, the plaintiff filed an amended complaint. On July 26, 2019, the parties filed a joint stipulation wherein the Company denied all claims in the amended complaint but joined the plaintiff in seeking a stay of further proceedings in the lawsuit based on the parties’ agreement to attend early mediation in an effort to avoid further costs and expenses of protracted litigation. The parties participated in mediation on February 19, 2020, but a resolution of the matter was not reached at that time. On February 27, 2020, following mediation, the parties agreed to a settlement of all claims alleged by the named claimant on behalf of himself and all putative class members and other aggrieved associates. The Company will pay $3.5 million as the gross settlement fund in connection with this settlement. This settlement was preliminarily approved by the court on April 29, 2020. A final approval hearing was conducted by the court on October 27, 2020. The court approved the settlement according to the terms of the parties’ agreement and final judgment and order of dismissal was then entered. The Company deposited the settlement amount, or $3.5 million, into the designated account pursuant to the terms of the settlement agreement. In November 2019, the Company agreed to enter into a pre-litigation settlement with six former associates who asserted, on behalf of themselves and a proposed class, violations of the Fair Labor Standards Act and of California wage and hour laws. In order to avoid the burden, expense and uncertainty of litigation, and without admitting liability, the Company agreed to a settlement with the named claimants and all participating class members for a maximum settlement amount of $895,000. This settlement is subject to approval by a tribunal following a fairness hearing. |
Interest Rate Derivatives
Interest Rate Derivatives | 12 Months Ended |
Jan. 02, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Derivatives | Interest Rate Derivatives The Company is party to pay-fixed and receive-floating interest rate swap agreements to offset the variability of cash flows in LIBOR-indexed debt interest payments, subject to a 1.0% floor, attributable to changes in the benchmark interest rate from March 13, 2017 to March 13, 2021 related to its credit agreement. During the first quarter of 2020, in accordance with the original agreements with the counterparties, the notional amount of one swap decreased from $105.0 million to $70.0 million. The aggregate notional amount of the interest rate swaps was $395.0 million and $430.0 million for the year ended January 2, 2021 and December 28, 2019, respectively. There were no other changes in the terms of the agreements. Also, during the first quarter of 2020, the Company entered into a forward-starting interest rate collar that will hedge variability of cash flows of LIBOR-indexed debt interest payments from March 13, 2021 to July 18, 2024, following the maturity of the interest rate swap agreements, with an aggregate notional amount of $375 million. See Note 11. “Fair Value Measurement of Financial Assets and Liabilities” for further details. During the second quarter of 2020, as a result of the partial repayment of the Company’s LIBOR based debt balances, certain forecasted hedged transactions were deemed not probable of occurring. The Company subsequently discontinued hedge accounting on $78.0 million of interest rate swap notional and $58.0 million of interest rate collar notional, reclassifying net unrealized losses of approximately $2.5 million from AOCL to interest expense, net during fiscal year 2020. Additionally, due to changes in the interest rates applicable to the Company’s Term Loan and Revolving Credit Facility, the interest rate collar ceased to be a highly effective hedge. Losses on the change in fair value of the interest rate collar of approximately $2.6 million were recorded in interest expense, net during fiscal year 2020. Interest expense, net related to derivatives considered to be highly effective hedges for fiscal year 2020 was $7.7 million. Changes in the cash flows of interest rate swap derivatives designated as hedges are expected to be highly effective in offsetting the changes in interest payments on a principal balance equal to the designated derivative’s notional amount, attributable to the hedged risk. Cash flows related to derivatives qualifying as hedges are included in the same section of the Consolidated Statements of Cash Flows as the underlying assets and liabilities being hedged. Cash flows during fiscal year 2020 related to derivatives not qualifying as hedges were included in the operating section of the Consolidated Statements of Cash Flows and were immaterial. As of January 2, 2021, the Company expects to reclassify approximately $2.5 million of unrealized losses on derivative instruments, net of tax, from AOCL into earnings in the next 12 months as the derivative instruments mature. See Note 18. “Accumulated Other Comprehensive Loss” for further details. Our cash flow hedge position related to interest rate derivative contracts is as follows: In thousands Balance Sheet Classification As of As of Derivatives designated as hedging instruments under ASC 815 Interest rate swaps Other Payables and Accrued Expenses $ 1,528 $ 6,382 Interest rate swaps Other Liabilities — 1,603 Total derivative liabilities designated as hedging instruments $ 1,528 $ 7,985 Derivatives not designated as hedging instruments under ASC 815 Interest rate swap Other Payables and Accrued Expenses $ 248 $ — Interest rate collar Other Payables and Accrued Expenses 3,340 — Interest rate collar Other Liabilities 7,663 — Total derivative liabilities not designated as hedging instruments $ 11,251 $ — |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Jan. 02, 2021 | |
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 shares outstanding for the period and includes the dilutive impact of potential new shares issuable upon vesting and exercise of stock options, vesting of restricted stock units, and assumed conversion of $402.5 million of aggregate principal amount of 2025 Notes. Potential shares of common stock are excluded from the computation of diluted EPS if their effect is anti-dilutive. Prior to the fourth quarter of the fiscal year 2020, we intended to settle the principal amount of the outstanding 2025 Notes in cash and, therefore, used the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. Under the treasury stock method, the shares underlying the conversion option of the 2025 Notes will have an impact on our diluted EPS when net income is reported and when the average market price of our common stock for the period exceeds the conversion price of $31.17 per share. Beginning with the fourth quarter of the current fiscal year, we are no longer asserting cash settlement of the principal amount of the outstanding 2025 Notes, therefore share settlement is now presumed. Thus, on a prospective basis we will apply the if-converted method for calculating any potential dilutive effect of the conversion of the outstanding 2025 Notes on Diluted EPS, if applicable. If the if-converted method is anti-dilutive, the anti-dilutive share count for the 2025 notes will represent the maximum number of shares of common stock issuable upon conversion. See Note 4. “Long-term Debt” for more information on the 2025 Notes. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows: In thousands, except EPS Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Net income $ 36,277 $ 32,798 $ 23,653 Weighted average shares outstanding for basic EPS 80,565 78,608 75,899 Effect of dilutive securities: Stock options 1,737 3,019 3,129 Restricted Stock 183 56 13 2025 Notes 308 — — Weighted average shares outstanding for diluted EPS 82,793 81,683 79,041 Basic EPS $ 0.45 $ 0.42 $ 0.31 Diluted EPS $ 0.44 $ 0.40 $ 0.30 Anti-dilutive options, RSUs outstanding, and 2025 Notes excluded from EPS 13,325 294 — |
Segment Reporting
Segment Reporting | 12 Months Ended |
Jan. 02, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting | 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. In America’s Best stores, vision care services are provided by optometrists employed either by us or by independent professional corporations. Eyeglass World locations primarily feature independent optometrists to perform eye exams and on-site laboratories. Our two host operating segments consist of Military and Fred Meyer. These brands provide eye exams principally by independent optometrists in nearly all locations. We have aggregated our America’s Best, Eyeglass World, Military and Fred Meyer 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, and supplies inventory and lab processing services to, 230 Legacy retail Vision Centers. 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 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 providing optometric examination services. 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 for our managed care customers. Revenues associated with managing operations of our Legacy partner were $33.4 million, $35.5 million and $34.7 million for fiscal years ended 2020, 2019 and 2018, respectively. Our management & services agreement also allows our Legacy partner to collect penalties if the Vision Centers do not generate a requisite amount of revenues. No such penalties have been assessed under our current arrangement. On January 22, 2020, we entered into an amendment to our management & services agreement with Walmart which provided for a six On July 17, 2020, NVI and Walmart entered into a further amendment to the management & services agreement, to extend the current term and economics of the agreement by three years, to February 23, 2024, and provide that the agreement will automatically renew for an additional three The “Corporate/Other” category includes the results of operations of our other operating segments and corporate overhead support. Revenues from the Corporate/Other segments are attributable to the AC Lens and FirstSight operating segments. AC Lens primarily sells contact lenses and optical accessory products to retail customers through e-commerce. AC Lens also distributes contact lenses to certain 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 operations in California, and arranges for the provision of optometric services at the offices next to Walmart and Sam’s Club stores throughout California. None of those segments met the quantitative thresholds for determining reportable segments for any of the periods presented. 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. The operating segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our CODM to allocate resources and assess performance. Our CODM is our chief executive officer. The Company considers each of our brands to be an operating segment and has further concluded that presenting the results of our reportable segments provides meaningful information consistent with the objectives of ASC 280, Segment Reporting . Strategic initiatives and financial objectives for each reportable segment are determined at the corporate level. Each operating segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives, and has a general manager responsible for the sales and marketing initiatives and financial results for product lines within the segment. Our reportable segment profit measure is earnings before interest, tax, depreciation and amortization (“EBITDA”), or net revenue, less costs applicable to revenue, less SG&A expenses. Depreciation and amortization, asset impairment, litigation settlement and other corporate costs that are not allocated to the reportable segments (including interest expense) are excluded from segment EBITDA. There are no revenue 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. In fiscal year 2020, revenues from Walmart, recognized in our Legacy segment and Corporate/Other category, represent $268.6 million of our total net revenue, subjecting us to customer concentration risk. We incurred $8.6 million of costs during fiscal year 2020, directly related to adapting the Company’s operations to the COVID-19 pandemic such as personal protective equipment and other supplies needed to operate our stores safely and certain other costs such as compensation, a tangible appreciation bonus paid to our customer-facing doctors and associates, and other administrative expenses. These incremental expenses related to the COVID-19 pandemic are not allocated to the reportable segments, but are included in the Corporate/Other category. 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 consolidated financial statements, except for net revenue and associated costs applicable to revenue, which are presented on a cash basis, including point of sales for managed care payors and excluding the effects of unearned and deferred revenue, consistent with what the CODM regularly reviews. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments. Fiscal Year 2020 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 1,097,749 $ 90,909 $ 234,403 $ (4,778) $ 1,418,283 Segment services and plans revenues 244,650 51,108 — (2,281) 293,477 Total net revenue 1,342,399 142,017 234,403 (7,059) 1,711,760 Cost of products 307,813 43,452 201,880 (1,362) 551,783 Cost of services and plans 210,313 23,777 751 — 234,841 Total costs applicable to revenue 518,126 67,229 202,631 (1,362) 786,624 SG&A 489,449 51,809 179,332 — 720,590 Asset impairment — — 22,004 — 22,004 Litigation settlement — — 4,395 — 4,395 Other expense (income), net — — (445) — (445) Debt issuance costs — — 156 — 156 EBITDA $ 334,824 $ 22,979 $ (173,670) $ (5,697) Depreciation and amortization 91,585 Interest expense, net 48,171 Income before income taxes $ 38,680 Fiscal Year 2019 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 1,076,315 $ 105,450 $ 245,206 $ (835) $ 1,426,136 Segment services and plans revenues 248,685 54,599 12 (5,101) 298,195 Total net revenue 1,325,000 160,049 245,218 (5,936) 1,724,331 Cost of products 310,790 48,712 215,052 (203) 574,351 Cost of services and plans 206,878 25,289 1 — 232,168 Total costs applicable to revenue 517,668 74,001 215,053 (203) 806,519 SG&A 508,239 56,235 180,014 — 744,488 Asset impairment — — 8,894 — 8,894 Other expense (income), net — — 3,611 — 3,611 Loss on extinguishment of debt — — 9,786 — 9,786 EBITDA $ 299,093 $ 29,813 $ (172,140) $ (5,733) Depreciation and amortization 87,244 Interest expense, net 33,300 Income before income taxes $ 30,489 Fiscal Year 2018 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 956,355 $ 103,890 $ 208,875 $ 492 $ 1,269,612 Segment services and plans revenues 217,047 50,522 3,552 (3,879) 267,242 Total net revenue 1,173,402 154,412 212,427 (3,387) 1,536,854 Cost of products 280,720 46,986 183,459 241 511,406 Cost of services and plans 178,362 20,272 3,531 — 202,165 Total costs applicable to revenue 459,082 67,258 186,990 241 713,571 SG&A 457,618 54,091 175,767 — 687,476 Asset impairment — — 17,630 — 17,630 Other expense (income), net — — 1,487 — 1,487 Debt issuance cost — — 200 — 200 EBITDA $ 256,702 $ 33,063 $ (169,647) $ (3,628) Depreciation and amortization 74,339 Interest expense, net 37,283 Income before income taxes $ 4,868 Consolidated Net Product Revenue Information The following table presents our consolidated net product revenue information: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Net Product Sales Eyeglasses and sunglasses $ 946,025 $ 947,729 $ 851,328 Contact lenses 466,262 471,042 410,839 Accessories and other 5,996 7,365 7,445 Total net product revenues $ 1,418,283 $ 1,426,136 $ 1,269,612 |
Restricted Cash
Restricted Cash | 12 Months Ended |
Jan. 02, 2021 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash | Restricted Cash The following table provides a reconciliation of cash and cash equivalents reported within the consolidated balance sheets to the total of cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Cash and cash equivalents $ 373,903 $ 39,342 $ 17,132 Restricted cash included in other assets 1,256 965 866 Total cash, cash equivalents and restricted cash $ 375,159 $ 40,307 $ 17,998 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Jan. 02, 2021 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in the fair value of the Company’s cash flow hedge derivative instruments from their inception are recorded in AOCL if the instruments are deemed to be highly effective as cash flow hedges. The following table presents the changes in AOCL, net of tax during the fiscal years 2020, 2019 and 2018, respectively: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Cash flow hedging activity Balance at beginning of fiscal year $ (3,814) $ (2,810) $ (9,868) Other comprehensive income (loss) before reclassification (11,108) (5,814) 3,182 Tax effect of other comprehensive income (loss) before reclassification 2,830 1,489 (815) Amount reclassified from AOCL 10,328 4,464 6,306 Tax effect of amount reclassified from AOCL (2,636) (1,143) (1,615) Net current period other comprehensive income (loss), net of tax (586) (1,004) 7,058 Balance at end of fiscal year $ (4,400) $ (3,814) $ (2,810) See Note 14. “Interest Rate Derivatives” for a description of the Company’s use of cash flow hedging derivatives. |
Schedule I - Condensed Financia
Schedule I - Condensed Financial Information of Registrant | 12 Months Ended |
