Delaware (State or other jurisdiction of incorporation or organization) | 46‑4841717 (I.R.S. Employer Identification No.) | |
2435 Commerce Ave, Building 2200 Duluth, Georgia (Address of principal executive offices) | 30096 (Zip Code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) | |
(770) 822‑3600 (Registrant’s telephone number, including area code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer (Do not check if a smaller reporting company) | ☒ | Smaller reporting company Emerging growth company | ☐ ☐ |
Class | Outstanding at November 30, 2017 | |
Common stock, $0.01 par value | 74,653,832 |
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• | If we fail to open and operate new stores in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected. |
• | We will require significant capital to fund our expanding business. If we are unable to maintain sufficient levels of cash flow from our operations, we may not be able to execute or sustain our growth strategy or we may require additional financing, which may not be available to us on satisfactory terms or at all. |
• | Failure to recruit and retain vision care professionals for our stores could adversely affect our business, financial condition and results of operations. |
• | We are subject to extensive state, local and federal vision care and healthcare laws and regulations and failure to adhere to such laws and regulations would adversely affect our business. |
• | Future operational success depends on our ability to develop and maintain relationships with managed vision care companies, vision insurance providers and other third-party payors. |
• | If we are unable to maintain our current operating relationships with our host and legacy partners, our business, profitability and cash flows may be adversely affected. |
• | We depend on our distribution centers and optical laboratories. The loss of, or disruption in the operations of, one or more of these facilities may adversely affect our ability to process and fulfill customer orders and deliver our products in a timely manner, or at all, and may result in quality issues, which would adversely affect our reputation, our business and our profitability. |
• | We face risks associated with vendors from whom our products are sourced. |
• | The optical retail industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted. |
• | We are dependent on a limited number of suppliers. |
• | Our and our vendors’ systems containing personal information and payment card data of our retail store and e-commerce customers, employees and other third parties, could be breached, which could subject us to adverse publicity, costly government enforcement actions or private litigation. |
• | Any failure, inadequacy, interruption, security failure or breach of our information technology systems, whether owned by us or outsourced or managed by third parties, could harm our ability to effectively operate our business and could have a material adverse effect on our business, financial condition and results of operations. |
• | An overall decline in the health of the economy and other factors impacting consumer spending, such as the timing and issuance of tax refunds, governmental instability and natural disasters, may affect consumer purchases, which could reduce demand for our products and materially harm our sales, profitability and financial condition. |
• | Our growth strategy could strain our existing resources and cause the performance of our existing stores to suffer. |
• | If we fail to retain our existing senior management team or attract qualified new personnel, such failure could have a material adverse effect on our business, financial condition, and results of operations. |
• | We are a low-cost provider and our business model relies on the low cost of inputs. Factors such as wage rate increases, inflation, cost increases, increases in raw material prices and energy prices could have a material adverse effect on our business, financial condition and results of operations. |
• | Our success depends upon our marketing, advertising and promotional efforts. If we are unable to implement them successfully, or if our competitors are more effective than we are, it could have a material adverse effect on our business, financial condition and results of operations. |
• | We are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs. |
• | We could be adversely affected by product liability, product recall or personal injury issues. |
• | Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our debt obligations. |
• | We are subject to managed vision care laws and regulations. |
• | We rely on third-party coverage and reimbursement, including government programs, for an increasing portion of our revenues, the future reduction of which could adversely affect our results of operations. |
• | Our profitability and cash flows may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage. |
• | Our e-commerce business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability. |
• | Our operating results and inventory levels fluctuate on a seasonal basis. |
• | Certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, and future drug development for the correction of vision-related problems may reduce the demand for our products and adversely impact our business and profitability. |
• | Our debt agreements contain restrictions that limit our flexibility in operating our business. |
• | We may be unable to generate sufficient cash flow to satisfy our significant debt service obligations, which could have a material adverse effect on our business, financial condition and results of operations. |
• | Failure to comply with laws, regulations and enforcement activities or changes in statutory, regulatory, accounting, and other legal requirements could potentially impact our operating and financial results. |
• | Adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, financial condition and results of operations. |
• | We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business. |
• | Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business. |
• | Our sponsors (affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and private equity funds managed by Berkshire Partners LLC (“Berkshire”)) control us and their interests may conflict with ours or yours in the future. |
ASSETS | As of September 30, 2017 | As of December 31, 2016 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 27,621 | $ | 4,945 | |||
Accounts receivable, net of allowances | 39,111 | 34,370 | |||||
Inventories | 89,370 | 87,064 | |||||
Prepaid expenses and other current assets | 22,688 | 20,880 | |||||
Total current assets | 178,790 | 147,259 | |||||
Property and equipment, net | 290,656 | 256,414 | |||||
Other assets and deferred costs: | |||||||
Goodwill | 792,744 | 793,229 | |||||
Trademarks and trade names | 240,547 | 240,547 | |||||
Other intangible assets, net | 75,011 | 81,338 | |||||
Other assets | 11,114 | 12,330 | |||||
Total non-current assets | 1,410,072 | 1,383,858 | |||||
Total assets | $ | 1,588,862 | $ | 1,531,117 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 33,562 | $ | 39,400 | |||
Other payables and accrued expenses | 90,746 | 69,402 | |||||
Unearned revenue | 20,867 | 25,600 | |||||
Deferred revenue | 64,356 | 57,996 | |||||
Current maturities of long-term debt | 9,645 | 7,285 | |||||
Total current liabilities | 219,176 | 199,683 | |||||
Long-term debt, less current portion and debt discount | 912,734 | 738,340 | |||||
Other non-current liabilities: | |||||||
Deferred revenue | 32,094 | 29,432 | |||||
Other liabilities | 49,714 | 50,497 | |||||
Deferred income taxes, net | 120,556 | 111,278 | |||||
Total other non-current liabilities | 202,364 | 191,207 | |||||
Commitments and contingencies (See Note 8) | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value; 200,000 shares authorized; 56,477 and 56,202 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively. | 565 | 562 | |||||
Additional paid-in capital | 259,034 | 424,789 | |||||
Accumulated other comprehensive loss | (13,223 | ) | (14,556 | ) | |||
Retained earnings (deficit) | 8,445 | (8,675 | ) | ||||
Treasury stock, at cost; 28 shares as of September 30, 2017 and December 31, 2016 | (233 | ) | (233 | ) | |||
Total stockholders’ equity | 254,588 | 401,887 | |||||
Total liabilities and stockholders’ equity | $ | 1,588,862 | $ | 1,531,117 |
Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | ||||||||||||
Revenue: | |||||||||||||||
Net product sales | $ | 283,648 | $ | 246,638 | $ | 867,192 | $ | 756,787 | |||||||
Net sales of services and plans | 62,441 | 54,578 | 186,297 | 162,294 | |||||||||||
Total net revenue | 346,089 | 301,216 | 1,053,489 | 919,081 | |||||||||||
Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||||||
Products | 115,752 | 99,096 | 349,099 | 299,420 | |||||||||||
Services and plans | 46,606 | 39,568 | 135,474 | 115,033 | |||||||||||
Total costs applicable to revenue | 162,358 | 138,664 | 484,573 | 414,453 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 151,251 | 134,457 | 445,714 | 395,385 | |||||||||||
Depreciation and amortization | 15,352 | 13,217 | 44,404 | 38,237 | |||||||||||
Asset impairment | — | — | 1,000 | 52 | |||||||||||
Litigation settlement | — | — | 7,000 | — | |||||||||||
Other expense, net | 568 | 563 | 744 | 1,217 | |||||||||||
Total operating expenses | 167,171 | 148,237 | 498,862 | 434,891 | |||||||||||
Income from operations | 16,560 | 14,315 | 70,054 | 69,737 | |||||||||||
Interest expense, net | 14,851 | 9,728 | 40,965 | 29,377 | |||||||||||
Debt issuance costs | — | — | 2,702 | — | |||||||||||
Earnings before income taxes | 1,709 | 4,587 | 26,387 | 40,360 | |||||||||||
Income tax provision | 163 | 1,561 | 9,267 | 15,893 | |||||||||||
Net income | $ | 1,546 | $ | 3,026 | $ | 17,120 | $ | 24,467 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.03 | $ | 0.05 | $ | 0.30 | $ | 0.44 | |||||||
Diluted | $ | 0.03 | $ | 0.05 | $ | 0.29 | $ | 0.43 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 56,414 | 56,211 | 56,363 | 56,176 | |||||||||||
Diluted | 58,459 | 57,170 | 58,281 | 56,814 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 1,546 | $ | 3,026 | $ | 17,120 | $ | 24,467 | |||||||
Change in fair value of hedge instruments | 2,255 | (663 | ) | 2,176 | (13,245 | ) | |||||||||
Tax (provision) benefit of change in fair value of hedge instruments | (872 | ) | 261 | (843 | ) | 5,219 | |||||||||
Comprehensive income | $ | 2,929 | $ | 2,624 | $ | 18,453 | $ | 16,441 |
Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 17,120 | $ | 24,467 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation of property and equipment | 38,077 | 31,345 | |||||
Amortization of intangible assets | 6,327 | 6,892 | |||||
Amortization of loan costs | 3,075 | 2,946 | |||||
Asset impairment | 1,000 | 52 | |||||
Deferred income tax expense | 8,922 | 15,901 | |||||
Non-cash stock option compensation | 3,140 | 3,308 | |||||
Non-cash inventory adjustments | 4,695 | 1,228 | |||||
Debt issuance costs | 2,702 | — | |||||
Other | 388 | 529 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (4,741 | ) | 569 | ||||
Inventories | (7,001 | ) | (8,007 | ) | |||
Other assets | 2,487 | (1,223 | ) | ||||
Accounts payable | (5,838 | ) | (8,738 | ) | |||
Other liabilities | 25,898 | 21,807 | |||||
Net cash provided by operating activities | 96,251 | 91,076 | |||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (67,135 | ) | (66,771 | ) | |||
Purchase of investments | (1,500 | ) | (1,000 | ) | |||
Other | (113 | ) | (734 | ) | |||
Net cash used for investing activities | (68,748 | ) | (68,505 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of long-term debt | 173,712 | — | |||||
Proceeds from issuance of common stock | 1,004 | — | |||||
Principal payments on long-term debt | (6,236 | ) | (4,886 | ) | |||
Proceeds from exercise of stock options | 1,088 | 884 | |||||
Payments on capital lease obligations | (710 | ) | (426 | ) | |||
Debt issuance costs | (2,702 | ) | — | ||||
Dividend to stockholders | (170,983 | ) | — | ||||
Net cash used for financing activities | (4,827 | ) | (4,428 | ) | |||
Net change in cash and cash equivalents | 22,676 | 18,143 | |||||
Cash and cash equivalents, beginning of year | 4,945 | 5,595 | |||||
Cash and cash equivalents, end of period | $ | 27,621 | $ | 23,738 | |||
Supplemental cash flow disclosure information: | |||||||
Non-cash financing activities: | |||||||
Deferred offering costs accrued at the end of period | $ | 2,694 | $ | — |
In thousands | As of September 30, 2017 | As of December 31, 2016 | |||||
Accounts receivable, net: | |||||||
Trade receivables | $ | 25,985 | $ | 20,817 | |||
Credit card receivables | 7,534 | 9,398 | |||||
Tenant improvement allowances receivable | 5,132 | 3,308 | |||||
Other receivables | 2,613 | 2,430 | |||||
Allowance for uncollectible accounts | (2,153 | ) | (1,583 | ) | |||
$ | 39,111 | $ | 34,370 | ||||
Inventories: | |||||||
Raw materials and work in process (1) | $ | 41,985 | $ | 42,266 | |||
Finished goods | 47,385 | 44,798 | |||||
$ | 89,370 | $ | 87,064 | ||||
(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. | |||||||
Property and equipment, net: | |||||||
Land and building | $ | 3,608 | $ | 3,607 | |||
Equipment | 193,945 | 161,714 | |||||
Furniture and fixtures | 41,228 | 36,046 | |||||
Leasehold improvements | 145,661 | 121,963 | |||||
Construction in progress | 32,732 | 28,099 | |||||
Property under capital leases | 9,262 | 3,244 | |||||
426,436 | 354,673 | ||||||
Less accumulated depreciation | 135,780 | 98,259 | |||||
$ | 290,656 | $ | 256,414 |
In thousands | As of September 30, 2017 | As of December 31, 2016 | |||||
Other payables and accrued expenses: | |||||||
Employee compensation and benefits | $ | 29,238 | $ | 18,984 | |||
Advertising | 1,588 | 1,058 | |||||
Self-insurance reserves | 6,773 | 7,235 | |||||
Reserves for customer returns and remakes | 7,075 | 4,611 | |||||
Capital expenditures | 8,424 | 9,202 | |||||
Legacy management and services agreement | 5,306 | 4,591 | |||||
Rental expenses | 1,514 | 2,172 | |||||
Fair value of derivative liabilities | 8,499 | 8,218 | |||||
Professional fees | 2,938 | 1,298 | |||||
Supplies and other store support expenses | 3,033 | 3,489 | |||||
Litigation settlements | 7,469 | 422 | |||||
Other | 8,889 | 8,122 | |||||
$ | 90,746 | $ | 69,402 | ||||
Other non-current liabilities: | |||||||
Fair value of derivative liabilities | $ | 13,061 | $ | 15,518 | |||
Tenant improvements (2) | 22,831 | 21,089 | |||||
Deferred rental expenses | 7,169 | 6,256 | |||||
Self-insurance reserves | 4,147 | 3,908 | |||||
Above market leases | 952 | 1,705 | |||||
Other | 1,554 | 2,021 | |||||
$ | 49,714 | $ | 50,497 | ||||
(2) Obligations for tenant improvements are amortized as a reduction of rental expense over the respective lease term. |
In thousands | Notional Amount | Final Maturity Date | Other Payables and Accrued Expenses | Other Liabilities | AOCL, Net of Tax | ||||||||||||
As of September 30, 2017 | $ | 500,000 | March 2021 | $ | 8,499 | $ | 13,061 | $ | 13,223 | ||||||||
As of December 31, 2016 | $ | 500,000 | March 2021 | $ | 8,218 | $ | 15,518 | $ | 14,556 |
Options issued and outstanding | Vested Rollover | Service-Based | Performance-Based | Total | |||||||
Balance, December 31, 2016 | 169,050 | 3,528,526 | 5,765,156 | 9,462,732 | |||||||
Issued | — | 505,928 | 759,025 | 1,264,953 | |||||||
Exercised | — | (211,568 | ) | — | (211,568 | ) | |||||
Balance, September 30, 2017 | 169,050 | 3,822,886 | 6,524,181 | 10,516,117 | |||||||
Options vested and exercisable | |||||||||||
Balance, December 31, 2016 | 169,050 | 1,073,960 | — | 1,243,010 | |||||||
Vested during period | — | 719,864 | — | 719,864 | |||||||
Exercised during period | — | (211,568 | ) | — | (211,568 | ) | |||||
Balance, September 30, 2017 | 169,050 | 1,582,256 | — | 1,751,306 |
In thousands | Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | |||||||||||
KKR | $ | 220 | $ | 213 | $ | 2,993 | $ | 638 | |||||||
Berkshire | $ | 52 | $ | 50 | $ | 156 | $ | 149 |
Three Months Ended September 30, 2017 | |||||||||||||||||||
In thousands | Owned & Host | Legacy | Corporate/Other | Reconciliations | Total | ||||||||||||||
Segment product revenues | $ | 211,035 | $ | 24,503 | $ | 46,421 | $ | 1,689 | $ | 283,648 | |||||||||
Segment services and plans revenues | 48,119 | 12,864 | 3,110 | (1,652 | ) | 62,441 | |||||||||||||
Total net revenue | 259,154 | 37,367 | 49,531 | 37 | 346,089 | ||||||||||||||
Cost of products | 63,159 | 11,427 | 40,699 | 467 | 115,752 | ||||||||||||||
Cost of services and plans | 39,395 | 4,579 | 2,632 | — | 46,606 | ||||||||||||||
Total costs applicable to revenue | 102,554 | 16,006 | 43,331 | 467 | 162,358 | ||||||||||||||
SG&A | 103,851 | 12,904 | 34,496 | — | 151,251 | ||||||||||||||
Other expense, net | — | — | 568 | — | 568 | ||||||||||||||
EBITDA | $ | 52,749 | $ | 8,457 | $ | (28,864 | ) | $ | (430 | ) | 31,912 | ||||||||
Depreciation and amortization | 15,352 | ||||||||||||||||||
Interest expense, net | 14,851 | ||||||||||||||||||
Income before income taxes | $ | 1,709 |
Three Months Ended October 1, 2016 | |||||||||||||||||||
In thousands | Owned & Host | Legacy | Corporate/Other | Reconciliations | Total | ||||||||||||||
Segment product revenues | $ | 184,292 | $ | 25,134 | $ | 37,977 | $ | (765 | ) | $ | 246,638 | ||||||||
Segment services and plans revenues | 40,331 | 12,220 | 4,408 | (2,381 | ) | 54,578 | |||||||||||||
Total net revenue | 224,623 | 37,354 | 42,385 | (3,146 | ) | 301,216 | |||||||||||||
Cost of products | 54,157 | 11,749 | 33,240 | (50 | ) | 99,096 | |||||||||||||
Cost of services and plans | 32,816 | 2,933 | 3,819 | — | 39,568 | ||||||||||||||
Total costs applicable to revenue | 86,973 | 14,682 | 37,059 | (50 | ) | 138,664 | |||||||||||||
SG&A | 91,000 | 12,984 | 30,473 | — | 134,457 | ||||||||||||||
Other expense, net | — | — | 563 | — | 563 | ||||||||||||||
EBITDA | $ | 46,650 | $ | 9,688 | $ | (25,710 | ) | $ | (3,096 | ) | 27,532 | ||||||||
Depreciation and amortization | 13,217 | ||||||||||||||||||
Interest expense, net | 9,728 | ||||||||||||||||||
Income before income taxes | $ | 4,587 |
Nine Months Ended September 30, 2017 | |||||||||||||||||||
In thousands | Owned & Host | Legacy | Corporate/Other | Reconciliations | Total | ||||||||||||||
Segment product revenues | $ | 649,526 | $ | 78,828 | $ | 134,371 | $ | 4,467 | $ | 867,192 | |||||||||
Segment services and plans revenues | 146,415 | 37,840 | 11,274 | (9,232 | ) | 186,297 | |||||||||||||
Total net revenue | 795,941 | 116,668 | 145,645 | (4,765 | ) | 1,053,489 | |||||||||||||
Cost of products | 190,604 | 37,138 | 120,116 | 1,241 | 349,099 | ||||||||||||||
Cost of services and plans | 113,902 | 11,909 | 9,663 | — | 135,474 | ||||||||||||||
Total costs applicable to revenue | 304,506 | 49,047 | 129,779 | 1,241 | 484,573 | ||||||||||||||
SG&A | 304,168 | 39,087 | 102,459 | — | 445,714 | ||||||||||||||
Asset impairment | — | — | 1,000 | — | 1,000 | ||||||||||||||
Debt issuance costs | — | — | 2,702 | — | 2,702 | ||||||||||||||
Litigation settlement | — | — | 7,000 | — | 7,000 | ||||||||||||||
Other expense, net | — | — | 744 | — | 744 | ||||||||||||||
EBITDA | $ | 187,267 | $ | 28,534 | $ | (98,039 | ) | $ | (6,006 | ) | 111,756 | ||||||||
Depreciation and amortization | 44,404 | ||||||||||||||||||
Interest expense, net | 40,965 | ||||||||||||||||||
Income before income taxes | $ | 26,387 |
Nine Months Ended October 1, 2016 | |||||||||||||||||||
In thousands | Owned & Host | Legacy | Corporate/Other | Reconciliations | Total | ||||||||||||||
Segment product revenues | $ | 560,794 | $ | 79,099 | $ | 113,639 | $ | 3,255 | $ | 756,787 | |||||||||
Segment services and plans revenues | 122,455 | 37,749 | 13,483 | (11,393 | ) | 162,294 | |||||||||||||
Total net revenue | 683,249 | 116,848 | 127,122 | (8,138 | ) | 919,081 | |||||||||||||
Cost of products | 163,059 | 37,118 | 98,309 | 934 | 299,420 | ||||||||||||||
Cost of services and plans | 94,831 | 8,723 | 11,479 | 115,033 | |||||||||||||||