Jan. 02, 2021 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule I - Condensed Financial Information of Registrant | Schedule I - Condensed Financial Information of Registrant National Vision Holdings, Inc. and Subsidiaries (Parent Company Only) Condensed Balance Sheets In Thousands, Except Par Value As of January 2, 2021 As of December 28, 2019 ASSETS Current assets: Cash and cash equivalents $ 10 $ 55 Accounts Receivable, net 1,409 534 Prepaid expenses and other current assets 5 — Total current assets 1,424 589 Deferred income taxes — 320 Investment in subsidiary 1,268,846 804,443 Total non-current assets 1,268,846 804,763 Total assets $ 1,270,270 $ 805,352 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Other current liabilities $ 1,341 $ 50 Long-term debt, less current portion and debt discount 309,377 — Non-current liabilities: Other non-current liabilities 36,308 28,865 Deferred income taxes 16,742 — Total other non-current liabilities 53,050 28,865 Stockholders’ equity: Common stock, $0.01 par value; 200,000 shares authorized; 82,183 and 80,603 shares issued as of January 2, 2021 and December 28, 2019, respectively; 81,239 and 79,678 shares outstanding as of January 2, 2021 and December 28, 2019, respectively 821 805 Additional paid-in capital 795,697 700,121 Accumulated other comprehensive loss (4,400) (3,814) Retained earnings 142,880 107,132 Treasury stock, at cost; 944 and 925 shares as of January 2, 2021 and December 28, 2019, respectively (28,496) (27,807) Total stockholders’ equity 906,502 776,437 Total liabilities and stockholders’ equity $ 1,270,270 $ 805,352 Note: Fiscal year 2020 includes 53 weeks. Fiscal year 2019 includes 52 weeks. The accompanying notes are an integral part of these condensed financial statements. Schedule I - Condensed Financial Information of Registrant National Vision Holdings, Inc. And Subsidiaries (Parent Company Only) Condensed Statements of Operations and Comprehensive Income In Thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Total net revenue $ — $ — $ — Cost applicable to revenue — — — Operating expenses 264 256 265 Interest expense, net 17,296 — — Income (Loss) before income taxes (17,560) (256) (265) Income tax provision (benefit) (3,959) 71 (91) Income (Loss) before equity in net income of subsidiaries (13,601) (327) (174) Net income of subsidiaries 49,878 33,125 23,827 Net income $ 36,277 $ 32,798 $ 23,653 Comprehensive income: Net income 36,277 32,798 23,653 Unrealized gain (loss) on hedge instruments (780) (1,350) 9,488 Tax provision (benefit) of unrealized gain (loss) on hedge instruments (194) (346) 2,430 Comprehensive income $ 35,691 $ 31,794 $ 30,711 Note: Fiscal year 2020 includes 53 weeks. Fiscal years 2019 and 2018 include 52 weeks. The accompanying notes are an integral part of these condensed financial statements. Schedule I - Condensed Financial Information of Registrant National Vision Holdings, Inc. and Subsidiaries (Parent Company Only) Condensed Statements of Cash Flows In Thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Operating Activities Net cash provided by (used for) operating activities $ 1,189 $ 25,455 $ 223 Investing Activities Investment in subsidiary (404,537) (15,090) (19,802) Net cash provided by (used for) investing activities (404,537) (15,090) (19,802) Financing Activities Proceeds from stock option exercises and associate stock purchase plan 13,105 15,090 19,802 Proceeds from issuance of convertible notes 402,500 — — Payments of debt issuance costs (11,613) — — Purchase of treasury stock (689) (25,646) — Net cash provided by (used for) financing activities 403,303 (10,556) 19,802 Net change in cash and cash equivalents (45) (191) 223 Cash and cash equivalents, beginning of year 55 246 23 Cash and cash equivalents, end of year $ 10 $ 55 $ 246 Note: Fiscal year 2020 includes 53 weeks. Fiscal years 2019 and 2018 include 52 weeks. The accompanying notes are an integral part of these condensed financial statements. 1. Basis of Presentation National Vision Holdings, Inc. (“NVHI,” or the “Company”) conducts substantially all of its activities through its indirect wholly owned subsidiary, National Vision, Inc. (“NVI”) and its subsidiaries. NVHI was incorporated in Delaware on February 14, 2014 under the name Nautilus Parent, Inc. There were no financial transactions between the inception date and March 13, 2014, the date the majority ownership of NVI was transferred from private equity funds managed by Berkshire Partners LLC to affiliates of Kohlberg Kravis Roberts & Co. L.P. In the parent-company-only financial statements, NVHI’s investment in subsidiaries is stated at cost, plus equity in undistributed earnings of subsidiaries since the date of acquisition, less dividends. The parent-company-only financial statements should be read in conjunction with the NVHI consolidated financial statements. In May 2020, the Company issued $402.5 million principal amount of 2.50% convertible senior notes due 2025. The 2025 Notes will pay interest semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2020, at an annual rate of 2.50% and will be convertible into cash, shares of common stock or a combination of cash and shares of common stock, at our election, based on the applicable conversion rate at such time. NVHI contributed the proceeds from of the 2025 Notes to NVI as additional investments during the fiscal year 2020. See Note 4. “Long-term Debt” to the NVHI consolidated financial statements for details of the 2025 Notes. 2. Guarantees and Restrictions As described in the Credit Agreement section included in Note 4. “Long-term Debt” to the NVHI consolidated financial statements, NVI used proceeds from the 2025 Notes to fully repay the outstanding amount on its Revolving Credit Facility of $294.3 million and partially repaid $75 million on the Term Loan. As of January 2, 2021, NVI had $317.4 million of principal amount of long-term debt outstanding under its Term Loan and no outstanding balance under its $300.0 million Revolving Credit Facility, which includes $6.4 million in outstanding letters of credit. Under the Credit Agreement Amendment, provided no event of default has occurred and is continuing, NVI is permitted to pay dividends to NVHI with certain restrictions as stated in the Credit Agreement Amendment. |
Business and Significant Acco_2
Business and Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal Year We operate on a retail fiscal calendar that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to December 31. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References herein to “fiscal year 2020,” relate to the 53 weeks ended January 2, 2021, and references to “fiscal year 2019,” and “fiscal year 2018,” relate to the 52 weeks ended December 28, 2019 and December 29, 2018, respectively. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The 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. |
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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash consists of currency and demand deposits with financial institutions and money market funds. We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. We also review cash balances on a bank by bank basis to identify book overdrafts. Book overdrafts occur when the amount of outstanding checks exceed the cash deposited at a bank. We reclassify book overdrafts, if any, to accounts payable in the accompanying consolidated balance sheets. |
Accounts Receivable, Net | Accounts Receivable, Net 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. Accounts receivable are reduced by allowances for credit losses. Estimates of our allowance for credit losses are based on our historical and current operating, billing, and collection trends, as well as current conditions and reasonable and supportable forecasts about the future. Accounts receivable are written off after all collection attempts have been exhausted. Credit loss expense recognized on our receivables, which is presented in SG&A expenses in the Company’s consolidated statements of operations, were approximately |
Inventories | InventoriesThe cost of inventory is determined using the weighted average cost method. Inventories at retail stores consist of finished goods and are valued at the lower of cost or estimated net realizable value (“NRV”). Manufactured inventories are valued using absorption accounting which includes material, labor, other variable costs and other applicable manufacturing overhead. Inventory values are adjusted for estimated obsolescence and written down to NRV based on estimates of current and anticipated demand, customer preference, merchandise age, planned promotional activities, contact lens vendor return acceptance activity, and estimates of future retail sales prices. Shrinkage is estimated and recorded throughout the period as a percentage of cost of sales based on historical results and current inventory levels. Actual shrinkage is recorded throughout the year based upon periodic physical counts. |
Property and Equipment | Property and Equipment Property and equipment (“P&E”) is stated at cost less accumulated depreciation. Depreciation associated with P&E is included in depreciation and amortization in the accompanying consolidated statements of operations. When we retire or otherwise dispose of P&E, we remove the cost and related accumulated depreciation from our accounts and recognize any gain or loss on the sale of such assets in SG&A in the consolidated statements of operations. We capitalize major replacements and remodeling, and recognize expenditures for maintenance and repairs in SG&A. We depreciate P&E for financial accounting purposes using the straight-line method over the following estimated useful lives: Buildings 34 years Equipment 3 - 7 years Information technology hardware and software (a) 2 - 5 years Furniture and fixtures 6 years Leasehold improvements (b) 5 - 10 years P&E under capital leases (b) 10 years ____________ (a) Costs of developing or obtaining software for internal use, such as direct costs of materials or services and internal payroll costs related to the software development projects, are capitalized to information technology hardware and software. (b) Depreciation of leasehold improvements is recognized over the shorter of the estimated useful life of the asset or the term of the lease. The term of the lease includes renewal options for additional periods if the exercise of the renewal is considered to be reasonably assured. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Indefinite-lived intangible assets include goodwill and our trademarks and tradenames; we evaluate these assets annually for impairment, or more frequently if events and circumstances indicate that it is more likely than not that goodwill is impaired. Our annual testing date for impairment of goodwill and indefinite-lived intangible assets is the first day of the fourth fiscal quarter, which for fiscal years 2020 and 2019 was September 27, 2020, and September 29, 2019, respectively. Finite-lived, amortizing intangible assets primarily consist of our contracts and relationships with certain retailers and our customer database tool. We amortize finite-lived intangible assets on a straight-line basis over their estimated useful lives, ranging from four Goodwill is impaired if a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. We consider each of our operating segments to be reporting units. We estimate the fair value of our reporting units using the income approach, which is based on a discounted cash flow analysis and calculate the fair value of reporting units by estimating after-tax cash flows discounted using a weighted average cost of capital. The cash flows used in the analysis are based on financial forecasts developed internally by management and require significant judgment. The significant unobservable inputs used in the fair value measurement of the reporting units are revenue growth rate, cost of sales, payroll expense growth rate and other store expenses growth rate. These assumptions are sensitive to future changes in the business profitability, changes in our business strategy and external market conditions, among other factors. A decrease to the long term revenue growth rate assumption or an increase to the expense growth rate assumptions could require us to record goodwill impairment charges. If impairment indicators related to amortizing intangible assets are present, we estimate cash flows expected to be generated over the remaining useful lives of the related assets based on current projections. If the projected net undiscounted cash flows are less than the carrying value of the related assets, we then measure impairment based on a discounted cash flow model and record an impairment charge as the excess of carrying value and estimated fair value. We use the relief-from-royalty method to estimate fair value of our trademarks and tradenames, which involves estimating a royalty rate based on comparable licensing arrangements, applying that rate to the revenue projections for the subject asset, and then estimating fair value using a discounted cash flow analysis. We record an impairment charge as the excess of carrying value over estimated fair value. |
Equity Method Investment | Equity Method InvestmentThe Company has an investment in a private start-up company whose principal business is licensing software to eyeglass retailers. The carrying value of our equity method investment is $0 as of the end of the fiscal year 2020. |
Fair Value Measurement of Assets and Liabilities (Non-Recurring Basis) | Fair Value Measurement of Assets and Liabilities (Non-Recurring Basis)Non-financial assets such as P&E, ROU assets and intangible assets are subject to nonrecurring fair value measurements if impairment indicators are present. Factors we consider important that could trigger an impairment review include a significant under-performance compared to expected operating results, a significant or adverse change in customer business climate, and a significant negative industry or economic trend. |
Deferred Financing Costs and Loan Discounts | Deferred Financing Costs and Loan Discounts Costs incurred in connection with long-term debt which are paid directly to the Company’s lenders and to third parties are presented as reductions to our long-term debt balance, except for the costs related to our revolving credit facility (the “Revolving Credit Facility”) which are presented as assets. These costs are amortized over the term of the related financing agreement and included in interest expense in the accompanying consolidated statements of operations. |
Self-Insurance Liabilities | Self-Insurance Liabilities We are primarily self-insured for workers’ compensation, associate health benefits and general liability claims. We record self-insurance liabilities based on claims filed, including the development of those claims and an estimate of claims incurred but not yet reported. Should a different amount of claims occur compared to what was estimated, or costs of the claims increase or decrease beyond what was anticipated, liabilities may need to be adjusted accordingly. We periodically update our estimates and record such adjustments in the period in which such determination is made. Self-insurance liabilities are recorded in Other payables and accrued expenses (current portion) and Other liabilities (non-current portion) on an undiscounted basis in the accompanying consolidated balance sheets. |
Derivative Financial Instruments | Derivative Financial Instruments The Company uses interest rate derivatives to manage the exposure of its LIBOR-based debt to fluctuations in interest rates. We designate certain of our interest rate derivatives as cash flow hedges and formally document our hedge relationships, including identification of the hedging instruments and the hedged items, as well as our risk management objectives and strategies for undertaking the hedge transactions. We record all interest rate derivatives in our consolidated balance sheets on a gross basis at fair value. Fair value represents estimated amounts we would receive or pay upon a termination of interest rate derivatives prior to their scheduled expiration dates. The fair value was based on information that is model-driven and whose inputs were observable (Level 2 inputs). We do not hold or enter into financial instruments for trading or speculative purposes. The gain or loss res ulting from fair value adjustments for highly effective cash flow hedges is recorded in Accumulated other comprehensive loss (“AOCL”) in the accompanying consolidated balance sheets until the hedged item is recognized as interest expense in the consolidated statements of operations. The gain or loss resulting from fair value adjustments of derivatives not deemed to be highly effective cash flow hedges is recognized in interest expense immediately. We perform periodic assessments of the effectiveness of our derivative contracts designated as hedges, including the possibility of counterparty default. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss AOCL is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Accumulated other comprehensive loss, net of income tax, is entirely composed of the cumulative unrealized loss on our hedging instruments. See Note 18. “Accumulated Other Comprehensive Loss” for details of reclassifications out of AOCL. |
Revenue Recognition and Costs Applicable to Revenue | Revenue Recognition Product revenues include sales of prescription and non-prescription eyewear, contact lenses, related accessories to retail customers (including those covered by managed care) and sales of inventory in which our customer is another retail entity. Revenues from services and plans include eye exams, eyecare club membership fees, product protection plans (i.e. warranties) and HMO vision plan fees. Service revenue also includes fees we earn for managing certain Vision Centers and performing laboratory processing services for our legacy partner. At our America’s Best brand, our signature offer is two pairs of eyeglasses and a free eye exam for one low price (“two-pair offer”). 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 offer. As a result, we do not allocate revenue to the eye exam associated with the two-pair offer, and we record all revenue associated with the offer in Owned & Host net product sales when the customer has received and accepted the merchandise. 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 consolidated balance sheets. Unearned revenue at the end of a reporting period is estimated based on processing and delivery times throughout the current month which generally range from approximately seven Revenue is recognized net of sales taxes and returns and include amounts billed to customers related to shipping and handling costs. The returns allowance is based on historical return patterns. Provisions for estimated returns are established and the expected costs continue to be recognized as reductions to revenue when the products are sold. Shipping and handling costs are accounted for as fulfillment costs and are included in costs applicable to revenue. We record reductions in revenue for estimated price concessions granted to managed care providers. The Company considers its revenue from managed care customers to include variable consideration and estimates such amounts associated with managed care customer revenues using the history of concessions provided and cash receipts from managed care providers; we reduced our net revenue for variable considerations of $7.5 million during the fiscal year 2020. Refer to Note 7. “Revenue from Contracts With Customers” for further details of our revenues. Costs Applicable To Revenue Costs applicable to revenue consist primarily of cost of products sold and costs of administering services and plans. Costs of products sold include (i) costs to procure non-prescription eyewear, contacts and accessories which we purchase and sell in their finished form, (ii) costs to manufacture finished prescription eyeglasses, including direct materials, labor and overhead and (iii) remake costs, warehousing and distribution expenses and internal transfer costs. Costs of services and plans include costs associated with warranty programs, eyecare club memberships, HMO vision plan fees, eyecare practitioner and eye exam technician payroll, taxes and benefits and optometric and other service costs. Depreciation and amortization are excluded from costs applicable to revenue and are presented separately on the accompanying consolidated statements of operations. As a component of the Company’s procurement program, the Company frequently enters into contracts with its vendors that provide for payments of rebates or other allowances. These vendor payments are reflected in the carrying value of the inventory when earned or as progress is made toward earning the rebate or allowance and as a component of cost of products as the inventory is sold. Rebates that have been earned but not yet received are recognized as an increase to Accounts receivable, net or a reduction to Accounts payable, depending on the nature of the agreement with the vendor, until the rebate has been received. |