Total costs applicable to revenue | 257,890 | 45,841 | 109,788 | 934 | 414,453 | ||||||||||||||
SG&A | 260,537 | 39,783 | 95,065 | — | 395,385 | ||||||||||||||
Asset impairment | — | — | 52 | — | 52 | ||||||||||||||
Other expense, net | — | — | 1,217 | — | 1,217 | ||||||||||||||
EBITDA | $ | 164,822 | $ | 31,224 | $ | (79,000 | ) | $ | (9,072 | ) | 107,974 | ||||||||
Depreciation and amortization | 38,237 | ||||||||||||||||||
Interest expense, net | 29,377 | ||||||||||||||||||
Income before income taxes | $ | 40,360 |
Three Months Ended | Nine Months Ended | ||||||||||||||
In thousands, except EPS data | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||
Net income | $ | 1,546 | $ | 3,026 | $ | 17,120 | $ | 24,467 | |||||||
Weighted average shares outstanding for basic EPS | 56,414 | 56,211 | 56,363 | 56,176 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock options | 2,045 | 959 | 1,918 | 638 | |||||||||||
Weighted average shares outstanding for diluted EPS | 58,459 | 57,170 | 58,281 | 56,814 | |||||||||||
Basic EPS | $ | 0.03 | $ | 0.05 | $ | 0.30 | $ | 0.44 | |||||||
Diluted EPS | $ | 0.03 | $ | 0.05 | $ | 0.29 | $ | 0.43 | |||||||
Anti-dilutive options outstanding excluded from EPS | — | — | 339 | 92 |
In thousands | Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | |||||||||||
Cash flow hedging activity | |||||||||||||||
Balance at beginning of period | $ | (14,605 | ) | $ | (18,909 | ) | $ | (14,556 | ) | $ | (11,284 | ) | |||
Other comprehensive loss before reclassification | (228 | ) | (401 | ) | (2,424 | ) | (8,026 | ) | |||||||
Amount reclassified from AOCL | 1,610 | — | 3,757 | — | |||||||||||
Net current period other comprehensive income (loss), net of tax | 1,382 | (401 | ) | 1,333 | (8,026 | ) | |||||||||
Balance at end of period | $ | (13,223 | ) | $ | (19,310 | ) | $ | (13,223 | ) | $ | (19,310 | ) |
• | Owned & host – As of September 30, 2017, our owned brands consisted of 577 America’s Best Contacts and Eyeglasses (“America’s Best”) retail stores and 107 Eyeglass World retail stores. In America’s Best stores, vision care services are provided by optometrists employed by us or by independent professional corporations. America’s Best stores are primarily located in high-traffic strip centers next to similar nationally-known discount retailers. Eyeglass World locations primarily feature independent optometrists who perform eye exams and on-site optical laboratories that enable stores to quickly fulfill many customer orders and make repairs on site. Eyeglass World stores are primarily located in freestanding or in-suite locations near high-foot-traffic shopping centers. Our two host brands consisted of 56 Vista Optical locations on military bases and 29 Vista Optical locations within Fred Meyer stores as of September 30, 2017. We have strong, long-standing relationships with our host partners and have maintained each partnership for over 18 years. Both host brands compete within the value segment of the U.S. optical retail industry. These brands provide eye exams principally by independent optometrists in nearly all locations. All brands utilize our centralized laboratories. This segment also includes sales from our four store websites, three of which are omni-channel. |
• | Legacy - We managed the operations of, and supplied inventory and laboratory processing services to, 227 Vision Centers in Walmart retail locations as of September 30, 2017. Under our management & services agreement, our responsibilities include ordering and maintaining merchandise inventory, arranging the provision of optometry services, providing managers and staff at each location, training personnel, providing sales receipts to customers, maintaining necessary insurance, obtaining and holding required licenses, permits and accreditations, owning and maintaining store furniture, fixtures and equipment, and developing annual operating budgets and reporting. We earn management fees as a result of providing such services and we record revenue related to sales of products and product protection plans on a net basis. Our management & services agreement also allows our legacy partner to collect penalties if the Vision Centers do not generate a requisite amount of revenues. We also sell to our legacy partner merchandise that is stocked in retail locations we manage pursuant to a separate supplier agreement, and provide to our legacy partner centralized laboratory services for the finished eyeglasses for our legacy partner’s customers in stores that we manage. We lease space from Walmart within or adjacent to each of the locations we manage and use this space for the provision of optometric examination services. During the nine months ended September 30, 2017, sales to our legacy partner represented 11.1% of consolidated net revenue. This exposes us to concentration of customer risk. Our agreements with our legacy partner expire on August 23, 2020, and will automatically renew for a three-year period unless a party elects not to renew. |
• | Our e-commerce platform of 14 dedicated websites managed by our wholly-owned subsidiary, Arlington Contact Lens Service, Inc. (“AC Lens”). Our e-commerce business consists of seven proprietary branded websites, including aclens.com and discountcontactlenses.com, and eight third-party websites with established retailers, such as Walmart, Sam’s Club and Giant Eagle, and mid-sized vision insurance providers. AC Lens handles site management, customer relationship management and order fulfillment and also sells a wide variety of contact lenses, eyeglasses and eye care accessories. |
• | AC Lens also distributes contact lenses to Walmart and Sam’s Club under fee for service arrangements. We record revenue for these activities and we incur costs at a higher percentage of sales than other product categories, given the wholesale nature of the business. |
• | Managed care business conducted by FirstSight Vision Services, Inc. (“FirstSight”), our wholly-owned subsidiary that is licensed as a single-service health plan under California law, which arranges for the provision of optometric services at the optometric offices next to Eyeglass World, Walmart and Sam’s Club stores throughout California, and also issues individual vision care benefit plans in connection with our America’s Best operations in California. |
• | Unallocated corporate overhead expenses, which are a component of selling, general and administrative expenses and are comprised of various home office general and administrative expenses such as payroll expenses, occupancy costs, and consulting and professional fees. Corporate overhead expenses also include field supervision for stores included in our owned & host and legacy segments. |
• | consumer preferences, buying trends and overall economic trends; |
• | the recurring nature of eye care purchases; |
• | our ability to identify and respond effectively to customer preferences and trends; |
• | our ability to provide an assortment of high quality/low cost product offerings that generate new and repeat visits to our stores; |
• | the customer experience we provide in our stores; |
• | the availability of vision care professionals; |
• | our ability to source and receive products accurately and timely; |
• | changes in product pricing, including promotional activities; |
• | the number of items purchased per store visit; and |
• | the number of stores that have been in operation for more than 12 months. |
($ in thousands, except percentage and store data) | Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | |||||||||||
Revenue: | |||||||||||||||
Net product sales | $ | 283,648 | $ | 246,638 | $ | 867,192 | $ | 756,787 | |||||||
Net sales of services and plans | 62,441 | 54,578 | 186,297 | 162,294 | |||||||||||
Total net revenue | 346,089 | 301,216 | 1,053,489 | 919,081 | |||||||||||
Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||||||
Products | 115,752 | 99,096 | 349,099 | 299,420 | |||||||||||
Services and plans | 46,606 | 39,568 | 135,474 | 115,033 | |||||||||||
Total costs applicable to revenue | 162,358 | 138,664 | 484,573 | 414,453 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 151,251 | 134,457 | 445,714 | 395,385 | |||||||||||
Depreciation and amortization | 15,352 | 13,217 | 44,404 | 38,237 | |||||||||||
Asset impairment | — | — | 1,000 | 52 | |||||||||||
Litigation settlement | — | — | 7,000 | — | |||||||||||
Other expense, net | 568 | 563 | 744 | 1,217 | |||||||||||
Total operating expenses | 167,171 | 148,237 | 498,862 | 434,891 | |||||||||||
Income from operations | 16,560 | 14,315 | 70,054 | 69,737 | |||||||||||
Interest expense, net | 14,851 | 9,728 | 40,965 | 29,377 | |||||||||||
Debt issuance costs | — | — | 2,702 | — | |||||||||||
Earnings before income taxes | 1,709 | 4,587 | 26,387 | 40,360 | |||||||||||
Income tax provision | 163 | 1,561 | 9,267 | 15,893 | |||||||||||
Net income | $ | 1,546 | $ | 3,026 | $ | 17,120 | $ | 24,467 | |||||||
Operating data: | |||||||||||||||
Number of stores open at end of period | 996 | 932 | 996 | 932 | |||||||||||
New stores opened | 19 | 27 | 59 | 74 | |||||||||||
Adjusted EBITDA | $ | 36,161 | $ | 30,738 | $ | 134,686 | $ | 116,803 | |||||||
Total costs applicable to revenue (exclusive of depreciation and amortization) | 46.9 | % | 46.0 | % | 46.0 | % | 45.1 | % | |||||||
Selling, general, and administrative expenses | 43.7 | % | 44.6 | % | 42.3 | % | 43.0 | % | |||||||
Income from operations | 4.8 | % | 4.8 | % | 6.6 | % | 7.6 | % | |||||||
Net income | 0.4 | % | 1.0 | % | 1.6 | % | 2.7 | % | |||||||
Adjusted EBITDA | 10.4 | % | 10.2 | % | 12.8 | % | 12.7 | % |
Comparable store sales growth(1) | Stores open at end of period | Net revenue | ||||||||||||||||||
($ in thousands, except percentage and store data) | Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | September 30, 2017 | October 1, 2016 | Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | ||||||||||||||
Owned & host segment | ||||||||||||||||||||
America’s Best | 10.2 | % | 5.5 | % | 577 | 520 | $ | 212,329 | $ | 179,687 | ||||||||||
Eyeglass World | 2.4 | % | 5.1 | % | 107 | 101 | 36,979 | 34,376 | ||||||||||||
Military | (12.3 | )% | 5.9 | % | 56 | 55 | 6,268 | 6,977 | ||||||||||||
Fred Meyer | (0.1 | )% | (2.7 | )% | 29 | 29 | 3,578 | 3,583 | ||||||||||||
Owned & host segment total | 769 | 705 | $ | 259,154 | $ | 224,623 | ||||||||||||||
Legacy segment | 1.3 | % | (3.1 | )% | 227 | 227 | 37,367 | 37,354 | ||||||||||||
Corporate/Other | — | % | — | % | — | — | 49,531 | 42,385 | ||||||||||||
Reconciliations | — | % | — | % | — | — | 37 | (3,146 | ) | |||||||||||
Total | 8.3 | % | 5.2 | % | 996 | 932 | $ | 346,089 | $ | 301,216 | ||||||||||
Adjusted comparable store sales growth(2) | 7.0 | % | 3.7 | % |
(1) | We calculate total comparable store sales based on consolidated net revenue excluding the impact of (i) Corporate/Other segment net revenue, (ii) sales from stores opened less than 12 months, (iii) stores closed in the periods presented, (iv) sales from partial months of operation when stores do not open or close on the first day of the month and (v) if applicable, the impact of a 53rd week in a fiscal year. |
(2) | There are two differences between total comparable store sales growth based on consolidated net revenue and adjusted comparable store sales growth: (i) adjusted comparable store sales growth includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 1.3% and 1.0% from total comparable store sales growth based on consolidated net revenue for the three months ended September 30, 2017 and October 1, 2016, respectively, and (ii) adjusted comparable store sales growth includes retail sales to the legacy partner’s customers (rather than the revenues recognized consistent with the management & services agreement), resulting in a decrease of 0.0% and 0.5% from total comparable store sales growth based on consolidated net revenue for the three months ended September 30, 2017 and October 1, 2016, respectively. |
Comparable store sales growth(1) | Stores open at end of period | Net revenue | ||||||||||||||||||
($ in thousands, except percentage and store data) | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | September 30, 2017 | October 1, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | ||||||||||||||
Owned & host segment | ||||||||||||||||||||
America’s Best | 9.6 | % | 9.2 | % | 577 | 520 | $ | 651,167 | $ | 548,196 | ||||||||||
Eyeglass World | 5.0 | % | 3.8 | % | 107 | 101 | 114,632 | 103,314 | ||||||||||||
Military | (8.9 | )% | 4.8 | % | 56 | 55 | 19,357 | 20,696 | ||||||||||||
Fred Meyer | (2.3 | )% | (1.4 | )% | 29 | 29 | 10,785 | 11,043 | ||||||||||||
Owned & host segment total | 769 | 705 | $ | 795,941 | $ | 683,249 | ||||||||||||||
Legacy segment | (0.3 | )% | (2.7 | )% | 227 | 227 | 116,668 | 116,848 | ||||||||||||
Corporate/Other | — | % | — | % | — | — | 145,645 | 127,122 | ||||||||||||
Reconciliations | — | % | — | % | — | — | (4,765 | ) | (8,138 | ) | ||||||||||
Total | 7.4 | % | 6.9 | % | 996 | 932 | $ | 1,053,489 | $ | 919,081 | ||||||||||
Adjusted comparable store sales growth(2) | 6.7 | % | 5.9 | % |
(1) | We calculate total comparable store sales based on consolidated net revenue excluding the impact of (i) Corporate/Other segment net revenue, (ii) sales from stores opened less than 12 months, (iii) stores closed in the periods presented, (iv) sales from partial months of operation when stores do not open or close on the first day of the month and (v) if applicable, the impact of a 53rd week in a fiscal year. |
(2) | There are two differences between total comparable store sales growth based on consolidated net revenue and adjusted comparable store sales growth: (i) adjusted comparable store sales growth includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale, resulting in a decrease of 0.5% and 0.5% from total comparable store sales growth based on consolidated net revenue for the nine months ended September 30, 2017 and October 1, 2016, respectively, and (ii) adjusted comparable store sales growth includes retail sales to the legacy partner’s customers (rather than the revenues recognized consistent with the management & services agreement), resulting in a decrease of 0.2% and 0.5% from total comparable store sales growth based on consolidated net revenue for the nine months ended September 30, 2017 and October 1, 2016, respectively. |
• | they do not reflect costs or cash outlays for capital expenditures or contractual commitments; |
• | they do not reflect changes in, or cash requirements for, our working capital needs; |
• | EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; |
• | EBITDA and Adjusted EBITDA do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes; |
• | they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations, including costs related to new store openings, which are incurred on a non-recurring basis with respect to any particular store when opened; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and |
• | other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. |
In thousands | Three Months Ended September 30, 2017 | Three Months Ended October 1, 2016 | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | |||||||||||
Net income | $ | 1,546 | $ | 3,026 | $ | 17,120 | $ | 24,467 | |||||||
Interest expense | 14,851 | 9,728 | 40,965 | 29,377 | |||||||||||
Income tax provision | 163 | 1,561 | 9,267 | 15,893 | |||||||||||
Depreciation and amortization | 15,352 | 13,217 | 44,404 | 38,237 | |||||||||||
EBITDA | 31,912 | 27,532 | 111,756 | 107,974 | |||||||||||
Stock compensation expense (a) | 1,151 | 854 | 3,140 | 3,308 | |||||||||||
Debt issuance costs (b) | — | — | 2,702 | — | |||||||||||
Asset impairment (c) | — | — | 1,000 | 52 | |||||||||||
Non-cash inventory write-offs (d) | — | — | 2,271 | — | |||||||||||
Management fees (e) | 271 | 290 | 845 | 815 | |||||||||||
New store pre-opening expenses (f) | 618 | 547 | 1,896 | 1,672 | |||||||||||
Non-cash rent (g) | 381 | 296 | 1,035 | 1,104 | |||||||||||
Litigation settlement (h) | — | — | 7,000 | — | |||||||||||
Other (i) | 1,828 | 1,219 | 3,041 | 1,878 | |||||||||||
Adjusted EBITDA | $ | 36,161 | $ | 30,738 | $ | 134,686 | $ | 116,803 | |||||||
Net income | $ | 1,546 | $ | 3,026 | $ | 17,120 | $ | 24,467 | |||||||
Stock compensation expense (a) | 1,151 | 854 | 3,140 | 3,308 | |||||||||||
Debt issuance costs (b) | — | — | 2,702 | — | |||||||||||
Asset impairment (c) | — | — | 1,000 | 52 | |||||||||||
Non-cash inventory write-offs (d) | — | — | 2,271 | — | |||||||||||
Management fees (e) | 271 | 290 | 845 | 815 | |||||||||||
New store pre-opening expenses (f) | 618 | 547 | 1,896 | 1,672 | |||||||||||
Non-cash rent (g) | 381 | 296 | 1,035 | 1,104 | |||||||||||
Litigation settlement (h) | — | — | 7,000 | — | |||||||||||
Other (i) | 1,828 | 1,219 | 3,041 | 1,878 | |||||||||||
Amortization of acquisition intangibles and deferred financing costs (j) | 2,884 | 2,814 | 8,628 | 8,500 | |||||||||||
Tax effect of total adjustments (k) | (2,853 | ) | (2,407 | ) | (12,623 | ) | (6,931 | ) | |||||||
Adjusted Net Income | $ | 5,826 | $ | 6,639 | $ | 36,055 | $ | 34,865 |
(a) | Non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards. |
(b) | Fees associated with the borrowing of $175.0 million in additional principal under our first lien credit agreement during the first fiscal quarter of 2017. |
(c) | Non-cash charges related to impairment of long-lived assets, primarily the complete write-off of a cost based investment. |
(d) | Reflects write-offs of inventory relating to the expiration of a specific type of contact lenses that could not be sold and required disposal. |
(e) | Reflects management fees paid to KKR and Berkshire in accordance with our monitoring agreement with them. |
(f) | Pre-opening expenses, which include marketing and advertising, labor and occupancy expenses incurred prior to opening a new store, are generally higher than comparable expenses incurred once such store is open and generating revenue. We believe that such higher pre-opening expenses are specific in nature and amount to opening a new store and as such, are not indicative of ongoing core operating performance. We adjust for these costs to facilitate comparisons of store operating performance from period to period. Pre-opening costs are permitted exclusions in our calculation of Adjusted EBITDA pursuant to the terms of our existing credit agreements. |
(g) | Consists of the non-cash portion of rent expense, which reflects the extent to which our straight-line rent expense recognized under GAAP exceeds or is less than our cash rent payments. The adjustment can vary depending on the average age of our lease portfolio, which has been impacted by our significant growth in recent years. For newer leases, our rent expense recognized typically exceeds our cash rent payments, while for more mature leases, rent expense recognized under GAAP is typically less than our cash rent payments. |
(h) | Amounts accrued related to settlement of litigation. See Note 8 - Commitments and Contingencies in our unaudited condensed consolidated financial statements included in Item 1 for further details. |