Selling, General and Administrative | Selling, General and Administrative SG&A includes store associate (including optician) payroll, taxes and benefits, occupancy and other store expenses, advertising and promotion, field services, and corporate support. Advertising and promotion costs, including online marketing arrangements, newspaper, direct mail, television and radio, are recorded in SG&A and expensed at the time the advertising first occurs. Production costs of future media advertising and related promotional campaigns are deferred until the advertising events occur. Non-capital expenditures associated with opening new stores, including rent, marketing expenses, travel and relocation costs, and training costs, are recorded in SG&A as incurred. |
Leases | Leases We lease our stores, laboratories, distribution centers, and corporate offices. These leases generally have noncancelable lease terms of between 5 years and 10 years, with an option to renew for additional terms of 1 year to 10 years or more. The lease term includes renewal option periods when the renewal is deemed reasonably certain after considering the value of the leasehold improvements at the end of the noncancelable lease period. Most leases for our stores provide for a minimum rent and typically include escalating rent over time with the exception of Military for which lease payments are variable and based on a percentage of sales. For Vista Optical locations in Fred Meyer stores, we pay fixed rent plus a percentage of sales after certain minimum thresholds are achieved. The Company’s leases generally require us to pay insurance, real estate taxes and common area maintenance expenses, substantially all of which are variable and not included in the measurement of the lease liability. Our lease arrangements frequently include tenant improvement allowances (TIAs), which are contractual amounts received or receivable from a lessor for improvements made to leased properties by the Company. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. With respect to lease accounting guidance, the Company’s management & services agreement with its legacy partner does not contain a lease arrangement. The lease liability is measured at the present value of future lease payments over the lease term less TIAs receivable, and the ROU asset is measured at the lease liability amount, adjusted for prepaid lease payments, TIAs received and the lessee’s initial direct costs. As the rate implicit in the Company’s leases is not easily determinable, the Company’s incremental borrowing rate is used in calculating the present value of the sum of the lease payments. Factors incorporated into the calculation of the lease incremental borrowing rate include lease term, borrowing rates on the Company’s long-term debt, fixed rates on the Company’s interest rate swaps, LIBOR margins for issuers of similar credit rating to NVI and effect of collateralization. |
Stock-Based Compensation | Stock-Based Compensation We measure stock-based compensation cost, which consists of grants of stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), performance stock options and restricted stock awards (“RSAs”) to associates and non-associate directors, based on the estimated grant date fair value of the awards. We recognize compensation expense for all awards over the requisite service period using a straight-line recognition method. Additionally, for awards that are subject to performance conditions, we recognize compensation expense once achievement of the conditions is considered to be probable. We account for forfeitures as they occur. See Note 5. “Stock Incentive Plan” for further details related to our stock-based compensation plans. |
Long-lived Asset Impairment | Long-lived Asset Impairment We evaluate impairment of long-lived tangible and right of use (“ROU”) store assets at the store level, which is the lowest level at which independent cash flows can be identified, when events or conditions indicate the carrying values of such assets may not be recoverable. In making this evaluation, we may consider multiple factors including financial performance of the stores, regional and local business climates, future plans for the store operations and other qualitative factors. If the store’s projected undiscounted net cash flows expected to be generated by the related assets over the life of the primary asset within the asset group are less than the carrying value of the subject assets, we determine an estimate of the fair value of the asset group using an income approach based on discounted cash flows, which require estimates and assumptions related to forecasted store revenue growth rates and store profitability. The cash flows used in estimating fair value were discounted using market rates from 6.3% to 8%. If the fair value of the asset group is less than its carrying value, the loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long lived asset of the group shall not reduce the carrying amount of that asset below its fair value. We consider market-based indications of prevailing rental rates for retail space, market participant discount rates, and lease incentives when estimating the fair values of ROU assets. A decrease in the estimated cash flows would lead to a lower fair value measurement, as would an increase in the discount rate. These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy. We recognized impairments of $22.0 million, $8.9 million and $2.5 million in fiscal years 2020, 2019 and 2018, respectively. These impairment charges were primarily related to our long-lived tangible store assets classified as held and used, and were primarily driven by lower than projected customer sales volume in certain stores; we also considered the historical performance of the stores before the temporary store closures in response to the COVID-19 pandemic, the effect of store closures and uncertainty in store revenues over the remaining useful life of the asset group as a result of the COVID-19 pandemic. The estimated remaining fair value of the assets impaired during fiscal year 2020 was $30.6 million and the estimated remaining fair value of the assets impaired during fiscal year 2019 was $16.6 million; the estimated remaining fair values include amounts estimated at various dates during the related fiscal years. Substantially all of the remaining fair value of the impaired store assets in fiscal year 2020 represent the fair value of ROU assets. We assess non-store long-lived assets, including capitalized software costs in use or under development, for impairment if events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. The asset impairments recognized in fiscal year 2020 includes $1.1 million related to a write-off of certain capitalized software costs that were deemed to be obsolete due to a decision to cease further development. During fiscal years 2019 and 2018 there was no impairment of non-store long-lived assets or capitalized software costs. |
Income Taxes | Income Taxes We account for deferred income taxes based on the asset and liability method. The Company must make certain estimates and judgments in determining income tax expense. We are required to determine the aggregate amount of income tax expense to accrue and the amount which will be currently payable or refundable based upon tax statutes of each jurisdiction in which the Company does business. Deferred income taxes are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets also include future tax benefits to be derived from the utilization of tax loss carry-forwards and application of certain carry-forward credits. The net carrying amount of deferred income tax assets and liabilities is recorded in non-current deferred income tax liabilities in the accompanying consolidated balance sheets. Deferred income taxes are measured using enacted tax rates in effect for the years in which those differences are expected to be recovered or settled. The effect on deferred taxes from a change in the tax rate is recognized through continuing operations in the period that includes the enactment of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. A valuation allowance is recorded if it is more likely than not that some portion of a deferred tax asset will not be realized. Valuation allowances are released as positive evidence of future taxable income sufficient to realize the underlying deferred tax assets becomes available. |
Recently Issued Accounting Pronouncements | Adoption of New Accounting Pronouncements Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases . This new guidance establishes a 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 are classified as either finance or operating, with such classification affecting the pattern of expense recognition in the statement of operations. Disclosure of key information about leasing arrangements is also required. We adopted ASU No. 2016-02, as amended, as of December 30, 2018 (the first day of fiscal year 2019), using the modified retrospective transition approach without adjusting the comparative periods presented. We elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward historical lease classification for leases in existence as of the adoption date, to not assess whether any expired or existing contracts are leases or contain leases and to not assess whether unamortized initial direct costs for existing leases meet the definition of initial direct costs. In addition, we elected the practical expedients to not separate lease components from non-lease components and to not apply this new guidance to leases with terms of less than 12 months. Upon adoption, we recorded operating lease liabilities of approximately $339.6 million as of December 30, 2018. The Company treated TIAs and deferred rent of $24.3 million and $11.9 million, respectively, as of December 30, 2018 as reductions of lease payments and prepaid rent of $5.8 million as of December 30, 2018 as an increase in lease payments used to measure ROU assets and recorded $308.5 million of lease ROU assets upon adoption. The difference between the additional lease assets and lease liabilities net of the deferred tax impact was $0.5 million, which was recorded as an adjustment to fiscal year 2019 opening retained earnings. Adoption of this new guidance did not result in significant changes to our results of operations or cash flows. See Note 8. “Leases” for additional information. Other Comprehensive Income. In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) . This guidance allows for an optional reclassification from accumulated other comprehensive income or loss to retained earnings for stranded tax effects as a result of the newly enacted federal corporate income tax rate under the 2017 Tax Cuts and Jobs Act enacted into law on December 22, 2017 (the “Tax Legislation”). This guidance is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We adopted the guidance during the first quarter of fiscal year 2019, and did not reclassify the stranded income tax benefit resulting from adoption of the Tax Legislation from AOCL into earnings. There were no other impacts to the Company’s financial condition, result of operations, or cash flows. Cloud Computing. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. 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). We obtain a variety of software solutions and tools through cloud computing arrangements. This new guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years and may be adopted on a prospective or retrospective basis. We adopted the accounting standard on a prospective basis in the first quarter of 2020. The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations, or cash flows. Credit Losses . In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) . This new guidance requires an entity to assess impairment of its financial instruments based on its estimate of expected credit losses. Initial adoption of ASU 2016-13 is required to be reported on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for certain provisions that are required to be applied prospectively. This guidance is effective for fiscal years beginning after December 15, 2019, and for interim reporting periods within those fiscal years. We adopted ASU No. 2016-13 as of December 29, 2019 (the first day of fiscal year 2020), using the modified retrospective approach without adjusting the comparative periods presented. Upon adoption, the Company recorded a $0.7 million increase to the allowance for credit losses as a result of increases in our allowance for credit losses of notes receivable. Refer to Note 11. “Equity in Assets of Non-Consolidated Investee” for more information on our non-consolidated investee’s secured convertible promissory note. After adjusting for deferred taxes, we recorded a $0.5 million decrease in Retained earnings through a cumulative-effect adjustment. Adoption of this new guidance did not have a material impact on the Company’s financial condition, results of operations or cash flows. Future Adoption of Accounting Pronouncements Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that may be affected by the cessation of the London Inter-bank Offered Rate (“LIBOR.”) An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. A substantial portion of our debt is subject to interest payments that are indexed to LIBOR; additionally, we are party to multiple interest rate derivatives based on LIBOR. We are currently evaluating the effect of this guidance and have not applied the provisions of this guidance during the current fiscal year. Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This new guidance simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. The guidance also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. ASU 2020-06 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption possible for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020. We plan to early adopt the accounting standard in the first quarter of 2021. Upon adoption we expect this guidance to result in a reclassification of conversion feature balances from additional paid-in capital to debt and to decrease reported non-cash interest expense for the convertible senior notes (the “2025 Notes”). We currently expect the net impact of the reclassification will be an increase to long term debt of approximately $83 million, a decrease to deferred tax liabilities of approximately $19 million, a decrease to additional paid-in capital of $71 million and an increase to retained earnings of approximately $7 million on the consolidated balance sheet as of January 3, 2021. We also expect incremental reductions to interest expense in post-adoption periods compared pre-adoption periods. Ultimate decisions regarding the timing of adoption, as well as the quantification of the effects of adoption on the financial statements, are subject to further evaluation. |
Business and Significant Acco_3
Business and Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment, Net | We depreciate P&E for financial accounting purposes using the straight-line method over the following estimated useful lives: Buildings 34 years Equipment 3 - 7 years Information technology hardware and software (a) 2 - 5 years Furniture and fixtures 6 years Leasehold improvements (b) 5 - 10 years P&E under capital leases (b) 10 years ____________ (a) Costs of developing or obtaining software for internal use, such as direct costs of materials or services and internal payroll costs related to the software development projects, are capitalized to information technology hardware and software. (b) Depreciation of leasehold improvements is recognized over the shorter of the estimated useful life of the asset or the term of the lease. The term of the lease includes renewal options for additional periods if the exercise of the renewal is considered to be reasonably assured. In thousands As of As of Property and equipment, net: Land and building $ 3,624 $ 3,632 Equipment 207,265 188,593 Information technology hardware and software 129,008 115,283 Furniture and fixtures 56,277 55,146 Leasehold improvements 220,720 213,124 Construction in progress 23,859 26,517 Right of use assets under finance leases 36,757 36,437 677,510 638,732 Less: Accumulated depreciation (336,217) (271,965) $ 341,293 $ 366,767 |
Details of Certain Balance Sh_2