(i) | Other adjustments include amounts that management believes are not representative of our operating performance, including our share of losses on equity method investments of $0.4 million, $0.2 million, $0.7 million and $1.0 million for the three months ended September 30, 2017 and October 1, 2016 and nine months ended September 30, 2017 and October 1, 2016, respectively; the amortization impact of the KKR Acquisition-related adjustments (e.g., fair value of leasehold interests) of $(0.1) million, $(0.1) million, $(0.2) million and $(0.6) million for the three months ended September 30, 2017 and October 1, 2016 and nine months ended September 30, 2017 and October 1, 2016, respectively, related to prior acquisitions; expenses related to preparation for being an SEC registrant that were not directly attributable to our initial public offering (“the IPO”) and therefore not charged to equity of $0.6 million, $0.6 million, $1.8 million and $0.9 million for the three months ended September 30, 2017 and October 1, 2016 and nine months ended September 30, 2017 and October 1, 2016, respectively; differences between the timing of expense versus cash payments related to contributions to charitable organizations of $(0.3) million for three months ended September 30, 2017 and October 1, 2016, and $(0.8) million during nine months ended September 30, 2017 and October 1, 2016; costs of severance and relocation of $0.7 million, $0.4 million, $1.0 million, and $0.8 million for the three months ended September 30, 2017 and October 1, 2016 and nine months ended September 30, 2017 and October 1, 2016 respectively; and other expenses and adjustments totaling $0.4 million, $0.4 million, $0.5 million, and $0.6 million for the three months ended September 30, 2017 and October 1, 2016 and nine months ended September 30, 2017 and October 1, 2016, respectively. |
(j) | Amortization of acquisition intangibles related to the additional expense incurred due to the increase in the carrying values of amortizing intangible assets as a result of the KKR Acquisition of $1.9 million for the three months ended September 30, 2017 and October 1, 2016 and $5.6 million for nine months ended September 30, 2017 and October 1, 2016. Amortization of deferred financing costs is primarily associated with the March 2014 term loan borrowings in connection with the KKR Acquisition and, to a lesser extent, amortization of deferred loan discount costs associated with the May 2015 and February 2017 incremental first lien term loans of $1.0 million, $1.0 million, $3.1 million and $2.9 million for the three months ended September 30, 2017 and October 1, 2016 and nine months ended September 30, 2017 and October 1, 2016, respectively. |
(k) | Represents the tax effect of the total adjustments at our estimated effective tax rate. |
(In thousands) | Nine Months Ended September 30, 2017 | Nine Months Ended October 1, 2016 | |||||
Cash Flows Provided By (Used For): | |||||||
Operating activities | $ | 96,251 | $ | 91,076 | |||
Investing activities | (68,748 | ) | (68,505 | ) | |||
Financing activities | (4,827 | ) | (4,428 | ) | |||
Net increase in cash and cash equivalents | $ | 22,676 | $ | 18,143 |
• | Removed higher obsolescence risk contact lenses from our stores to our Distribution Center in order to better manage inventory turns and related obsolescence potential and established a policy requiring stores to return all contact lenses expiring within the next twelve months to our central distribution center. |
• | Changed our store inventory observation procedures to monitor the compliance with the policy described above, in order to allow for the Company to sell or exchange products with respective vendors for newer products with similar value. |
• | Initiated quarterly reviews with accounting and merchandising teams to evaluate the impact of product inventory turns on inventory obsolescence. |
• | Implemented an automated reporting system to report financial results consistent with Regulation S-X and to provide reconciliations between internal and external reporting, highlighting any changes in reporting and business requirements. |
• | Established a disclosure committee, consisting of certain key members of management, to assist in formalizing our disclosure. risk assessment, internal controls and procedures. |
• | Established an internal audit department that reports directly to the Audit Committee. |
• | On July 24, 2017, we issued 6,357 shares of restricted stock, based on the fair market value of $15.73 per share as of the award date, to a non-employee director. |
• | On July 24, 2017, we granted stock options to purchase an aggregate of 101,715 shares of our common stock with an exercise price of $15.73 per share to an employee. |
• | On August 14, 2017, we granted stock options to purchase an aggregate of 642,034 shares of our common stock with an exercise price of $15.73 per share to certain employees, including an executive officer. |
• | On August 14, 2017, we issued 63,572 shares of our common stock at a price per share of $15.73 to an executive officer. |
• | On August 24, 2017, we granted stock options to purchase an aggregate of 76,286 shares of our common stock with an exercise price of $15.73 per share to an employee. |
Exhibit No. | Exhibit Description | |
Second Amended and Restated Certificate of Incorporation of National Vision Holdings, Inc. -incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 31, 2017. | ||
Second Amended and Restated Bylaws of National Vision Holdings, Inc. -incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on October 31, 2017 | ||
Amended and Restated Stockholders’ Agreement, dated as of October 30, 2017, by and among National Vision Holdings, Inc. and the stockholders party thereto -incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 31, 2017 | ||
Joinder and Amendment Agreement, dated as of October 31, 2017, among National Vision, Inc., as borrower, the guarantors party thereto, each revolving credit lender, Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and a letter of credit issuer, Bank of America, N.A., as a letter of credit issuer, and Citibank, N.A., as a letter of credit issuer -incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 31, 2017 | ||
Joinder and Amendment Agreement, dated as of November 20, 2017, among National Vision, Inc., as borrower, the guarantors party thereto, each lender party thereto, Goldman Sachs Bank USA, as administrative agent and collateral agent-incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on November 20, 2017 | ||
National Vision Holdings, Inc. 2017 Omnibus Incentive Plan -incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 31, 2017 | ||
Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | ||
Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | ||
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | ||
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
National Vision Holdings, Inc. | ||
Dated: December 7, 2017 | By: | /s/ L. Reade Fahs |
Chief Executive Officer and Director | ||
(Principal Executive Officer) | ||
Dated: December 7, 2017 | By: | /s/ Patrick R. Moore |
Senior Vice President, Chief Financial Officer | ||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2017 of National Vision Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2017 of National Vision Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
• | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
• | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2017 |
Nov. 30, 2017 |
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Document And Entity Information [Abstract] | ||
Entity Registrant Name | National Vision Holdings, Inc. | |
Entity Central Index Key | 0001710155 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 74,653,832 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares, issued | 56,477,000 | 56,202,000 |
Common stock, shares, outstanding | 56,477,000 | 56,202,000 |
Treasury stock, shares | 28,000 | 28,000 |
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
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Revenue: | ||||
Net product sales | $ 283,648 | $ 246,638 | $ 867,192 | $ 756,787 |
Net sales of services and plans | 62,441 | 54,578 | 186,297 | 162,294 |
Total net revenue | 346,089 | 301,216 | 1,053,489 | 919,081 |
Costs applicable to revenue (exclusive of depreciation and amortization): | ||||
Products | 115,752 | 99,096 | 349,099 | 299,420 |
Services and plans | 46,606 | 39,568 | 135,474 | 115,033 |
Total costs applicable to revenue | 162,358 | 138,664 | 484,573 | 414,453 |
Operating expenses: | ||||
Selling, general and administrative expenses | 151,251 | 134,457 | 445,714 | 395,385 |
Depreciation and amortization | 15,352 | 13,217 | 44,404 | 38,237 |
Asset impairment | 0 | 0 | 1,000 | 52 |
Litigation settlement | 0 | 0 | 7,000 | 0 |
Other expense, net | 568 | 563 | 744 | 1,217 |
Total operating expenses | 167,171 | 148,237 | 498,862 | 434,891 |
Income from operations | 16,560 | 14,315 | 70,054 | 69,737 |
Interest expense, net | 14,851 | 9,728 | 40,965 | 29,377 |
Debt issuance costs | 0 | 0 | 2,702 | 0 |
Earnings before income taxes | 1,709 | 4,587 | 26,387 | 40,360 |
Income tax provision | 163 | 1,561 | 9,267 | 15,893 |
Net income | $ 1,546 | $ 3,026 | $ 17,120 | $ 24,467 |
Earnings per share: | ||||
Basic (in usd per share) | $ 0.03 | $ 0.05 | $ 0.30 | $ 0.44 |
Diluted (in usd per share) | $ 0.03 | $ 0.05 | $ 0.29 | $ 0.43 |
Weighted average shares outstanding: | ||||
Basic (shares) | 56,414 | 56,211 | 56,363 | 56,176 |
Diluted (shares) | 58,459 | 57,170 | 58,281 | 56,814 |
Comprehensive income: | ||||
Net income | $ 1,546 | $ 3,026 | $ 17,120 | $ 24,467 |
Change in fair value of hedge instruments | 2,255 | (663) | 2,176 | (13,245) |
Tax (provision) benefit of change in fair value of hedge instruments | (872) | 261 | (843) | 5,219 |
Comprehensive income | $ 2,929 | $ 2,624 | $ 18,453 | $ 16,441 |