Details of Certain Balance Sheet Accounts (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable, Net | In thousands As of As of Accounts receivable, net: Trade receivables $ 28,405 $ 28,635 Credit card receivables 21,557 14,173 Other receivables 8,460 4,707 Allowance for credit losses (433) (3,040) $ 57,989 $ 44,475 |
Schedule of Inventories | In thousands As of As of Inventories: Raw materials and work in process (1) $ 55,473 $ 65,179 Finished goods 55,801 62,377 $ 111,274 $ 127,556 (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 | We depreciate P&E for financial accounting purposes using the straight-line method over the following estimated useful lives: Buildings 34 years Equipment 3 - 7 years Information technology hardware and software (a) 2 - 5 years Furniture and fixtures 6 years Leasehold improvements (b) 5 - 10 years P&E under capital leases (b) 10 years ____________ (a) Costs of developing or obtaining software for internal use, such as direct costs of materials or services and internal payroll costs related to the software development projects, are capitalized to information technology hardware and software. (b) Depreciation of leasehold improvements is recognized over the shorter of the estimated useful life of the asset or the term of the lease. The term of the lease includes renewal options for additional periods if the exercise of the renewal is considered to be reasonably assured. In thousands As of As of Property and equipment, net: Land and building $ 3,624 $ 3,632 Equipment 207,265 188,593 Information technology hardware and software 129,008 115,283 Furniture and fixtures 56,277 55,146 Leasehold improvements 220,720 213,124 Construction in progress 23,859 26,517 Right of use assets under finance leases 36,757 36,437 677,510 638,732 Less: Accumulated depreciation (336,217) (271,965) $ 341,293 $ 366,767 |
Schedule of Other Payables and Accrued Expenses | In thousands As of As of Other payables and accrued expenses: Associate compensation and benefits (1) $ 51,081 $ 28,347 Self-insurance liabilities 8,650 8,403 Capital expenditures 8,455 6,782 Advertising 2,173 2,919 Reserves for customer returns and remakes 8,084 7,158 Legacy management & services agreement 5,386 4,461 Fair value of derivative liabilities 5,116 6,382 Supplies and other store support expenses 3,461 2,926 Litigation settlements 1,107 3,840 Lease concessions 3,142 — Other 13,654 11,611 $ 110,309 $ 82,829 (1) Includes CARES Act deferred employer payroll taxes in the amount of $12.8 million as of January 2, 2021. |
Schedule of Other Non-current Liabilities | In thousands As of As of Other non-current liabilities: Fair value of derivative liabilities $ 7,663 $ 1,603 Self-insurance liabilities 7,046 7,283 Other 2,706 4,845 $ 17,415 $ 13,731 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The gross carrying amount and accumulated impairment of the Company’s goodwill balances for 2020 and 2019 are as follows: As of As of In thousands Gross Carrying Accumulated Gross Carrying Accumulated Owned & Host Segment $ 736,901 $ (19,357) $ 736,901 $ (19,357) Legacy Segment 60,069 — 60,069 — Corporate/Other 8,107 (8,107) 8,107 (8,107) $ 805,077 $ (27,464) $ 805,077 $ (27,464) |
Schedule of Indefinite-Lived Intangible Assets | Indefinite-lived intangible assets by major asset class are as follows: In thousands As of As of Trademarks and trade names: America’s Best $ 200,547 $ 200,547 Eyeglass World 40,000 40,000 $ 240,547 $ 240,547 |
Schedule of Finite-Lived Intangible Assets | Finite-lived, amortizing intangible assets by major asset class are as follows: As of January 2, 2021 As of December 28, 2019 In thousands Gross Carrying Accumulated Remaining Life Gross Carrying Accumulated Remaining Life Contracts and relationships: Legacy $ 65,000 $ 40,154 4 $ 65,000 $ 34,247 5 Fred Meyer 35,000 10,339 16 35,000 8,820 17 Customer database 4,400 4,400 — 4,400 4,400 — Other 746 742 — 746 739 — $ 105,146 $ 55,635 $ 105,146 $ 48,206 |
Schedule of Aggregate Future Estimated Amortization Expense | Aggregate future estimated amortization expense is shown in the following table: Fiscal Year In thousands 2021 $ 7,491 2022 7,490 2023 7,488 2024 7,488 2025 2,519 Thereafter 17,035 $ 49,511 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consists of the following: In thousands As of As of 2025 Notes, due May 15, 2025 $ 402,500 $ — Term Loan, due July 18, 2024 317,375 392,375 Revolving Credit Facility, due July 18, 2024 — 148,000 Long-term debt before debt discount 719,875 540,375 Unamortized discount and issuance costs - 2025 Notes (93,123) — Unamortized discount and issuance costs - term loan (2,141) (3,979) Long-term debt less debt discount 624,611 536,396 Less current maturities — (10,500) Long-term debt - non-current portion 624,611 525,896 Finance lease obligations 30,750 33,296 Less current maturities (3,598) (3,259) Long-term debt and finance lease obligations, less current portion and debt discount $ 651,763 $ 555,933 |
Schedule of Annual Maturities of Debt | Scheduled annual maturities of debt are as follows: Fiscal Year In thousands 2021 $ — 2022 — 2023 — 2024 317,375 2025 402,500 $ 719,875 |
Stock Incentive Plans (Tables)
Stock Incentive Plans (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Compensation Expense | The following table summarizes stock compensation expense under the Company’s plans, which is included in SG&A in the accompanying statements of operations: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Stock options $ 2,827 $ 8,562 $ 19,397 RSUs and PSUs 7,201 3,655 1,386 RSAs 588 334 108 Associate stock purchase plan 124 119 48 Pre-tax stock based compensation expense $ 10,740 $ 12,670 $ 20,939 Income tax benefit (2,743) (3,237) (5,367) After-tax share based compensation expense $ 7,997 $ 9,433 $ 15,572 Stock options RSUs and PSUs RSAs Unrecognized compensation cost ( in thousands ) $ 3,248 $ 14,156 $ 366 Expected remaining weighted-average period of expense recognition (in years) 1.69 2.20 0.58 |
Schedule of RSU, PSU, and RSA Activity | The following summarizes RSU, PSU and RSA awards activity: RSUs Weighted average grant date fair value ($) PSUs Weighted average grant date fair value ($) RSAs Weighted average grant date fair value ($) Outstanding at December 28, 2019 376,145 28.45 113,014 34.49 20,628 30.71 Granted 162,468 34.73 125,387 34.34 19,583 30.65 Vested (52,466) 25.65 — — (18,229) 29.27 Forfeited (31,656) 30.62 (18,217) 34.98 — — Outstanding at January 2, 2021 454,491 30.85 220,184 34.36 21,982 31.85 |
Service-based options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Option Activity | The following table summarizes service-based stock option activity, including service-based options under the Vision Holding Corp. Amended and Restated 2013 Equity Incentive Plan, the 2014 Stock Incentive Plan, and the 2017 Omnibus Incentive Plan. Number of Options Outstanding Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (In Thousands) ($) Outstanding options at December 28, 2019 1,906,158 13.37 Granted 160,574 34.47 Exercised (823,685) 8.83 Forfeited (49,061) 23.54 Outstanding options at January 2, 2021 1,193,986 18.92 6.19 31,490 Vested and exercisable at January 2, 2021 665,781 12.94 4.94 21,540 |
Schedule of Valuation Assumptions for Stock Option Grants | The fair value of service-based options was estimated using the Black-Scholes-Merton option pricing model. The following is a summary of the assumptions used in this model for service-based options: 2020 2019 Expected volatility 39.54% to 55.81% 34.50% to 37.10% Expected term range (in years) 6.00 5.75 to 6.50 Expected risk-free interest rate 0.47% to 1.13% 1.68% to 2.94% |
Performance-based options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Option Activity | The following table summarizes performance-based stock option activity: Number of Options Outstanding Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (In Thousands) ($) Outstanding options at December 28, 2019 1,603,848 6.60 Exercised (705,414) 7.37 Forfeited (43,478) 15.74 Outstanding options at January 2, 2021 854,956 5.50 3.42 34,018 Vested and exercisable at January 2, 2021 854,956 5.50 3.42 34,018 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax (Benefit) Provision | The income tax provision (benefit) consists of: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Current income tax: Federal $ 86 $ 443 $ 174 State 2,550 864 381 Deferred income tax: Federal (219) (2,972) (15,687) State (14) (644) (3,653) Income tax provision (benefit) $ 2,403 $ (2,309) $ (18,785) |
Schedule of Effective Income Tax Rate Reconciliation | Our income tax provision (benefit) differs from the amounts computed by multiplying earnings before income taxes by the statutory federal income tax rate as shown in the following table: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Federal income tax provision at statutory rate $ 8,123 $ 6,403 $ 1,022 State income tax provision, net of federal income tax 1,755 1,387 226 Increase (decrease) in deferred tax asset valuation allowance (216) (386) 318 Goodwill impairment — — 3,879 Tax benefit of equity-based compensation deductions (7,996) (10,089) (25,544) Other, net 737 376 1,314 Net income tax provision (benefit) $ 2,403 $ (2,309) $ (18,785) Effective income tax rate 6.2 % (7.6) % (385.9) % |
Schedule of Deferred Tax Assets and Liabilities | The sources of the differences between the financial accounting and tax bases of our assets and liabilities that give rise to the deferred tax assets and deferred tax liabilities and the tax effects of each are as follows: In thousands As of As of Deferred tax assets: NOL carry-forwards $ 10,841 $ 12,006 Deferred interest expense carry-forwards 180 3,733 AMT payment and employment credits 3,541 4,155 Deferred revenue 5,498 5,145 Accrued expenses and reserves 9,361 12,542 Loss on equity and other investments 2,135 1,960 Stock option compensation 5,135 5,505 Unrealized losses on hedging instruments 2,237 2,039 Other 15,842 942 Subtotal 54,770 48,027 Valuation allowances (3,486) (3,705) Total net deferred tax assets 51,284 44,322 Deferred tax liabilities: Depreciation of property and equipment (37,592) (27,953) Amortization of intangible assets (73,590) (74,529) Convertible debt discount (18,819) — Other (2,222) (1,986) Total deferred tax liabilities (132,223) (104,468) Net deferred tax liabilities $ (80,939) $ (60,146) |
Revenue From Contracts With C_2
Revenue From Contracts With Customers (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
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: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Revenues recognized at a point in time $ 1,569,757 $ 1,578,379 $ 1,397,801 Revenues recognized over time 142,003 145,952 139,053 Total net revenue $ 1,711,760 $ 1,724,331 $ 1,536,854 |
Schedule of Allowance for Expected Credit Losses | The following table summarizes the activity of allowance for expected credit losses for the fiscal year end 2020. In thousands Fiscal Year 2020 Beginning balance as of December 28, 2019 $ (3,040) Current-period provision for expected credit losses (671) Write-offs charged against the allowance 1,071 Other adjustments (1) 2,207 Ending balance as of January 2, 2021 $ (433) (1) As part of our adoption of ASU 2016-13, we adjusted the allowance for certain amounts recognized in prior periods that no longer represented an allowance for credit losses. The adjustment was immaterial to the financial results of current and prior periods. See Note 2. “Details of Certain Balance Sheet Accounts” for further details. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Leases [Abstract] | |
Schedule of Lease Type and Classification on Balance Sheet | In thousands As of As of Type Classification ASSETS Finance Property and equipment, net (a) $ 24,373 $ 28,128 Operating Right of use assets (b) 340,141 348,090 Total leased assets $ 364,514 $ 376,218 LIABILITIES Current Liabilities: Finance Current maturities of long-term debt and finance lease obligations $ 3,598 $ 3,259 Operating Current operating lease obligations (c) 58,356 51,937 Other non-current liabilities: Finance Long-term debt and finance lease obligations, less current portion and debt discount 27,152 30,037 Operating Non-current operating lease obligations 327,371 331,769 Total lease liabilities $ 416,477 $ 417,002 As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the net present value of minimum lease payments. We used the incremental borrowing rate on December 30, 2018 for operating leases that commenced prior to that date. _________ (a) Finance lease assets are recorded net of accumulated amortization of $12.4 million and $8.3 million as of January 2, 2021 and December 28, 2019, respectively. (b) TIA of $36.0 million and $35.2 million are treated as reductions of lease payments used to measure ROU assets as of January 2, 2021 and December 28, 2019, respectively. Deferred rent of $17.5 million and $15.0 million are treated as reductions of lease payments used to measure ROU assets as of January 2, 2021 and December 28, 2019, respectively. (c) Current operating lease liabilities are measured net of TIA receivables of $3.8 million and $5.9 million as of January 2, 2021 and December 28, 2019, respectively. |
Schedule of Lease Cost | In thousands Fiscal Year 2020 Fiscal Year 2019 Operating lease cost Fixed lease cost (a) $ 79,387 $ 73,971 Variable lease cost (b) 28,158 26,466 Sublease income (c) (2,700) (2,930) Finance lease cost Amortization of finance lease assets 4,561 4,418 Interest expense, net: Interest on finance lease liabilities 3,656 3,573 Net lease cost $ 113,062 $ 105,498 (a) Includes short-term leases, which are immaterial. (b) Includes costs for insurance, real estate taxes and common area maintenance expenses, which are variable as well as lease costs above minimum thresholds for Fred Meyer stores and lease costs for Military stores. (c) Income from sub-leasing of stores includes rental income from operating lease properties to ophthalmologists and optometrists who are independent contractors. |
Schedule of Lease Terms and Discount Rate | Lease Term and Discount Rate As of As of Weighted average remaining lease term (months) Operating leases 77 82 Finance leases 79 88 Weighted average discount rate (a) Operating leases 4.7 % 4.6 % Finance leases (b) 12.3 % 13.1 % (a) The discount rate used to determine the lease assets and lease liabilities was derived upon considering (i) incremental borrowing rates on our term loan and revolving credit facility; (ii) fixed rates we pay on our interest rate swaps; (iii) LIBOR margins for issuers of similar credit rating; and (iv) effect of collateralization. As a majority of our leases are five-year and 10-year leases, we determined a lease discount rate for such tenors and determined this discount rate is reasonable for leases that were entered into during the period. (b) The discount rate on finance leases is higher than operating leases because the present value of minimum lease payments was higher than the fair value of leased properties for certain leases entered into prior to adoption of ASC 842. The discount rate differential for those leases is not material to our results of operations. |
Schedule of Operating Lease Cash Flows | In thousands Fiscal Year 2020 Fiscal Year 2019 Other Information Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows - operating leases $ 84,913 $ 75,330 |
Schedule of Maturity for Operating Lease Liabilities | The following table summarizes the maturity of our lease liabilities as of January 2, 2021: In thousands Operating Leases (a) Finance Leases (b) Fiscal Year 2021 $ 73,867 $ 6,676 2022 77,874 7,215 2023 70,103 6,241 2024 60,998 4,673 2025 51,974 4,451 Thereafter 116,272 12,008 Total lease liabilities 451,088 41,264 Less: Interest 65,361 10,514 Present value of lease liabilities (c) $ 385,727 $ 30,750 _________ (a) Operating lease payments include $60.8 million related to options to extend lease terms that are reasonably certain of being exercised. (b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised. (c) The present value of lease liabilities excludes $26.4 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Schedule of Maturity for Finance Lease Liabilities | The following table summarizes the maturity of our lease liabilities as of January 2, 2021: In thousands Operating Leases (a) Finance Leases (b) Fiscal Year 2021 $ 73,867 $ 6,676 2022 77,874 7,215 2023 70,103 6,241 2024 60,998 4,673 2025 51,974 4,451 Thereafter 116,272 12,008 Total lease liabilities 451,088 41,264 Less: Interest 65,361 10,514 Present value of lease liabilities (c) $ 385,727 $ 30,750 _________ (a) Operating lease payments include $60.8 million related to options to extend lease terms that are reasonably certain of being exercised. (b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised. (c) The present value of lease liabilities excludes $26.4 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Equity in Net Assets of Non-C_2
Equity in Net Assets of Non-Consolidated Investee (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Financial Information and Transactions with Equity Method Affiliate | Summarized balance sheet information for our investee is as follows: In thousands As of January 2, 2021 As of December 28, 2019 Current assets $ 1,815 $ 1,351 Non-current assets 387 450 Total assets 2,202 1,801 Current liabilities 3,464 3,821 Non-current liabilities 4,421 8,200 Total liabilities 7,885 12,021 Net assets $ (5,683) $ (10,220) Summarized income statement information for our investee is as follows: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Revenues $ 6,771 $ 6,046 $ 3,871 Net loss $ (5,739) $ (5,481) $ (5,632) Our share of net loss (1) $ (1,383) $ (1,804) $ (1,304) (1) We did not record our share of the 2020 net loss as there is no obligation to absorb losses in excess of the equity investment. |
Schedule of Transactions with Affiliate | Balances and transactions related to our non-consolidated investee included in our consolidated balance sheets and statements of operations were as follows: In thousands As of As of Balance sheets Other assets (1) $ — $ 704 (1) Other assets represent a loan receivable from our investee. In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Statements of operations Licensing fees (SG&A) $ 151 $ 132 $ 172 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Roll-Forward of Deferred Revenue | The following depicts a roll-forward of deferred revenue: Fiscal Year 2020 In thousands Product Protection Plans Eye Care HMO Memberships Total Beginning of the year $ 30,911 $ 46,486 $ 3 $ 77,400 Sold 63,535 47,445 — 110,980 Revenue recognized (60,299) (48,351) (3) (108,653) End of year $ 34,147 $ 45,580 $ — $ 79,727 Current $ 33,810 $ 25,089 $ — $ 58,899 Non-current 337 20,491 — 20,828 $ 34,147 $ 45,580 $ — $ 79,727 Fiscal Year 2019 In thousands Product Protection Plans Eye Care HMO Memberships Total Beginning of the year $ 28,775 $ 43,488 $ 15 $ 72,278 Sold 63,105 52,438 — 115,543 Revenue recognized (60,969) (49,440) (12) (110,421) End of year $ 30,911 $ 46,486 $ 3 $ 77,400 Current $ 30,547 $ 25,320 $ 3 $ 55,870 Non-current 364 21,166 — 21,530 $ 30,911 $ 46,486 $ 3 $ 77,400 |
Schedule of Expected Deferred Revenue to be Reflected in Future Operating Results | Deferred revenue recorded as of fiscal year end 2020 is expected to be reflected in future operating results as follows: Fiscal Year In thousands 2021 $ 58,899 2022 15,484 2023 5,141 2024 152 2025 51 $ 79,727 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability | The following details the activity in our product warranty liability accounts: In thousands Fiscal Year 2020 Fiscal Year 2019 Beginning of year balance $ 1,881 $ 1,742 Accrued obligation 28,415 33,014 Claims paid (28,067) (32,875) End of year balance $ 2,229 $ 1,881 |
Interest Rate Derivatives (Tabl
Interest Rate Derivatives (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivative Contracts | Our cash flow hedge position related to interest rate derivative contracts is as follows: In thousands Balance Sheet Classification As of As of Derivatives designated as hedging instruments under ASC 815 Interest rate swaps Other Payables and Accrued Expenses $ 1,528 $ 6,382 Interest rate swaps Other Liabilities — 1,603 Total derivative liabilities designated as hedging instruments $ 1,528 $ 7,985 Derivatives not designated as hedging instruments under ASC 815 Interest rate swap Other Payables and Accrued Expenses $ 248 $ — Interest rate collar Other Payables and Accrued Expenses 3,340 — Interest rate collar Other Liabilities 7,663 — Total derivative liabilities not designated as hedging instruments $ 11,251 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
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: In thousands, except EPS Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Net income $ 36,277 $ 32,798 $ 23,653 Weighted average shares outstanding for basic EPS 80,565 78,608 75,899 Effect of dilutive securities: Stock options 1,737 3,019 3,129 Restricted Stock 183 56 13 2025 Notes 308 — — Weighted average shares outstanding for diluted EPS 82,793 81,683 79,041 Basic EPS $ 0.45 $ 0.42 $ 0.31 Diluted EPS $ 0.44 $ 0.40 $ 0.30 Anti-dilutive options, RSUs outstanding, and 2025 Notes excluded from EPS 13,325 294 — |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
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 consolidated financial statements, except for net revenue and associated costs applicable to revenue, which are presented on a cash basis, including point of sales for managed care payors and excluding the effects of unearned and deferred revenue, consistent with what the CODM regularly reviews. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments. Fiscal Year 2020 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 1,097,749 $ 90,909 $ 234,403 $ (4,778) $ 1,418,283 Segment services and plans revenues 244,650 51,108 — (2,281) 293,477 Total net revenue 1,342,399 142,017 234,403 (7,059) 1,711,760 Cost of products 307,813 43,452 201,880 (1,362) 551,783 Cost of services and plans 210,313 23,777 751 — 234,841 Total costs applicable to revenue 518,126 67,229 202,631 (1,362) 786,624 SG&A 489,449 51,809 179,332 — 720,590 Asset impairment — — 22,004 — 22,004 Litigation settlement — — 4,395 — 4,395 Other expense (income), net — — (445) — (445) Debt issuance costs — — 156 — 156 EBITDA $ 334,824 $ 22,979 $ (173,670) $ (5,697) Depreciation and amortization 91,585 Interest expense, net 48,171 Income before income taxes $ 38,680 Fiscal Year 2019 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 1,076,315 $ 105,450 $ 245,206 $ (835) $ 1,426,136 Segment services and plans revenues 248,685 54,599 12 (5,101) 298,195 Total net revenue 1,325,000 160,049 245,218 (5,936) 1,724,331 Cost of products 310,790 48,712 215,052 (203) 574,351 Cost of services and plans 206,878 25,289 1 — 232,168 Total costs applicable to revenue 517,668 74,001 215,053 (203) 806,519 SG&A 508,239 56,235 180,014 — 744,488 Asset impairment — — 8,894 — 8,894 Other expense (income), net — — 3,611 — 3,611 Loss on extinguishment of debt — — 9,786 — 9,786 EBITDA $ 299,093 $ 29,813 $ (172,140) $ (5,733) Depreciation and amortization 87,244 Interest expense, net 33,300 Income before income taxes $ 30,489 Fiscal Year 2018 In thousands Owned & Host Legacy Corporate/Other Reconciliations Total Segment product revenues $ 956,355 $ 103,890 $ 208,875 $ 492 $ 1,269,612 Segment services and plans revenues 217,047 50,522 3,552 (3,879) 267,242 Total net revenue 1,173,402 154,412 212,427 (3,387) 1,536,854 Cost of products 280,720 46,986 183,459 241 511,406 Cost of services and plans 178,362 20,272 3,531 — 202,165 Total costs applicable to revenue 459,082 67,258 186,990 241 713,571 SG&A 457,618 54,091 175,767 — 687,476 Asset impairment — — 17,630 — 17,630 Other expense (income), net — — 1,487 — 1,487 Debt issuance cost — — 200 — 200 EBITDA $ 256,702 $ 33,063 $ (169,647) $ (3,628) Depreciation and amortization 74,339 Interest expense, net 37,283 Income before income taxes $ 4,868 |
Schedule of Net Product Revenue | The following table presents our consolidated net product revenue information: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Net Product Sales Eyeglasses and sunglasses $ 946,025 $ 947,729 $ 851,328 Contact lenses 466,262 471,042 410,839 Accessories and other 5,996 7,365 7,445 Total net product revenues $ 1,418,283 $ 1,426,136 $ 1,269,612 |
Restricted Cash (Tables)
Restricted Cash (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash and cash equivalents reported within the consolidated balance sheets to the total of cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Cash and cash equivalents $ 373,903 $ 39,342 $ 17,132 Restricted cash included in other assets 1,256 965 866 Total cash, cash equivalents and restricted cash $ 375,159 $ 40,307 $ 17,998 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following table presents the changes in AOCL, net of tax during the fiscal years 2020, 2019 and 2018, respectively: In thousands Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Cash flow hedging activity Balance at beginning of fiscal year $ (3,814) $ (2,810) $ (9,868) Other comprehensive income (loss) before reclassification (11,108) (5,814) 3,182 Tax effect of other comprehensive income (loss) before reclassification 2,830 1,489 (815) Amount reclassified from AOCL 10,328 4,464 6,306 Tax effect of amount reclassified from AOCL (2,636) (1,143) (1,615) Net current period other comprehensive income (loss), net of tax (586) (1,004) 7,058 Balance at end of fiscal year $ (4,400) $ (3,814) $ (2,810) |
Business and Significant Acco_4
Business and Significant Accounting Policies - Nature of Operations (Details) | Jan. 02, 2021storestore_brand | Dec. 28, 2019store |
Accounting Policies [Abstract] | ||
Number of retail vision centers | store | 1,205 | 1,151 |
Number of store brands | store_brand | 5 |
Business and Significant Acco_5
Business and Significant Accounting Policies - Secondary Public Offerings (Details) $ / shares in Units, $ in Thousands | Aug. 12, 2019$ / sharesshares | Jan. 02, 2021USD ($)$ / shares | Dec. 28, 2019USD ($)$ / shares | Dec. 29, 2018USD ($)public_offeringshares |
Class of Stock [Line Items] | ||||
Number of underwritten public offerings | public_offering | 3 | |||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |
Shares repurchased (shares) | shares | 819,134 | |||
Shares repurchased price per share (in usd per share) | $ / shares | $ 30.52 | |||
Non-cash stock-based compensation expense | $ 10,740 | $ 12,670 | $ 20,939 | |
Secondary offering vesting event | ||||
Class of Stock [Line Items] | ||||
Non-cash stock-based compensation expense | 4,200 | |||
SG&A | Secondary offering vesting event | ||||
Class of Stock [Line Items] | ||||
Long-term incentive compensation expense | 2,800 | |||
Stock offering expense | $ 400 | |||
Underwritten Public Offering | ||||
Class of Stock [Line Items] | ||||
Shares issued in public offering (shares) | shares | 9,149,908 | 42,914,852 |
Business and Significant Acco_6
Business and Significant Accounting Policies - CARES Act (Details) $ in Millions | 12 Months Ended |
Jan. 02, 2021USD ($) | |
Unusual or Infrequent Item, or Both [Line Items] | |
Reclassification of AMT credits from deferred income taxes to prepaid expenses and other assets, CARES Act | $ 1.3 |
Increase in gross deferred tax liability related to property and equipment, CARES Act | 25 |
Tax impact due to increase in gross deferred tax liability related to property and equipment, CARES Act | 6.4 |
Products | |
Unusual or Infrequent Item, or Both [Line Items] | |
Employee retention credit, CARES Act | 0.4 |
Services and plans | |
Unusual or Infrequent Item, or Both [Line Items] | |
Employee retention credit, CARES Act | 6.2 |
SG&A | |
Unusual or Infrequent Item, or Both [Line Items] | |
Employee retention credit, CARES Act | $ 4.4 |
Business and Significant Acco_7
Business and Significant Accounting Policies - Accounts Receivable and Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Concentration Risk [Line Items] | |||
Credit loss on receivables | $ 671 | $ 8,210 | $ 7,107 |
Supplier concentration risk | Contact Lenses | Three Key Vendors | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 93.00% | ||
Supplier concentration risk | Lenses | One Key Vendor | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 89.00% | ||
Supplier concentration risk | Frames | Two Key Vendors | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 52.00% |
Business and Significant Acco_8
Business and Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Jan. 02, 2021 | |
Buildings | |
Property and Equipment | |
Estimated useful life (in years) | 34 years |
Equipment | Minimum | |
Property and Equipment | |
Estimated useful life (in years) | 3 years |
Equipment | Maximum | |
Property and Equipment | |
Estimated useful life (in years) | 7 years |
Information technology hardware and software | Minimum | |
Property and Equipment | |
Estimated useful life (in years) | 2 years |
Information technology hardware and software | Maximum | |
Property and Equipment | |
Estimated useful life (in years) | 5 years |
Furniture and fixtures | |
Property and Equipment | |
Estimated useful life (in years) | 6 years |
Leasehold improvements | Minimum | |
Property and Equipment | |
Estimated useful life (in years) | 5 years |
Leasehold improvements | Maximum | |
Property and Equipment | |
Estimated useful life (in years) | 10 years |
P&E under capital leases | |
Property and Equipment | |
Estimated useful life (in years) | 10 years |
Business and Significant Acco_9
Business and Significant Accounting Policies - Goodwill, Intangible Assets, and Equity Method Investment (Details) | 12 Months Ended |
Jan. 02, 2021USD ($) | |
Accounting Policies [Abstract] | |
Equity investment | $ 0 |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, estimated useful life (in years) | 4 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, estimated useful life (in years) | 23 years |
Business and Significant Acc_10
Business and Significant Accounting Policies - Self-Insurance Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Accounting Policies [Abstract] | ||
Estimated recoveries from reinsurance, current | $ 1,100 | $ 1,100 |
Estimated recoveries from reinsurance, non-current | 2,300 | 2,400 |
Self-insurance accrued obligation, current | 8,650 | 8,403 |
Self-insurance accrued obligation, non-current | $ 7,046 | $ 7,283 |
Business and Significant Acc_11
Business and Significant Accounting Policies - Revenue Recognition (Details) $ in Millions | 12 Months Ended |
Jan. 02, 2021USD ($) | |
Disaggregation of Revenue [Line Items] | |
Net revenue reduction for variable considerations | $ 7.5 |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Delivery time used in period end unearned revenue calculation | 7 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Delivery time used in period end unearned revenue calculation | 10 days |
Business and Significant Acc_12
Business and Significant Accounting Policies - Advertising Expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Accounting Policies [Abstract] | |||
Advertising expenses | $ 86.5 | $ 113.3 | $ 107.5 |
Business and Significant Acc_13
Business and Significant Accounting Policies - Leases (Details) - Stores, laboratories, distribution centers, offices | 12 Months Ended |
Jan. 02, 2021 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 5 years |
Renewal terms (in years) | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms (in years) | 10 years |
Renewal terms (in years) | 10 years |
Business and Significant Acc_14
Business and Significant Accounting Policies - Long-lived Asset Impairment (Details) - USD ($) | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Property and Equipment | |||
Impairment of non-store capitalized software costs | $ 1,100,000 | $ 0 | $ 0 |
Minimum | |||
Property and Equipment | |||
Discount rate used in impairment analysis (percent) | 6.30% | ||
Maximum | |||
Property and Equipment | |||
Discount rate used in impairment analysis (percent) | 8.00% | ||
Long-lived tangible store assets held and used | |||
Property and Equipment | |||
Asset impairment charges for long-live tangible assets held and used | $ 22,000,000 | 8,900,000 | $ 2,500,000 |
Assets impaired during 2020 | |||
Property and Equipment | |||
Estimated fair value of impaired assets | $ 30,600,000 | ||
Assets impaired during 2019 | |||
Property and Equipment | |||
Estimated fair value of impaired assets | $ 16,600,000 |
Business and Significant Acc_15
Business and Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 03, 2021 | Jan. 02, 2021 | Dec. 29, 2019 | Dec. 28, 2019 | Dec. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease liabilities | $ 385,727 | ||||
TIA treated as reduction of lease payments used to measure operating lease ROU assets | 36,000 | $ 35,200 | |||
Deferred rent treated as reduction of lease payments used to measure operating lease ROU assets | 17,500 | 15,000 | |||
Right of use assets | 340,141 | 348,090 | |||
Long-term debt | 624,611 | 536,396 | |||
Deferred tax liabilities | 132,223 | 104,468 | |||
Additional paid-in capital | 795,697 | 700,121 | |||
Retained earnings | $ 142,880 | $ 107,132 | |||
ASU No. 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease liabilities | $ 339,600 | ||||
TIA treated as reduction of lease payments used to measure operating lease ROU assets | 24,300 | ||||
Deferred rent treated as reduction of lease payments used to measure operating lease ROU assets | 11,900 | ||||
Prepaid rent as increase in lease payments used to measure ROU assets | 5,800 | ||||
Right of use assets | 308,500 | ||||
ASU No. 2016-02 | Effect of adoption of new accounting standard | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Retained earnings | $ (500) | ||||
ASU No. 2016-13 | Effect of adoption of new accounting standard | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Allowance for credit losses | $ 700 | ||||
Retained earnings | $ (500) | ||||
ASU No. 2020-06 | Effect of adoption of new accounting standard | Forecast | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Long-term debt | $ 83,000 | ||||
Deferred tax liabilities | (19,000) | ||||
Additional paid-in capital | (71,000) | ||||
Retained earnings | $ 7,000 |
Details of Certain Balance Sh_3
Details of Certain Balance Sheet Accounts - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Accounts receivable, net: | ||
Allowance for credit losses | $ (433) | $ (3,040) |
Accounts receivable, net | 57,989 | 44,475 |
Trade receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 28,405 | 28,635 |
Credit card receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 21,557 | 14,173 |
Other receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | $ 8,460 | $ 4,707 |
Details of Certain Balance Sh_4
Details of Certain Balance Sheet Accounts - Inventories (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Inventories: | ||
Raw materials and work in process | $ 55,473 | $ 65,179 |
Finished goods | 55,801 | 62,377 |
Inventories | $ 111,274 | $ 127,556 |
Details of Certain Balance Sh_5
Details of Certain Balance Sheet Accounts - Property and Equipment, Net (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Property and equipment, net | ||
Right of use assets under finance leases | $ 36,757 | $ 36,437 |
Property, equipment, and right of use assets under finance leases, gross | 677,510 | 638,732 |
Less: Accumulated depreciation | (336,217) | (271,965) |
Property and equipment, net | 341,293 | 366,767 |
Land and building | ||
Property and equipment, net | ||
Property and equipment, gross | 3,624 | 3,632 |
Equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 207,265 | 188,593 |
Information technology hardware and software | ||
Property and equipment, net | ||
Property and equipment, gross | 129,008 | 115,283 |
Furniture and fixtures | ||
Property and equipment, net | ||
Property and equipment, gross | 56,277 | 55,146 |
Leasehold improvements | ||
Property and equipment, net | ||
Property and equipment, gross | 220,720 | 213,124 |
Construction in progress | ||
Property and equipment, net | ||
Property and equipment, gross | $ 23,859 | $ 26,517 |
Details of Certain Balance Sh_6
Details of Certain Balance Sheet Accounts - Other Payables and Accrued Expenses (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Other payables and accrued expenses: | ||
Associate compensation and benefits | $ 51,081 | $ 28,347 |
Self-insurance liabilities | 8,650 | 8,403 |
Capital expenditures | 8,455 | 6,782 |
Advertising | 2,173 | 2,919 |
Reserves for customer returns and remakes | 8,084 | 7,158 |
Legacy management & services agreement | 5,386 | 4,461 |
Fair value of derivative liabilities | 5,116 | 6,382 |
Supplies and other store support expenses | 3,461 | 2,926 |