Description of Business and Basis of Presentation |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Nature of Operations National Vision Holdings, Inc. ( “NVHI,” the “Company,” “we,” “our,” or “us”) is a holding company whose operating subsidiaries include its indirect wholly owned subsidiary, National Vision, Inc. (“NVI”) and NVI’s direct wholly owned subsidiaries. The Company is a leading value retailer of eyeglasses and value retailer of contact lenses. To support our operations, we also own and operate three optical laboratories and two distribution centers. We operated 996 and 943 retail optical locations in the United States and its territories as of September 30, 2017 and December 31, 2016, respectively, through our five store brands, America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on U.S. Army/Air Force military bases and within Fred Meyer stores, and our management & services arrangement with Walmart. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by U.S. GAAP for complete consolidated financial statements. The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited consolidated balance sheet for the fiscal year then ended. These unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 30, 2017, the consolidated results of operations for the three and nine months ended September 30, 2017 and October 1, 2016, and consolidated cash flows for the nine months ended September 30, 2017 and October 1, 2016. Certain information and footnote disclosures normally included in our annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted; however, we believe that the disclosures included herein are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2016 included in the Company’s final prospectus dated October 25, 2017 (the “Prospectus”), as filed with the Securities and Exchange Commission (the “SEC”) on October 27, 2017 pursuant to Rule 424(b)(4) under the Securities Act Securities Act of 1933, as amended (the “Securities Act”). The significant accounting policies followed by the Company are set forth in Note 1 within those consolidated financial statements. We use the same accounting policies in preparing interim condensed consolidated financial information and annual consolidated financial statements. There were no changes in our significant accounting policies during the nine months ended September 30, 2017, except for the adoption of Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting and ASU No. 2017-04, Intangibles - Goodwill and Other, neither of which had a material effect on the Company’s consolidated financial condition, results of operations, or cash flows. The condensed consolidated financial statements include our accounts and those of our subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Year Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2017 contains 52 weeks and will end on December 30, 2017. All three and nine month periods presented herein contain 13 and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. Seasonality The consolidated results of operations for the three and nine months ended September 30, 2017 and October 1, 2016 are not necessarily indicative of the results to be expected for the full fiscal year due to seasonality and uncertainty of general economic conditions that may impact our key end markets. Historically, our business has realized a higher portion of net revenue, income from operations, and cash flows from operations in the first fiscal quarter, and a lower portion of net revenue, income from operations, and cash flows from operations in the fourth fiscal quarter. The seasonally larger first quarter is attributable primarily to the timing of our customers’ personal income tax refunds and annual health insurance program start or reset periods. Seasonality related to fourth quarter holiday spending by retail customers does not significantly impact our business. Our quarterly consolidated results can also be affected by the timing of new store openings and store closings and the timing of certain holidays. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Initial Public Offering On October 30, 2017, we completed an initial public offering of our common stock (“IPO”) in which we issued and sold 18,170,000 shares of common stock, including 2,370,000 shares of common stock pursuant to the exercise in full of the underwriters’ option to purchase additional shares. The shares sold in the offering were registered under the Securities Act pursuant to our Registration Statement on Form S-1 (File No. 333-220719), which was declared effective by the SEC on October 25, 2017. The shares of our common stock were sold at an initial offering price of $22.00 per share, which generated net proceeds of approximately $375.8 million to the Company, after deducting underwriting discounts and commissions of approximately $24.0 million which included $0.7 million paid to KKR Capital Markets LLC. (“KCM”), an affiliate of KKR, for underwriting services in connection with the IPO. We primarily used the net proceeds from the IPO to repay all $125.0 million outstanding aggregate amount of the Company’s second lien term loans and approximately $235.0 million of the outstanding amount of the Company’s first lien term loans and accrued and unpaid interest thereon. The repayment will result in an extinguishment of debt in the amount of approximately $353.3 million, which will be recognized in the fourth quarter of 2017. During the fourth quarter of 2017, the Company expects to pay $4.0 million of transaction related expenses. The remaining $11.8 million of the proceeds will be used for general corporate purposes, including the termination fees described below. NVI was party to a Monitoring Agreement, dated as of March 13, 2014 (the “Monitoring Agreement”), with KKR and Berkshire, which was terminated automatically in accordance with its terms upon the completion of the IPO. In connection with such termination, the Company paid termination fees of approximately $3.6 million and $0.8 million to KKR and Berkshire, respectively. Affiliates of KKR and Berkshire retained 58.2% and 13.6% ownership interest, respectively, in the Company after the IPO. Stock Split In connection with preparing for the IPO, on October 12, 2017 the Company’s Board of Directors approved a 1.96627-for-one reverse stock split of the Company’s common stock. The reverse stock split became effective October 24, 2017. The par value per share of common stock and authorized shares of common stock remain unchanged at $0.01 per share and 200 million shares, respectively. The accompanying financial statements and notes thereto give retroactive effect to the reverse stock split for all periods presented. All common share and per share amounts in the financial statements and notes have been retrospectively adjusted to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in aggregate par value of ‘‘Common stock’’ to ‘‘additional paid-in capital’’ on the condensed consolidated balance sheets. Deferred Offering Costs We capitalize legal and accounting fees directly relating to the IPO. These deferred offering costs will be offset against offering proceeds during the fourth fiscal quarter of 2017. As of September 30, 2017, the Company capitalized $3.2 million of deferred offering costs in prepaid expenses and other current assets in its condensed consolidated balance sheet, and accrued $2.7 million of such costs during the nine months ended September 30, 2017, which are presented in the condensed consolidated statement of cash flows as non-cash financing activities for the nine months ended September 30, 2017. We estimate an additional $1.6 million of direct IPO related costs to be capitalized in the fourth quarter of 2017. We also estimate to record an increase in additional paid-in-capital of $371.0 million as a result of the IPO. Income Taxes Our effective income tax rate, or ETR, was 9.5% and 34.1% during three moths ended and 35.2% and 39.4% during the nine months ended September 30, 2017 and October 1, 2016, respectively. The 9.5% rate during the three months ended September 30, 2017 resulted from a change to our expected annual ETR, with the cumulative results of that change recorded in the current quarter. During the nine months ended September 30, 2017, our expected combined statutory federal and state rate was reduced by a $1.4 million income tax benefit (5.3%) resulting from the recapitalization dividend described in Note 5 - Related Party Transactions. Other items aggregated to a 0.5% further reduction in the rate for the period. These benefits were partially offset by an increase in tax expense of $0.4 million (1.5%) related to a valuation allowance recorded on an impairment-related deferred tax asset. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. ASU No. 2014-09 provides new guidance related to the core principle that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. During 2016, the FASB issued additional ASUs to clarify certain aspects of ASU No. 2014-09, including ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) in March 2016, and ASU No. 2016-10, Identifying Performance Obligations and Licensing in April 2016. The guidance is effective for fiscal years beginning after December 15, 2017, and interim reporting periods within that fiscal year. The Company will adopt this new guidance in the first quarter of 2018 using the modified retrospective method. The most significant components of the new guidance to the Company relate to performance obligations surrounding our bundled product and service offerings and the reporting of revenue on a gross versus net basis with respect to our management and services agreement with Walmart, and the timing of revenue recognition associated with our discount club membership fees. We are currently finalizing our assessment, but we do not expect the adoption of this new guidance to have a significant impact on the timing or amount of revenue recognized in our consolidated financial results based on our implementation progress to-date. We do expect incremental additional disclosures in the notes to our consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases. The new guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with such classification affecting the pattern of expense recognition in the statement of operations. The guidance is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within that fiscal year. A modified transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company will adopt this new guidance in the first quarter of 2019. We are evaluating the impact of implementation of this new guidance on our consolidated financial statements, but expect that adoption will have a material impact to the Company’s total assets and liabilities since we have a significant number of operating leases not currently recognized on our consolidated balance sheets. In April 2016, FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This