Litigation settlements | 1,107 | 3,840 |
Lease concessions | 3,142 | 0 |
Other | 13,654 | 11,611 |
Total other payables and accrued expenses | 110,309 | $ 82,829 |
Deferred employer payroll taxes in associate compensation and benefits, CARES Act | $ 12,800 |
Details of Certain Balance Sh_7
Details of Certain Balance Sheet Accounts - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Other non-current liabilities: | ||
Fair value of derivative liabilities | $ 7,663 | $ 1,603 |
Self-insurance liabilities | 7,046 | 7,283 |
Other | 2,706 | 4,845 |
Total other non-current liabilities | $ 17,415 | $ 13,731 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Goodwill [Line Items] | |||
Intangible asset impairment | $ 0 | $ 0 | |
Other intangible asset impairment | $ 0 | ||
Fred Meyer | |||
Goodwill [Line Items] | |||
Goodwill impairment | 11,400,000 | ||
Military | |||
Goodwill [Line Items] | |||
Goodwill impairment | $ 3,700,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Goodwill Carrying Amount (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Goodwill [Line Items] | ||
Gross Carrying Amount | $ 805,077 | $ 805,077 |
Accumulated Impairment | (27,464) | (27,464) |
Owned & Host | ||
Goodwill [Line Items] | ||
Gross Carrying Amount | 736,901 | 736,901 |
Accumulated Impairment | (19,357) | (19,357) |
Legacy | ||
Goodwill [Line Items] | ||
Gross Carrying Amount | 60,069 | 60,069 |
Accumulated Impairment | 0 | 0 |
Corporate/Other | ||
Goodwill [Line Items] | ||
Gross Carrying Amount | 8,107 | 8,107 |
Accumulated Impairment | $ (8,107) | $ (8,107) |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived trademarks and trade names | $ 240,547 | $ 240,547 |
Trademarks and trade names - America's Best | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived trademarks and trade names | 200,547 | 200,547 |
Trademarks and trade names - Eyeglass World | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived trademarks and trade names | $ 40,000 | $ 40,000 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 105,146 | $ 105,146 |
Accumulated Amortization | 55,635 | 48,206 |
Contracts and relationships - Legacy | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 65,000 | 65,000 |
Accumulated Amortization | $ 40,154 | $ 34,247 |
Remaining Life (Years) | 4 years | 5 years |
Contracts and relationships - Fred Meyer | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 35,000 | $ 35,000 |
Accumulated Amortization | $ 10,339 | $ 8,820 |
Remaining Life (Years) | 16 years | 17 years |
Customer database | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,400 | $ 4,400 |
Accumulated Amortization | 4,400 | 4,400 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 746 | 746 |
Accumulated Amortization | $ 742 | $ 739 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Aggregate future estimated amortization expense | ||
2021 | $ 7,491 | |
2022 | 7,490 | |
2023 | 7,488 | |
2024 | 7,488 | |
2025 | 2,519 | |
Thereafter | 17,035 | |
Finite-lived intangible assets | $ 49,511 | $ 56,940 |
Long-term Debt - Summary of Lon
Long-term Debt - Summary of Long-term Debt (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 719,875 | $ 540,375 |
Long-term debt less debt discount | 624,611 | 536,396 |
Less current maturities | 0 | (10,500) |
Long-term debt - non-current portion | 624,611 | 525,896 |
Finance lease obligations | 30,750 | 33,296 |
Less current maturities | (3,598) | (3,259) |
Long-term debt and finance lease obligations, less current portion and debt discount | 651,763 | 555,933 |
Revolving Credit Facility, due July 18, 2024 | Credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 0 | 148,000 |
2025 Notes | Convertible senior notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 402,500 | 0 |
Unamortized discount | (93,123) | 0 |
Term Loan, due July 18, 2024 | Term loan | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 317,375 | 392,375 |
Unamortized discount | $ (2,141) | $ (3,979) |
Long-term Debt - 2025 Notes Nar
Long-term Debt - 2025 Notes Narrative (Details) $ / shares in Units, common_share in Millions | Jan. 02, 2021USD ($)$ / shares | May 12, 2020USD ($) | May 31, 2020USD ($)common_share$ / shares | Jan. 02, 2021USD ($)$ / shares | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Feb. 14, 2025day | Feb. 14, 2025USD ($)day | Jul. 18, 2019USD ($) |
Debt Instrument [Line Items] | |||||||||
Amortization of debt discount and deferred financing costs | $ 11,895,000 | $ 1,289,000 | $ 1,848,000 | ||||||
Convertible senior notes | 2025 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (percent) | 2.50% | 2.50% | 2.50% | ||||||
Proceeds from convertible debt | $ 390,900,000 | ||||||||
Debt issuance costs | 11,600,000 | ||||||||
Aggregate principal amount | 402,500,000 | ||||||||
Principal amount per note | $ 1,000 | ||||||||
Conversion ratio | 32.0783 | ||||||||
Conversion price (in usd per share) | $ / shares | $ 31.17 | $ 31.17 | $ 31.17 | ||||||
Number of shares of common stock reserved for conversion of debt | common_share | 12.9 | ||||||||
If-converted value in excess of principal amount | $ 182,300,000 | ||||||||
Post-tax conversion option recorded to equity | $ 73,500,000 | ||||||||
Pre-tax conversion option recorded to equity | $ 95,200,000 | ||||||||
Effective interest rate (percent) | 9.10% | ||||||||
Amortization of debt discount and deferred financing costs | $ 17,300,000 | ||||||||
Unamortized debt discount remaining period (in years) | 4 years 6 months | ||||||||
Convertible senior notes | 2025 Notes | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of shares of common stock reserved for conversion of debt | common_share | 16.5 | ||||||||
Convertible senior notes | 2025 Notes | Equity component | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | $ 2,700,000 | ||||||||
Post-tax debt issuance costs | 2,200,000 | ||||||||
Convertible senior notes | 2025 Notes | Debt component | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | $ 8,900,000 | ||||||||
Convertible senior notes | 2025 Notes | Forecast | |||||||||
Debt Instrument [Line Items] | |||||||||
Threshold stock price trigger (percent) | 130.00% | ||||||||
Threshold trading days for conversion price metric | day | 20 | ||||||||
Threshold consecutive trading days for conversion price measurement | day | 30 | ||||||||
Threshold consecutive business days after measurement period | day | 5 | ||||||||
Threshold consecutive trading days for measurement period | day | 10 | ||||||||
Principal amount per note | $ 1,000 | ||||||||
Trading price compared to factor of last reported sale price by conversion rate (percent) | 98.00% | ||||||||
Credit facility | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayment of revolving credit facility | $ 294,300,000 | ||||||||
Term loan | Term Loan, due July 18, 2024 | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayment of term loan | 75,000,000 | $ 25,000,000 | |||||||
Term loan | Term loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 420,000,000 | $ 420,000,000 |
Long-term Debt - Credit Agreeme
Long-term Debt - Credit Agreement Narrative (Details) | May 12, 2020USD ($) | May 05, 2020USD ($) | Mar. 17, 2020USD ($) | Sep. 28, 2019USD ($) | Oct. 02, 2021 | Dec. 28, 2019USD ($) | Jul. 18, 2024 | Jul. 18, 2024 | Jan. 02, 2021USD ($) | Jul. 18, 2019USD ($) |
Debt Instrument [Line Items] | ||||||||||
Write off of deferred debt issuance costs | $ 6,000,000 | |||||||||
Write off of unamortized debt discount | $ 3,800,000 | |||||||||
Amended credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Consolidated EBITDA for any six fiscal quarter period | $ 0 | |||||||||
Minimum liquidity level per amendment, component one | 100,000,000 | |||||||||
Minimum liquidity level per amendment, component two base | 40,000,000 | |||||||||
Minimum liquidity level per amendment, component two variable | 75,000,000 | |||||||||
Term loan | Term loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount | $ 420,000,000 | $ 420,000,000 | ||||||||
Term loan | Term Loan, due July 18, 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Required prepayment based on capital raised | 75,000,000 | |||||||||
Capital threshold for basis of required prepayment | $ 400,000,000 | |||||||||
Required prepayment as percentage of proceeds in excess of capital threshold | 50.00% | |||||||||
Basis spread adjustment (percent) | 0.50% | |||||||||
Variable rate adjustment factor, minimum threshold for capital market transactions within 30 days of amendment | $ 135,000,000 | |||||||||
Variable rate adjustment factor, minimum threshold for EBITDA | $ 0 | |||||||||
Repayment of term loan | 75,000,000 | $ 25,000,000 | ||||||||
Term loan | Term Loan, due July 18, 2024 | LIBOR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Applicable margin on rate (percent) | 1.75% | |||||||||
Term loan | Term Loan, due July 18, 2024 | LIBOR | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Applicable margin on rate (percent) | 2.75% | |||||||||
Term loan | Term Loan, due July 18, 2024 | ABR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Applicable margin on rate (percent) | 0.75% | |||||||||
Term loan | Term Loan, due July 18, 2024 | ABR | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Applicable margin on rate (percent) | 1.75% | |||||||||
Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Restriction on borrowings covenant, maximum unrestricted cash and cash equivalents | $ 50,000,000 | |||||||||
Revolving Credit Facility | Credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit facility borrowing capacity | $ 300,000,000 | 300,000,000 | ||||||||
Proceeds from revolving credit facility | $ 146,300,000 | |||||||||
Repayment of revolving credit facility | $ 294,300,000 | |||||||||
Amount outstanding on line of credit | 0 | |||||||||
Borrowing capacity remaining | 293,600,000 | |||||||||
Outstanding letters of credit | 6,400,000 | |||||||||
Letter of credit | Credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit facility sublimit | $ 20,000,000 | |||||||||
Outstanding letters of credit | $ 6,400,000 | |||||||||
Forecast | Amended credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Consolidated Total Debt to Consolidated EBITDA Ratio | 4.50 | 4 | ||||||||
Consolidated Interest Coverage Ratio minimum | 3 |
Long-term Debt - Maturities of
Long-term Debt - Maturities of Debt (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Annual Maturities of Debt | ||
2021 | $ 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 317,375 | |
2025 | 402,500 | |
Total | $ 719,875 | $ 540,375 |
Stock Incentive Plans - Narrati
Stock Incentive Plans - Narrative (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Jan. 02, 2021USD ($)installment$ / sharesshares | Dec. 28, 2019USD ($)$ / sharesshares | Dec. 29, 2018USD ($)shares | Aug. 12, 2019$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |
Service-based options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted (shares) | 160,574 | 0 | ||
Weighted average grant date fair value (in usd per share) | $ / shares | $ 13.71 | $ 13.67 | ||
Fair value of options vested | $ | $ 3.3 | $ 5.7 | $ 5.9 | |
Aggregate intrinsic value of options exercised | $ | $ 22.5 | $ 21.4 | $ 45.7 | |
Performance-based options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted (shares) | 0 | 0 | 0 | |
Fair value of options vested | $ | $ 1.4 | $ 4.4 | $ 16.1 | |
Aggregate intrinsic value of options exercised | $ | $ 20 | $ 29.9 | $ 70.2 | |
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares or units granted (shares) | 162,468 | 373,082 | ||
Unvested awards (shares) | 454,491 | 376,145 | ||
Intrinsic value | $ | $ 20.6 | |||
Remaining requisite service period (in years) | 2 years 4 months 9 days | |||
RSUs | Vesting in two installments | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested awards (shares) | 11,233 | |||
Number of equal vesting installments | installment | 2 | |||
RSUs | Vesting in three installments beginning on first anniversary | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested awards (shares) | 216,400 | |||
Number of equal vesting installments | installment | 3 | |||
RSUs | Vesting in three installments beginning on second anniversary | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested awards (shares) | 226,858 | |||
Number of equal vesting installments | installment | 3 | |||
PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares or units granted (shares) | 125,387 | 116,046 | ||
Unvested awards (shares) | 220,184 | 113,014 | ||
Intrinsic value | $ | $ 10 | |||
Remaining requisite service period (in years) | 1 year 9 months | |||
RSAs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares or units granted (shares) | 19,583 | |||
Unvested awards (shares) | 21,982 | 20,628 | ||
RSAs | Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares or units granted (shares) | 19,583 | 13,712 | ||
Intrinsic value | $ | $ 1 | |||
Remaining requisite service period (in years) | 6 months | |||
RSAs | Vest proportionally over three years | Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested awards (shares) | 2,399 | |||
Vesting period (years) | 3 years | |||
RSAs | Vest one year from grant date | Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested awards (shares) | 19,583 | |||
Vesting period (years) | 1 year | |||
Stock Incentive Plans | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards contractual life (in years) | 10 years | |||
2014 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized for issuance (shares) | 10,988,827 | |||
2017 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized for issuance (shares) | 4,000,000 | |||
Associate stock purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized for issuance (shares) | 850,000 |
Stock Incentive Plans - Stock C
Stock Incentive Plans - Stock Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Stock compensation expense | |||
Pre-tax stock based compensation expense | $ 10,740 | $ 12,670 | $ 20,939 |
Income tax benefit | (2,743) | (3,237) | (5,367) |
After-tax share based compensation expense | 7,997 | 9,433 | 15,572 |
Stock options | |||
Stock compensation expense | |||
Pre-tax stock based compensation expense | 2,827 | 8,562 | 19,397 |
Unrecognized compensation cost | |||
Unrecognized compensation cost | $ 3,248 | ||
Expected remaining weighted-average period of expense recognition (in years) | 1 year 8 months 8 days | ||
RSUs and PSUs | |||
Stock compensation expense | |||
Pre-tax stock based compensation expense | $ 7,201 | 3,655 | 1,386 |
Unrecognized compensation cost | |||
Unrecognized compensation cost | $ 14,156 | ||
Expected remaining weighted-average period of expense recognition (in years) | 2 years 2 months 12 days | ||
RSAs | |||
Stock compensation expense | |||
Pre-tax stock based compensation expense | $ 588 | 334 | 108 |
Unrecognized compensation cost | |||
Unrecognized compensation cost | $ 366 | ||
Expected remaining weighted-average period of expense recognition (in years) | 6 months 29 days | ||
Associate stock purchase plan | |||
Stock compensation expense | |||
Pre-tax stock based compensation expense | $ 124 | $ 119 | $ 48 |
Stock Incentive Plans - Stock O
Stock Incentive Plans - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Service-based options | |||
Number of Options Outstanding | |||
Outstanding, beginning balance (shares) | 1,906,158 | ||
Granted (shares) | 160,574 | 0 | |
Exercised (shares) | (823,685) | ||
Forfeited (shares) | (49,061) | ||
Outstanding, ending balance (shares) | 1,193,986 | 1,906,158 | |
Vested and exercisable (shares) | 665,781 | ||
Weighted Average Exercise Price ($) | |||
Outstanding, beginning balance (usd per share) | $ 13.37 | ||
Granted (usd per share) | 34.47 | ||
Exercised (usd per share) | 8.83 | ||
Forfeited (usd per share) | 23.54 | ||
Outstanding, ending balance (usd per share) | 18.92 | $ 13.37 | |
Vested and exercisable (usd per share) | $ 12.94 | ||
Outstanding, weighted average remaining contractual term (years) | 6 years 2 months 8 days | ||
Vested and exercisable, weighted average remaining contractual term (years) | 4 years 11 months 8 days | ||
Outstanding, aggregate intrinsic value | $ 31,490 | ||
Vested and exercisable, aggregate intrinsic value | $ 21,540 | ||
Performance-based options | |||
Number of Options Outstanding | |||
Outstanding, beginning balance (shares) | 1,603,848 | ||
Granted (shares) | 0 | 0 | 0 |
Exercised (shares) | (705,414) | ||
Forfeited (shares) | (43,478) | ||
Outstanding, ending balance (shares) | 854,956 | 1,603,848 | |
Vested and exercisable (shares) | 854,956 | ||
Weighted Average Exercise Price ($) | |||
Outstanding, beginning balance (usd per share) | $ 6.60 | ||
Exercised (usd per share) | 7.37 | ||
Forfeited (usd per share) | 15.74 | ||
Outstanding, ending balance (usd per share) | 5.50 | $ 6.60 | |
Vested and exercisable (usd per share) | $ 5.50 | ||
Outstanding, weighted average remaining contractual term (years) | 3 years 5 months 1 day | ||
Vested and exercisable, weighted average remaining contractual term (years) | 3 years 5 months 1 day | ||
Outstanding, aggregate intrinsic value | $ 34,018 | ||
Vested and exercisable, aggregate intrinsic value | $ 34,018 |
Stock Incentive Plans - Valuati
Stock Incentive Plans - Valuation Assumptions (Details) - Service-based options | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Fair Value Assumptions | ||
Expected volatility, minimum | 39.54% | 34.50% |
Expected volatility, maximum | 55.81% | 37.10% |
Expected term (in years) | 6 years | |
Expected risk-free interest rate, minimum | 0.47% | 1.68% |
Expected risk-free interest rate, maximum | 1.13% | 2.94% |
Minimum | ||
Fair Value Assumptions | ||
Expected term (in years) | 5 years 9 months | |
Maximum | ||
Fair Value Assumptions | ||
Expected term (in years) | 6 years 6 months |
Stock Incentive Plans - RSU, PS
Stock Incentive Plans - RSU, PSU, and RSA Activity (Details) - $ / shares | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
RSUs | ||
Number of Awards Outstanding | ||
Outstanding, beginning balance (shares) | 376,145 | |
Granted (shares) | 162,468 | 373,082 |
Vested (shares) | (52,466) | |
Forfeited (shares) | (31,656) | |
Outstanding, ending balance (shares) | 454,491 | 376,145 |
Weighted Average Grant Date Fair Value ($) | ||
Outstanding, beginning balance (in dollars per share) | $ 28.45 | |
Granted (in dollars per share) | 34.73 | |
Vested (in dollars per share) | 25.65 | |
Forfeited (in dollars per share) | 30.62 | |
Outstanding, ending balance (in dollars per share) | $ 30.85 | $ 28.45 |
PSUs | ||
Number of Awards Outstanding | ||
Outstanding, beginning balance (shares) | 113,014 | |
Granted (shares) | 125,387 | 116,046 |
Vested (shares) | 0 | |
Forfeited (shares) | (18,217) | |
Outstanding, ending balance (shares) | 220,184 | 113,014 |
Weighted Average Grant Date Fair Value ($) | ||
Outstanding, beginning balance (in dollars per share) | $ 34.49 | |
Granted (in dollars per share) | 34.34 | |
Vested (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 34.98 | |
Outstanding, ending balance (in dollars per share) | $ 34.36 | $ 34.49 |
RSAs | ||
Number of Awards Outstanding | ||
Outstanding, beginning balance (shares) | 20,628 | |
Granted (shares) | 19,583 | |
Vested (shares) | (18,229) | |
Forfeited (shares) | 0 | |
Outstanding, ending balance (shares) | 21,982 | 20,628 |
Weighted Average Grant Date Fair Value ($) | ||
Outstanding, beginning balance (in dollars per share) | $ 30.71 | |
Granted (in dollars per share) | 30.65 | |
Vested (in dollars per share) | 29.27 | |
Forfeited (in dollars per share) | 0 | |
Outstanding, ending balance (in dollars per share) | $ 31.85 | $ 30.71 |
Stock Incentive Plans - Associa
Stock Incentive Plans - Associate Stock Purchase Plan (Details) - Associate stock purchase plan | 12 Months Ended |
Jan. 02, 2021USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Discount from the market trading value of common stock at time of purchase (percent) | 10.00% |
Maximum annual contribution per participant for stock purchase | $ 25,000 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Current income tax: | |||
Federal | $ 86 | $ 443 | $ 174 |
State | 2,550 | 864 | 381 |
Deferred income tax: | |||
Federal | (219) | (2,972) | (15,687) |
State | (14) | (644) | (3,653) |
Income tax provision (benefit) | $ 2,403 | $ (2,309) | $ (18,785) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax provision at statutory rate | $ 8,123 | $ 6,403 | $ 1,022 |
State income tax provision, net of federal income tax | 1,755 | 1,387 | 226 |
Increase (decrease) in deferred tax asset valuation allowance | (216) | (386) | 318 |
Goodwill impairment | 0 | 0 | 3,879 |
Tax benefit of equity-based compensation deductions | (7,996) | (10,089) | (25,544) |
Other, net | 737 | 376 | 1,314 |
Income tax provision (benefit) | $ 2,403 | $ (2,309) | $ (18,785) |
Effective income tax rate (percent) | 6.20% | (7.60%) | (385.90%) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Deferred Tax Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Deferred tax assets: | ||
NOL carry-forwards | $ 10,841 | $ 12,006 |
Deferred interest expense carry-forwards | 180 | 3,733 |
AMT payment and employment credits | 3,541 | 4,155 |
Deferred revenue | 5,498 | 5,145 |
Accrued expenses and reserves | 9,361 | 12,542 |
Loss on equity and other investments | 2,135 | 1,960 |
Stock option compensation | 5,135 | 5,505 |
Unrealized losses on hedging instruments | 2,237 | 2,039 |
Other | 15,842 | 942 |
Subtotal | 54,770 | 48,027 |
Valuation allowances | (3,486) | (3,705) |
Total net deferred tax assets | 51,284 | 44,322 |
Deferred tax liabilities: | ||
Depreciation of property and equipment | (37,592) | (27,953) |
Amortization of intangible assets | (73,590) | (74,529) |
Convertible debt discount | (18,819) | 0 |
Other | (2,222) | (1,986) |
Total deferred tax liabilities | (132,223) | (104,468) |
Net deferred tax liabilities | $ (80,939) | $ (60,146) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) $ in Millions | Jan. 02, 2021USD ($) |
Operating Loss Carryforwards [Line Items] | |
Gross deferred tax assets related to operating lease liabilities | $ 100.8 |
Gross deferred tax liabilities related to ROU assets | 86.3 |
Federal AMT carry-forward credits requested to be refunded, CARES Act | 1.3 |
Deferred tax asset associated with equity method non-consolidated investee | 1.9 |
Deferred tax asset associated with impairment of investment | 0.2 |
NOL carry-forwards on professional corporations | |
Operating Loss Carryforwards [Line Items] | |
Valuation allowance for NOL carry-forwards not likely to be realized | 4.2 |
U.S. federal | |
Operating Loss Carryforwards [Line Items] | |
NOL carryforwards | 46.9 |
NOL carryforwards not subject to expiration | 44.5 |
NOL carryforwards expiring at end of fiscal year 2037 | 0.8 |
U.S. federal and state | AMT carry-forward and employment credit | |
Operating Loss Carryforwards [Line Items] | |
Non-expiring AMT carryforward credits and employment credits | $ 3.5 |
Revenue From Contracts With C_3
Revenue From Contracts With Customers - Narrative (Details) | 12 Months Ended |
Jan. 02, 2021 | |
Disaggregation of Revenue [Line Items] | |
Time frame for majority of payments on health care plans and programs accounts (in days) | 90 days |
Owned & Host | |
Disaggregation of Revenue [Line Items] | |
Extended warranty plan, term (in years) | 1 year |
Eye care club membership, term one (in years) | 3 years |
Eye care club membership, term two (in years) | 5 years |
Minimum | |
Disaggregation of Revenue [Line Items] | |
General payment terms for accounts on health care plans and programs (in days) | 14 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
General payment terms for accounts on health care plans and programs (in days) | 120 days |
Revenue From Contracts With C_4
Revenue From Contracts With Customers - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Total net revenue | $ 1,711,760 | $ 1,724,331 | $ 1,536,854 |
Revenues recognized at a point in time | |||
Disaggregation of Revenue [Line Items] | |||
Total net revenue | 1,569,757 | 1,578,379 | 1,397,801 |
Revenues recognized over time | |||
Disaggregation of Revenue [Line Items] | |||
Total net revenue | $ 142,003 | $ 145,952 | $ 139,053 |
Revenue From Contracts With C_5
Revenue From Contracts With Customers - Activity of Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Allowance for credit losses | |||
Beginning balance | $ (3,040) | ||
Current-period provision for expected credit losses | (671) | $ (8,210) | $ (7,107) |
Write-offs charged against the allowance | 1,071 | ||
Other adjustments | 2,207 | ||
Ending balance | $ (433) | $ (3,040) |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 27, 2020 | Jan. 02, 2021 | Dec. 28, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Lease concessions | $ 3,142 | $ 0 | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Lease extension term, COVID-19 related (in months) | 3 months | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Lease extension term, COVID-19 related (in months) | 12 months | ||
Stores, laboratories, distribution centers, offices | Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Lease terms (in years) | 5 years | ||
Renewal terms (in years) | 1 year | ||
Stores, laboratories, distribution centers, offices | Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Lease terms (in years) | 10 years | ||
Renewal terms (in years) | 10 years |
Leases - Lease Type and Classif
Leases - Lease Type and Classification (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
ASSETS | ||
Finance lease, right-of-use assets | $ 24,373 | $ 28,128 |
Operating lease, right of use assets | 340,141 | 348,090 |
Total leased assets | 364,514 | 376,218 |
Finance lease assets accumulated amortization | 12,400 | 8,300 |
TIA treated as reduction of lease payments used to measure operating lease ROU assets | 36,000 | 35,200 |
Deferred rent treated as reduction of lease payments used to measure operating lease ROU assets | $ 17,500 | $ 15,000 |
Finance lease, right of use assets, balance sheet | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization |
LIABILITIES | ||
Finance lease liabilities, current | $ 3,598 | $ 3,259 |
Operating lease liabilities, current | 58,356 | 51,937 |
Finance lease liabilities, non-current | 27,152 | 30,037 |
Operating lease liabilities, non-current | 327,371 | 331,769 |
Total lease liabilities | 416,477 | 417,002 |
TIA receivable netted to operating lease liabilities | $ 3,800 | $ 5,900 |
Finance lease liabilities, current, balance sheet | us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent | us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent |
Finance lease liabilities, non-current, balance sheet | us-gaap:LongTermDebtAndCapitalLeaseObligations | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Lease Cost | ||
Fixed lease cost | $ 79,387 | $ 73,971 |
Variable lease cost | 28,158 | 26,466 |
Sublease income | (2,700) | (2,930) |
Amortization of finance lease assets | 4,561 | 4,418 |
Interest on finance lease liabilities | 3,656 | 3,573 |
Net lease cost | $ 113,062 | $ 105,498 |
Leases - Lease Term and Discoun
Leases - Lease Term and Discount Rate (Details) | Jan. 02, 2021 | Dec. 28, 2019 |
Leases [Abstract] | ||
Operating leases, weighted average remaining lease term (months) | 77 months | 82 months |
Finance leases, weighted average remaining lease term (months) | 79 months | 88 months |
Operating leases, weighted average discount rate (percent) | 4.70% | 4.60% |
Finance leases, weighted average discount rate (percent) | 12.30% | 13.10% |
Leases - Other Information (Det
Leases - Other Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash outflows - operating leases | $ 84,913 | $ 75,330 |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Operating Leases | ||
2021 | $ 73,867 | |
2022 | 77,874 | |
2023 | 70,103 | |
2024 | 60,998 | |
2025 | 51,974 | |
Thereafter | 116,272 | |
Total lease liabilities | 451,088 | |
Less: Interest | 65,361 | |
Present value of lease liabilities | 385,727 | |
Finance Leases | ||
2021 | 6,676 | |
2022 | 7,215 | |
2023 | 6,241 | |
2024 | 4,673 | |
2025 | 4,451 | |
Thereafter | 12,008 | |
Total lease liabilities | 41,264 | |
Less: Interest | 10,514 | |
Finance lease obligations | 30,750 | $ 33,296 |
Operating lease payments related to reasonably certain option extensions included in total lease payments | 60,800 | |
Finance lease payments related to reasonably certain option extensions included in total lease payments | 1,700 | |
Minimum lease payments for leases signed but not yet commenced excluded from lease liability | $ 26,400 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Related Party Transaction [Line Items] | |||
Sponsor fees presented in debt issuance costs | $ 156 | $ 0 | $ 200 |
KKR Capital Markets LLC | |||
Related Party Transaction [Line Items] | |||
Sponsor fees presented in debt issuance costs | $ 1,000 | $ 1,200 |
Equity in Net Assets of Non-C_3
Equity in Net Assets of Non-Consolidated Investee - Narrative (Details) | Jan. 02, 2021USD ($) |
Schedule of Equity Method Investments [Line Items] | |
Equity investment | $ 0 |
Non-consolidated investee | |
Schedule of Equity Method Investments [Line Items] | |
Equity investment | $ 0 |
Investee | |
Schedule of Equity Method Investments [Line Items] | |
Equity interest in affiliate (percent) | 24.00% |
Equity in Net Assets of Non-C_4
Equity in Net Assets of Non-Consolidated Investee - Summarized Balance Sheet Information (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Balance Sheet | ||
Current assets | $ 566,650 | $ 234,639 |
Non-current assets | 1,766,848 | 1,798,086 |
Total assets | 2,333,498 | 2,032,725 |
Current liabilities | 328,680 | 273,179 |
Non-consolidated investee | ||
Balance Sheet | ||
Current assets | 1,815 | 1,351 |
Non-current assets | 387 | 450 |
Total assets | 2,202 | 1,801 |
Current liabilities | 3,464 | 3,821 |
Non-current liabilities | 4,421 | 8,200 |
Total liabilities | 7,885 | 12,021 |
Net assets | $ (5,683) | $ (10,220) |
Equity in Net Assets of Non-C_5
Equity in Net Assets of Non-Consolidated Investee - Summarized Income Statement Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Income Statement | |||
Our share of net loss | $ (1,383) | $ (1,804) | $ (1,304) |
Non-consolidated investee | |||
Income Statement | |||
Revenues | 6,771 | 6,046 | 3,871 |
Net loss | $ (5,739) | $ (5,481) | $ (5,632) |
Equity in Net Assets of Non-C_6
Equity in Net Assets of Non-Consolidated Investee - Transactions with Non-Consolidated Investee (Details) - Equity Method Investee - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Balance sheets | |||
Other assets | $ 0 | $ 704 | |
Statements of operations | |||
Licensing fees (SG&A) | $ 151 | $ 132 | $ 172 |
Fair Value Measurement of Fin_2
Fair Value Measurement of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | May 31, 2020 | Dec. 28, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Aggregate principal amount | $ 719,875 | $ 540,375 | |
Convertible senior notes | 2025 Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Aggregate principal amount | $ 402,500 | $ 0 | |
Stated interest rate (percent) | 2.50% | 2.50% | |
Estimated Fair Value | Level 2 | Convertible senior notes | 2025 Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Estimated fair value of convertible notes | $ 655,300 |
Deferred Revenue - Roll-Forward
Deferred Revenue - Roll-Forward of Deferred Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Contract Liability | ||
Deferred revenue, beginning balance | $ 77,400 | $ 72,278 |
Sold | 110,980 | 115,543 |
Revenue recognized | (108,653) | (110,421) |
Deferred revenue, ending balance | 79,727 | 77,400 |
Product Protection Plans | ||
Contract Liability | ||
Deferred revenue, beginning balance | 30,911 | 28,775 |
Sold | 63,535 | 63,105 |
Revenue recognized | (60,299) | (60,969) |
Deferred revenue, ending balance | 34,147 | 30,911 |
Eye Care Clubs | ||
Contract Liability | ||
Deferred revenue, beginning balance | 46,486 | 43,488 |
Sold | 47,445 | 52,438 |
Revenue recognized | (48,351) | (49,440) |
Deferred revenue, ending balance | 45,580 | 46,486 |
HMO Memberships | ||
Contract Liability | ||
Deferred revenue, beginning balance | 3 | 15 |
Sold | 0 | 0 |
Revenue recognized | (3) | (12) |
Deferred revenue, ending balance | $ 0 | $ 3 |
Deferred Revenue - Current and
Deferred Revenue - Current and Non-current Balances (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 |
Disaggregation of Revenue [Line Items] | |||
Deferred revenue, current | $ 58,899 | $ 55,870 | |
Deferred revenue, noncurrent | 20,828 | 21,530 | |
Deferred revenue | 79,727 | 77,400 | $ 72,278 |
Product Protection Plans | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue, current | 33,810 | 30,547 | |
Deferred revenue, noncurrent | 337 | 364 | |
Deferred revenue | 34,147 | 30,911 | 28,775 |
Eye Care Clubs | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue, current | 25,089 | 25,320 | |
Deferred revenue, noncurrent | 20,491 | 21,166 | |
Deferred revenue | 45,580 | 46,486 | 43,488 |
HMO Memberships | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue, current | 0 | 3 | |
Deferred revenue, noncurrent | 0 | 0 | |
Deferred revenue | $ 0 | $ 3 | $ 15 |
Deferred Revenue - Deferred Rev
Deferred Revenue - Deferred Revenue Remaining Performance Obligation (Details) $ in Thousands | Jan. 02, 2021USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligation remaining | $ 79,727 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation remaining | $ 58,899 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated timing of recognition of performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation remaining | $ 15,484 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated timing of recognition of performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation remaining | $ 5,141 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated timing of recognition of performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation remaining | $ 152 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated timing of recognition of performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligation remaining | $ 51 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated timing of recognition of performance obligation | 1 year |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | Oct. 20, 2020USD ($) | Feb. 27, 2020USD ($) | Nov. 08, 2017USD ($) | Nov. 30, 2019USD ($)plaintiff | May 31, 2017USD ($) | Jul. 01, 2017USD ($) | Jan. 02, 2021USD ($) | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) |
Other Commitments [Line Items] | |||||||||
Contractual commitments | $ 62,900 | ||||||||
401(k) plan expense | 5,300 | $ 5,300 | $ 4,200 | ||||||
Charge for litigation settlement | $ 4,395 | $ 0 | $ 0 | ||||||
1-800 Contacts Matter | |||||||||
Other Commitments [Line Items] | |||||||||
Amount of litigation settlement | $ 7,000 | ||||||||
Charge for litigation settlement | $ 7,000 | ||||||||
Percent of settlement award deposited in escrow account (percent) | 50.00% | 50.00% | |||||||
Amount of settlement deposited in escrow account | $ 3,500 | $ 3,500 | |||||||
Wage and hours | |||||||||
Other Commitments [Line Items] | |||||||||
Gross settlement fund to be paid | $ 3,500 | ||||||||
Fair Labor Standards Act | |||||||||
Other Commitments [Line Items] | |||||||||
Number of former employees | plaintiff | 6 | ||||||||
Maximum | Fair Labor Standards Act | |||||||||
Other Commitments [Line Items] | |||||||||
Amount of litigation settlement | $ 895 |
Commitments and Contingencies_2
Commitments and Contingencies - Warranty Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Movement in Product Warrant Liability Accounts | ||
Beginning balance | $ 1,881 | $ 1,742 |
Accrued obligation | 28,415 | 33,014 |
Claims paid | (28,067) | (32,875) |
Ending balance | $ 2,229 | $ 1,881 |
Interest Rate Derivatives - Nar
Interest Rate Derivatives - Narrative (Details) - USD ($) | 12 Months Ended | |||
Jan. 02, 2021 | Jun. 27, 2020 | Mar. 28, 2020 | Dec. 28, 2019 | |
Derivative [Line Items] | ||||
Loss on change in fair value | $ 2,600,000 | |||
Interest expense on highly effective hedges | 7,700,000 | |||
Estimated reclassification from AOCL to earnings in next 12 months | 2,500,000 | |||
Interest rate swap and collar | ||||
Derivative [Line Items] | ||||
Notional amount | 395,000,000 | $ 430,000,000 | ||
Interest rate swap and collar | Interest expense, net | ||||
Derivative [Line Items] | ||||
Reclassification of net unrealized losses on discontinuance of hedge accounting | $ 2,500,000 | |||
Interest rate swap | Cash Flow Hedges | ||||
Derivative [Line Items] | ||||
Derivative interest rate floor | 1.00% | |||
Interest rate swap | Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amount | $ 78,000,000 | |||
Interest rate swap one | Designated as Hedging Instrument | Cash Flow Hedges | ||||
Derivative [Line Items] | ||||
Notional amount | $ 70,000,000 | $ 105,000,000 | ||
Interest rate collar | Designated as Hedging Instrument | Cash Flow Hedges | ||||
Derivative [Line Items] | ||||
Notional amount | $ 375,000,000 | |||
Interest rate collar | Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amount | $ 58,000,000 |
Interest Rate Derivatives - Pos
Interest Rate Derivatives - Position Related to Derivative Contracts (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ 1,528 | $ 7,985 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 11,251 | 0 |
Interest rate swap | Designated as Hedging Instrument | Other Payables and Accrued Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 1,528 | 6,382 |
Interest rate swap | Designated as Hedging Instrument | Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 0 | 1,603 |
Interest rate swap | Not Designated as Hedging Instrument | Other Payables and Accrued Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 248 | 0 |
Interest rate collar | Not Designated as Hedging Instrument | Other Payables and Accrued Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 3,340 | 0 |
Interest rate collar | Not Designated as Hedging Instrument | Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ 7,663 | $ 0 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 02, 2021 | May 31, 2020 | Dec. 28, 2019 |
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 719,875 | $ 540,375 | |
Convertible senior notes | 2025 Notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 402,500 | $ 0 | |
Conversion price (in usd per share) | $ 31.17 | $ 31.17 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic and Diluted EPS Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Earnings Per Share [Abstract] | |||
Net income | $ 36,277 | $ 32,798 | $ 23,653 |
Weighted average shares outstanding for basic EPS | 80,565 | 78,608 | 75,899 |
Effect of dilutive securities: | |||
Stock options | 1,737 | 3,019 | 3,129 |
Restricted Stock | 183 | 56 | 13 |
2025 Notes | 308 | 0 | 0 |
Weighted average shares outstanding for diluted EPS | 82,793 | 81,683 | 79,041 |
Basic EPS (in usd per share) | $ 0.45 | $ 0.42 | $ 0.31 |
Diluted EPS (in usd per share) | $ 0.44 | $ 0.40 | $ 0.30 |
Options, RSUs, and 2025 Notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive options, RSUs outstanding, and 2025 Notes excluded from EPS | 13,325 | 294 | 0 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) $ in Thousands | Jul. 17, 2020 | Jan. 22, 2020vision_center | Jan. 02, 2021USD ($)segmentvision_centerstore | Dec. 28, 2019USD ($)store | Dec. 29, 2018USD ($) |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Number of host operating segments | segment | 2 | ||||
Number of retail vision centers | store | 1,205 | 1,151 | |||
Net revenue | $ 1,711,760 | $ 1,724,331 | $ 1,536,854 | ||
Corporate level COVID-19 related supplies expense and professional fees | $ 8,600 | ||||
Legacy | |||||
Segment Reporting Information [Line Items] | |||||
Number of retail vision centers | vision_center | 230 | ||||
Management of operations | Legacy | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | $ 33,400 | $ 35,500 | $ 34,700 | ||
Walmart | |||||
Segment Reporting Information [Line Items] | |||||
Management and services agreement, extension | 3 years | 6 months | |||
Management and services agreement, automatic renewal | 3 years | ||||
Period of time prior to end of term for written notice of non-renewal (in months) | 7 months | ||||
Number of Vision Centers added to the management and services agreement | vision_center | 5 | ||||
Walmart | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | $ 268,600 |
Segment Reporting - Financial D
Segment Reporting - Financial Data by Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Segment Reporting Information [Line Items] | |||
Total net revenue | $ 1,711,760 | $ 1,724,331 | $ 1,536,854 |
Total costs applicable to revenue | 786,624 | 806,519 | 713,571 |
SG&A | 720,590 | 744,488 | 687,476 |
Asset impairment | 22,004 | 8,894 | 17,630 |
Litigation settlement | 4,395 | 0 | 0 |
Other expense (income), net | (445) | 3,611 | 1,487 |
Loss on extinguishment of debt | 0 | 9,786 | 0 |
Debt issuance costs | 156 | 0 | 200 |
Depreciation and amortization | 91,585 | 87,244 | 74,339 |
Interest expense, net | 48,171 | 33,300 | 37,283 |
Earnings before income taxes | 38,680 | 30,489 | 4,868 |
Products | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 1,418,283 | 1,426,136 | 1,269,612 |
Total costs applicable to revenue | 551,783 | 574,351 | 511,406 |
Services and plans | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 293,477 | 298,195 | 267,242 |
Total costs applicable to revenue | 234,841 | 232,168 | 202,165 |
Operating Segments | Owned & Host | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 1,342,399 | 1,325,000 | 1,173,402 |
Total costs applicable to revenue | 518,126 | 517,668 | 459,082 |
SG&A | 489,449 | 508,239 | 457,618 |
Asset impairment | 0 | 0 | 0 |
Litigation settlement | 0 | ||
Other expense (income), net | 0 | 0 | 0 |
Loss on extinguishment of debt | 0 | ||
Debt issuance costs | 0 | 0 | |
EBITDA | 334,824 | 299,093 | 256,702 |
Operating Segments | Owned & Host | Products | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 1,097,749 | 1,076,315 | 956,355 |
Total costs applicable to revenue | 307,813 | 310,790 | 280,720 |
Operating Segments | Owned & Host | Services and plans | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 244,650 | 248,685 | 217,047 |
Total costs applicable to revenue | 210,313 | 206,878 | 178,362 |
Operating Segments | Legacy | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 142,017 | 160,049 | 154,412 |
Total costs applicable to revenue | 67,229 | 74,001 | 67,258 |
SG&A | 51,809 | 56,235 | 54,091 |
Asset impairment | 0 | 0 | 0 |
Litigation settlement | 0 | ||
Other expense (income), net | 0 | 0 | 0 |
Loss on extinguishment of debt | 0 | ||
Debt issuance costs | 0 | 0 | |
EBITDA | 22,979 | 29,813 | 33,063 |
Operating Segments | Legacy | Products | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 90,909 | 105,450 | 103,890 |
Total costs applicable to revenue | 43,452 | 48,712 | 46,986 |
Operating Segments | Legacy | Services and plans | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 51,108 | 54,599 | 50,522 |
Total costs applicable to revenue | 23,777 | 25,289 | 20,272 |
Operating Segments | Corporate/Other | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 234,403 | 245,218 | 212,427 |
Total costs applicable to revenue | 202,631 | 215,053 | 186,990 |
SG&A | 179,332 | 180,014 | 175,767 |
Asset impairment | 22,004 | 8,894 | 17,630 |
Litigation settlement | 4,395 | ||
Other expense (income), net | (445) | 3,611 | 1,487 |
Loss on extinguishment of debt | 9,786 | ||
Debt issuance costs | 156 | 200 | |
EBITDA | (173,670) | (172,140) | (169,647) |
Operating Segments | Corporate/Other | Products | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 234,403 | 245,206 | 208,875 |
Total costs applicable to revenue | 201,880 | 215,052 | 183,459 |
Operating Segments | Corporate/Other | Services and plans | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | 0 | 12 | 3,552 |
Total costs applicable to revenue | 751 | 1 | 3,531 |
Reconciliations | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | (7,059) | (5,936) | (3,387) |
Total costs applicable to revenue | (1,362) | (203) | 241 |
SG&A | 0 | 0 | 0 |
Asset impairment | 0 | 0 | 0 |
Litigation settlement | 0 | ||
Other expense (income), net | 0 | 0 | 0 |
Loss on extinguishment of debt | 0 | ||
Debt issuance costs | 0 | 0 | |
EBITDA | (5,697) | (5,733) | (3,628) |
Reconciliations | Products | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | (4,778) | (835) | 492 |
Total costs applicable to revenue | (1,362) | (203) | 241 |
Reconciliations | Services and plans | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | (2,281) | (5,101) | (3,879) |
Total costs applicable to revenue | $ 0 | $ 0 | $ 0 |
Segment Reporting - Consolidate
Segment Reporting - Consolidated Net Product Revenue Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Revenue from External Customer [Line Items] | |||
Total net revenue | $ 1,711,760 | $ 1,724,331 | $ 1,536,854 |
Products | |||
Revenue from External Customer [Line Items] | |||
Total net revenue | 1,418,283 | 1,426,136 | 1,269,612 |
Eyeglasses and sunglasses | |||
Revenue from External Customer [Line Items] | |||
Total net revenue | 946,025 | 947,729 | 851,328 |
Contact lenses | |||
Revenue from External Customer [Line Items] | |||
Total net revenue | 466,262 | 471,042 | 410,839 |
Accessories and other | |||
Revenue from External Customer [Line Items] | |||
Total net revenue | $ 5,996 | $ 7,365 | $ 7,445 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Reconciliation of cash, cash equivalents, and restricted cash | ||||
Cash and cash equivalents | $ 373,903 | $ 39,342 | $ 17,132 | |
Restricted cash included in other assets | 1,256 | 965 | 866 | |
Total cash, cash equivalents and restricted cash | $ 375,159 | $ 40,307 | $ 17,998 | $ 5,194 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Accumulated Other Comprehensive Loss | |||
Beginning balance | $ 776,437 | $ 743,154 | $ 654,600 |
Ending balance | 906,502 | 776,437 | 743,154 |
Cash Flow Hedges | |||
Accumulated Other Comprehensive Loss | |||
Beginning balance | (3,814) | (2,810) | (9,868) |
Other comprehensive income (loss) before reclassification | (11,108) | (5,814) | 3,182 |
Tax effect of other comprehensive income (loss) before reclassification | 2,830 | 1,489 | (815) |
Amount reclassified from AOCL | 10,328 | 4,464 | 6,306 |
Tax effect of amount reclassified from AOCL | (2,636) | (1,143) | (1,615) |
Net current period other comprehensive income (loss), net of tax | (586) | (1,004) | 7,058 |
Ending balance | $ (4,400) | $ (3,814) | $ (2,810) |
Schedule I - Condensed Financ_2
Schedule I - Condensed Financial Information of Registrant - Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 |
Current assets: | ||||
Cash and cash equivalents | $ 373,903 | $ 39,342 | $ 17,132 | |
Accounts receivable, net | 57,989 | 44,475 | ||
Prepaid expenses and other current assets | 23,484 | 23,266 | ||
Total current assets | 566,650 | 234,639 | ||
Total non-current assets | 1,766,848 | 1,798,086 | ||
Total assets | 2,333,498 | 2,032,725 | ||
Current liabilities: | ||||
Long-term debt, less current portion and debt discount | 624,611 | 525,896 | ||
Non-current liabilities: | ||||
Other non-current liabilities | 17,415 | 13,731 | ||
Deferred income taxes, net | 80,939 | 60,146 | ||
Total other non-current liabilities | 119,182 | 95,407 | ||
Stockholders’ equity: | ||||
Common stock, $0.01 par value; 200,000 shares authorized; 82,183 and 80,603 shares issued as of January 2, 2021 and December 28, 2019, respectively; 81,239 and 79,678 shares outstanding as of January 2, 2021 and December 28, 2019, respectively | 821 | 805 | ||
Additional paid-in capital | 795,697 | 700,121 | ||
Accumulated other comprehensive loss | (4,400) | (3,814) | ||
Retained earnings | 142,880 | 107,132 | ||
Treasury stock, at cost; 944 and 925 shares as of January 2, 2021 and December 28, 2019, respectively | (28,496) | (27,807) | ||
Total stockholders’ equity | 906,502 | 776,437 | $ 743,154 | $ 654,600 |
Total liabilities and stockholders’ equity | 2,333,498 | 2,032,725 | ||
Parent Company | ||||
Current assets: | ||||
Cash and cash equivalents | 10 | 55 | ||
Accounts receivable, net | 1,409 | 534 | ||
Prepaid expenses and other current assets | 5 | 0 | ||
Total current assets | 1,424 | 589 | ||
Deferred income taxes | 0 | 320 | ||
Investment in subsidiary | 1,268,846 | 804,443 | ||
Total non-current assets | 1,268,846 | 804,763 | ||
Total assets | 1,270,270 | 805,352 | ||
Current liabilities: | ||||
Other current liabilities | 1,341 | 50 | ||
Long-term debt, less current portion and debt discount | 309,377 | 0 | ||
Non-current liabilities: | ||||
Other non-current liabilities | 36,308 | 28,865 | ||
Deferred income taxes, net | 16,742 | 0 | ||
Total other non-current liabilities | 53,050 | 28,865 | ||
Stockholders’ equity: | ||||
Common stock, $0.01 par value; 200,000 shares authorized; 82,183 and 80,603 shares issued as of January 2, 2021 and December 28, 2019, respectively; 81,239 and 79,678 shares outstanding as of January 2, 2021 and December 28, 2019, respectively | 821 | 805 | ||
Additional paid-in capital | 795,697 | 700,121 | ||
Accumulated other comprehensive loss | (4,400) | (3,814) | ||
Retained earnings | 142,880 | 107,132 | ||
Treasury stock, at cost; 944 and 925 shares as of January 2, 2021 and December 28, 2019, respectively | (28,496) | (27,807) | ||
Total stockholders’ equity | 906,502 | 776,437 | ||
Total liabilities and stockholders’ equity | $ 1,270,270 | $ 805,352 |
Schedule I - Condensed Financ_3
Schedule I - Condensed Financial Information of Registrant - Condensed Balance Sheets Additional Information (Details) - $ / shares | Jan. 02, 2021 | Dec. 28, 2019 | Aug. 12, 2019 |
Condensed Financial Statements, Captions [Line Items] | |||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, authorized (shares) | 200,000,000 | 200,000,000 | |
Common stock, issued (shares) | 82,183,000 | 80,603,000 | |
Common stock, outstanding (shares) | 81,239,000 | 79,678,000 | |
Treasury stock, at cost (shares) | 944,000 | 925,000 |
Schedule I - Condensed Financ_4
Schedule I - Condensed Financial Information of Registrant - Condensed Statements of Operations and Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Condensed Financial Statements, Captions [Line Items] | |||
Total net revenue | $ 1,711,760 | $ 1,724,331 | $ 1,536,854 |
Cost applicable to revenue | 786,624 | 806,519 | 713,571 |
Operating expenses | 838,129 | 844,237 | 780,932 |
Interest expense, net | 48,171 | 33,300 | 37,283 |
Income (Loss) before income taxes | 38,680 | 30,489 | 4,868 |
Income tax provision (benefit) | 2,403 | (2,309) | (18,785) |
Net income | 36,277 | 32,798 | 23,653 |
Comprehensive income: | |||
Net income | 36,277 | 32,798 | 23,653 |
Unrealized gain (loss) on hedge instruments | (780) | (1,350) | 9,488 |
Tax provision (benefit) of unrealized gain (loss) on hedge instruments | (194) | (346) | 2,430 |
Comprehensive income | 35,691 | 31,794 | 30,711 |
Parent Company | |||
Condensed Financial Statements, Captions [Line Items] | |||
Total net revenue | 0 | 0 | 0 |
Cost applicable to revenue | 0 | 0 | 0 |
Operating expenses | 264 | 256 | 265 |
Interest expense, net | 17,296 | 0 | 0 |
Income (Loss) before income taxes | (17,560) | (256) | (265) |
Income tax provision (benefit) | (3,959) | 71 | (91) |
Income (Loss) before equity in net income of subsidiaries | (13,601) | (327) | (174) |
Net income of subsidiaries | 49,878 | 33,125 | 23,827 |
Net income | 36,277 | 32,798 | 23,653 |
Comprehensive income: | |||
Net income | 36,277 | 32,798 | 23,653 |
Unrealized gain (loss) on hedge instruments | (780) | (1,350) | 9,488 |
Tax provision (benefit) of unrealized gain (loss) on hedge instruments | (194) | (346) | 2,430 |
Comprehensive income | $ 35,691 | $ 31,794 | $ 30,711 |
Schedule I - Condensed Financ_5
Schedule I - Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Cash flows from operating activities: | |||
Net cash provided by (used for) operating activities | $ 234,981 | $ 165,081 | $ 106,628 |
Cash flows from investing activities: | |||
Net cash used for investing activities | (76,410) | (100,631) | (104,221) |
Cash flows from financing activities: | |||
Proceeds from stock option exercises and associate stock purchase plan | 13,105 | 14,767 | 19,802 |
Payments of debt issuance costs | (12,439) | (2,930) | (1,400) |
Purchase of treasury stock | (689) | (25,646) | (1,928) |
Net cash provided by (used for) financing activities | 176,281 | (42,141) | 10,397 |
Net change in cash, cash equivalents and restricted cash | 334,852 | 22,309 | 12,804 |
Cash and cash equivalents and restricted cash, beginning of year | 40,307 | 17,998 | 5,194 |
Cash and cash equivalents and restricted cash, end of year | 375,159 | 40,307 | 17,998 |
Parent Company | |||
Cash flows from operating activities: | |||
Net cash provided by (used for) operating activities | 1,189 | 25,455 | 223 |
Cash flows from investing activities: | |||
Investment in subsidiary | (404,537) | (15,090) | (19,802) |
Net cash used for investing activities | (404,537) | (15,090) | (19,802) |
Cash flows from financing activities: | |||
Proceeds from stock option exercises and associate stock purchase plan | 13,105 | 15,090 | 19,802 |
Proceeds from issuance of convertible notes | 402,500 | 0 | 0 |
Payments of debt issuance costs | (11,613) | 0 | 0 |
Purchase of treasury stock | (689) | 25,646 | 0 |
Net cash provided by (used for) financing activities | 403,303 | (10,556) | 19,802 |
Net change in cash, cash equivalents and restricted cash | (45) | (191) | 223 |
Cash and cash equivalents and restricted cash, beginning of year | 55 | 246 | 23 |
Cash and cash equivalents and restricted cash, end of year | $ 10 | $ 55 | $ 246 |
Schedule I - Condensed Financ_6
Schedule I - Condensed Financial Information of Registrant - Notes to Condensed Financial Statements (Details) - USD ($) | May 12, 2020 | Dec. 28, 2019 | Jan. 02, 2021 | May 31, 2020 | Jul. 18, 2019 |
Condensed Financial Statements, Captions [Line Items] | |||||
Aggregate principal amount | $ 540,375,000 | $ 719,875,000 | |||
Convertible senior notes | 2025 Notes | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Aggregate principal amount | $ 402,500,000 | ||||
Stated interest rate (percent) | 2.50% | 2.50% | |||
Aggregate principal amount | 0 | $ 402,500,000 | |||
Credit facility | Revolving Credit Facility | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Repayment of revolving credit facility | $ 294,300,000 | ||||
Aggregate principal amount | 148,000,000 | 0 | |||
Amount outstanding on line of credit | 0 | ||||
Credit facility borrowing capacity | 300,000,000 | $ 300,000,000 | |||
Outstanding letters of credit | 6,400,000 | ||||
Term loan | Term Loan, due July 18, 2024 | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Repayment of term loan | $ 75,000,000 | 25,000,000 | |||
Aggregate principal amount | $ 392,375,000 | $ 317,375,000 |