new guidance simplifies the accounting for share-based payment transactions, including income tax consequences, classification of certain items on the statement of cash flows, forfeitures, and minimum statutory withholding requirements. This new guidance is effective for fiscal years beginning after December 15, 2016, and interim reporting periods within that fiscal year. We adopted this new guidance in the first quarter of 2017. The adoption of this new guidance did not have a material effect on the Company’s financial condition, results of operations, or cash flows. In January 2017, FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other. This new guidance removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance will be applied prospectively, and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this new guidance during the first quarter of 2017. The adoption of this new guidance did not have a material effect on the Company’s financial condition, results of operations, or cash flows. Correction of an Error During the first quarter of 2017, we identified an error in our previously issued 2016 consolidated financial statements related to contact lens inventories that were expired or expiring and could not be sold as of December 31, 2016. Fiscal year 2016 costs applicable to revenue (products) was understated by $2.1 million, and net income was overstated by $1.3 million. We corrected the error in the three months ended July 1, 2017. Management concluded that the error was not material to the 2016 consolidated financial statements or the estimated 2017 results of operations. Cost Method Investment The Company has a $1.0 million cost method investment in a private start-up company whose principal business is creating eyeglasses through three dimensional printing which can be customized based on a scan of the customer’s face. During the second quarter of 2017, management determined that it was unlikely that the business would be able to continue operations for the foreseeable future. Therefore, we recorded an impairment charge for the entire amount of the investment during the second quarter of 2017, which is reflected in the condensed consolidated statement of operations and other comprehensive income for the nine months ended September 30, 2017. |
Details of Certain Balance Sheet Accounts |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Certain Balance Sheet Accounts | Details of Certain Balance Sheet Accounts
2. Details of Certain Balance Sheet Accounts (continued)
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Fair Value Measurements of Financial Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements of Financial Assets and Liabilities | Fair Value Measurements of Financial Assets and Liabilities The Company uses a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect pricing based upon a reporting entity’s own market assumptions. Under U.S. GAAP, the Company is required to (a) measure certain assets and liabilities at fair value or (b) disclose the fair values of certain assets and liabilities recorded at cost. Accounting standards define fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated assuming the transaction occurs in the principal or most advantageous market for the asset or liability and includes consideration of non-performance risk and credit risk of both parties. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 - Valuation inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. • Level 2 - Valuation inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 - Valuation inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and Cash Equivalents The carrying amount of cash and cash equivalents approximates fair value due to the short term maturity of the instruments. All cash and cash equivalents are denominated in U.S. currency. Accounts Receivable The carrying amount of accounts receivable approximates fair value due to the short-term nature of those items and the effect of related allowances for doubtful accounts. Accounts Payable and Other Payables and Accrued Expenses The carrying amounts of accounts payable and other payables and accrued expenses approximate fair value due to the short-term nature of those items. Long-term Debt - Credit Agreements Our long-term debt is traded in private markets on a less-than-daily basis. Fair value is based on the average of trading prices and bid/ask quotes around period-end (Level 2 inputs). The estimated fair values of our combined First and Second Lien Term Loans were $928.8 million and $753.0 million as of September 30, 2017 and December 31, 2016, respectively, compared to carrying values of $913.5 million and $742.9 million, which includes the current portion, and is net of unamortized discounts and deferred debt issuance costs. See Note 6 - Debt for further information related to debt transactions recorded during the three and nine months ended September 30, 2017. Long-term Debt - Capital Leases The fair value of capital lease obligations is based on estimated future contractual cash flows discounted at an appropriate market rate of interest (Level 2 inputs). The estimated fair values of our capital leases were $10.6 million and $2.9 million as of September 30, 2017 and December 31, 2016, respectively, compared to carrying values of $8.9 million and $2.7 million, respectively. Interest Rate Derivatives The Company is a party to three pay-fixed and receive-floating interest rate swap agreements to offset the variability of cash flows in LIBOR-indexed debt interest payments attributable to changes in the benchmark interest rate from March 13, 2017 to March 13, 2021 related to its current First Lien Credit Agreement. The Company designated these swap agreements as cash flow hedges at inception. Changes in the cash flows of each derivative are expected to be highly effective in offsetting the changes in interest payments on a principal balance equal to the derivative’s notional amount, attributable to the hedged risk. We have not had any ineffectiveness related to these instruments since inception. We recognize as assets or liabilities at fair value the estimated amounts we would receive or pay upon a termination of interest rate swaps prior to their scheduled expiration dates. We record the period change in fair value of cash flow hedges, net of tax, in the accompanying condensed consolidated statements of comprehensive income and the cumulative change in fair value of cash flow hedges since inception, net of tax, in accumulated other comprehensive loss (“AOCL”) in the accompanying condensed consolidated balances sheets. Fair value is based on information that is model-driven and whose inputs are observable (Level 2 inputs). Our cash flow hedge position related to interest rate derivative contracts is as follows:
As of September 30, 2017, the Company expects to reclassify $8.5 million of AOCL into earnings in the next 12 months. See Note 11- Accumulated Other Comprehensive Loss. Subsequent to the nine months ended September 30, 2017, the Company used proceeds in connection with the IPO to reduce outstanding debt. This event did not have a material impact on the hedge position for the nine months ended September 30, 2017 and is not expected to have an impact on the hedge position for the remainder of 2017. See Note 12 - Subsequent Events for transactions in connection with the IPO. |
Stock Incentive Plan |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plan | Stock Incentive Plan 2014 Stock Incentive Plan In 2014, our Board of Directors and stockholders of the Company approved the 2014 Stock Incentive Plan for Key Employees of NVHI (previously known as Nautilus Parent, Inc.) and Subsidiaries (the “2014 Stock Incentive Plan”). The 2014 Stock Incentive Plan was subsequently amended by our Board of Directors and our stockholders on November 9, 2015 and June 5, 2017 to increase the share reserve. The 2014 Stock Incentive Plan provides for the grant of stock options and other stock-based awards to employees, non-employee members of our Board of Directors, consultants, and other persons having a service relationship with us. We have reserved an aggregate of 10,988,827 shares of our common stock for issuance under our 2014 Stock Incentive Plan. As of September 30, 2017, options to purchase a total of 10,347,067 shares of common stock were issued and outstanding (excluding rollover options), 565,860 shares of common stock had been issued upon the exercise of options and 69,452 shares remained available for future grants. The following presents a roll-forward of stock options, giving retroactive effect to the reverse stock split, for the nine months ended September 30, 2017:
The total estimated fair value of service-based options granted during the nine months ended September 30, 2017 was $4.6 million. During the same period, there were 16,274, 36,618, and 158,676 service-based options exercised at a price of $9.24 per share, $7.24 per share, and $4.27 per share, respectively, for a total intrinsic value of $1.5 million. As a result of the application of ASU No. 2016-09, the Company recorded an income tax benefit of $0.2 million in the condensed consolidated statement of operations and comprehensive income related to these exercises. There was no additional significant activity for the three months ended September 30, 2017. The fair value of service-based options vested and outstanding as of September 30, 2017 was $9.4 million. The remaining unrecognized service cost for service-based options was $7.6 million as of September 30, 2017. Compensation expense associated with service-based stock options is presented in selling, general, and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations and comprehensive income. The vesting of performance-based options is conditional upon the achievement by the majority stockholder in NVHI, KKR, with respect to its investment in NVHI, of both a minimum internal rate of return and a minimum multiple of invested capital and then increases proportionally as the multiple of invested capital increases up to a defined target. No compensation expense has been recorded in relation to performance based options since achievement of the conditions triggering vesting by the IPO, or otherwise, have not been deemed to be probable as of September 30, 2017. See Note 12 - Subsequent Events for information about the adoption of a new omnibus incentive plan and related equity compensation matters in connection with the IPO. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions Transactions With Equity Sponsors Under certain agreements we have entered into with our equity sponsors, we recorded the following expenses related to management and/or advisory fees:
Fees paid to equity sponsors include retainer fees and certain other on-going project-oriented initiatives and are presented in SG&A in the accompanying condensed consolidated statements of operations and comprehensive income, except, as discussed further below in Note 6 - Debt, KCM fees for the nine months ended September 30, 2017 include $2.3 million presented in debt issuance costs, which were incurred in the first quarter of 2017. See Note 1 - Description of Business and Basis of Presentation for further details regarding transactions with our equity sponsors in conjunction with and following the IPO. Dividend & Stockholders’ Equity On February 2, 2017, the Company declared a recapitalization dividend to its stockholders, which included KKR, Berkshire, and management. Common stockholders received a dividend per common share of $1.51. There were 110.5 million common shares outstanding and eligible for the dividend. Vested and roll-over option holders received an additional cash payment of $1.51 per option, for an aggregate payment of $3.7 million. The income tax benefit of the additional cash payment was $1.4 million, which was incurred in the first quarter of 2017, is included in the condensed consolidated statement of operations and comprehensive income for the nine months ended September 30, 2017. The exercise price of unvested options was reduced by $1.51 per option, the amount of the dividend. Since the Company was in an accumulated deficit position on the date of declaration of the dividend, according to our accounting policy the combined total cash payment of $171.0 million was recorded as a reduction to additional paid-in capital. No other material non-recurring charges were recorded to stockholders’ equity during the three and nine months ended September 30, 2017. |
Debt |
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Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt The dividend discussed in Note 5 - Related Party Transactions was funded with $175.0 million in borrowed funds under the Company’s First Lien Credit Agreement, net of a $1.3 million original issue discount. The borrowing rate was 4.0%, consistent with the existing credit agreement. Quarterly principal payments increased $0.5 million, which increased current maturities from $6.5 million as of December 31, 2016, to $8.3 million as of September 30, 2017. The additional principal matures consistent with the original First Lien Term Loans on March 13, 2021. We recorded $2.3 million in fees to KKR and $0.4 million in third party fees in debt issuance costs in the condensed consolidated statement of operations and comprehensive income during the nine months ended September 30, 2017, which were incurred in the first quarter of 2017. See Note 12 - Subsequent Events for further details regarding debt in conjunction with and following the IPO. The Company entered into multiple new capital leases during the nine months ended September 30, 2017. As of September 30, 2017, our capital lease commitments are $0.5 million, $2.2 million, $1.7 million, $1.4 million, $1.3 million and $6.4 million for fiscal years 2017, 2018, 2019, 2020, 2021 and thereafter, respectively. |
Equity Method Investment |
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Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | Equity Method Investment The Company has an investment in a private start-up company whose principal business is licensing software to eyeglass retailers. Under the equity method of accounting we are required to record our interest in the investee’s reported net income or loss for each reporting period, which is presented in other expense, net in the Company’s condensed consolidated statements of operations and comprehensive income. On August 29, 2017, the investee issued a secured convertible promissory note to the Company, in a principal amount of $1.5 million, due at maturity, which was recorded in other assets in the accompanying balance sheets. The promissory note, which matures on August 29, 2020 bears interest at a fixed rate of 5.00% with an additional variable interest component based on the base rate of Bank of England, as published on the first day of each calendar year, which is 0.25% for 2017. After adjusting our investment for our interest in the investee’s reported net losses, our investment balance in the business was $2.6 million and $3.3 million as of September 30, 2017 and December 31, 2016, respectively, which is included in other assets in the accompanying condensed consolidated balance sheets. |
Commitments and Contingencies |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies From time to time, the Company is involved in various legal proceedings incidental to its business. The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that both a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s subsidiary, FirstSight Vision Services, Inc. (“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. On March 23, 2017, the court granted the motion to dismiss previously filed by FirstSight and dismissed the complaint with prejudice. The plaintiffs filed an appeal to the U.S. Court of Appeals for the Ninth Circuit in April 2017. The Company believes that the claims are without merit. In May 2017, a complaint was filed against the Company and other defendants alleging, on behalf of a proposed class of consumers who purchased contact lenses online, that 1-800 Contacts, Inc. entered into a series of agreements with the other defendants, including the Company’s 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 (the “1-800 Contacts Matter”). The Company has settled the 1-800 Contacts Matter for $7.0 million, without admitting liability. Accordingly, the Company recorded a $7.0 million charge in litigation settlement in the accompanying condensed consolidated statement of operations and comprehensive income during the nine months ended September 30, 2017, which were incurred in the second quarter of 2017. See Note 12 - Subsequent Events. |
Segment Reporting |
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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. Our host brands consist of our Vista Optical operating segments at certain U.S. Military Branches and inside Fred Meyer stores. We have aggregated our owned and host operating segments into a single reportable segment due to similar economic characteristics and similarity of the nature of products and services, production processes, class of customers, regulatory environment, and distribution methods of those brands. • Legacy - The Company manages the operations of 227 legacy retail vision centers within Walmart stores. We earn management fees as a result of providing such services and therefore we record revenue related to sales of products and product protection plans to our legacy partner’s customers on a net basis. We also sell to our legacy partner wholesale merchandise that is stocked in retail locations, and provide central lab processing services for the finished eyeglasses and frames expected to be sold to our legacy partner’s customers. We lease space from our legacy partner within or adjacent to each of the locations we manage and use this space for the provision of optometric examination services. Our legacy agreements were renewed on January 13, 2017, and expire on August 23, 2020, subject to extension pursuant to the terms of the agreements. Sales of services and plans in our legacy segment consist of fees earned for managing the operations of our legacy partner and revenues associated with the provision of eye exams. Revenue associated with managing operations of our legacy partner were $9.1 million and $28.3 million for the three and nine months ended September 30, 2017 and $9.7 million and $29.9 million for the three and nine months ended October 1, 2016, respectively. The “Corporate/Other” category includes the results of operations of our other operating segments and corporate overhead support. The “Reconciliations” category represents other adjustments to reportable segment results necessary for the presentation of consolidated financial results in accordance with U.S. GAAP for the two reportable segments. Revenues from the Corporate/Other segments are attributable to the AC Lens, and FirstSight operating segments and the Company’s corporate function. AC Lens sells contact lenses and optical accessory products to retail customers through e-commerce. AC Lens also distributes contact lenses to Walmart and Sam’s Club under fee for services arrangements. FirstSight sells single service health plans in connection with the operations of America’s Best in California, arranges for the provision of eye exams at retail locations throughout California and also sells contact lenses to its members in certain locations. None of those segments met the quantitative thresholds for determining reportable segments for any of the periods presented. Our reportable segment profit measure is EBITDA, or net revenue, less cost applicable to revenue, less selling, general and administrative costs. Asset impairment, depreciation and amortization, and other corporate costs that are not allocated to the segments, including interest expense, debt issuance costs and litigation settlements, are excluded from segment EBITDA. There are no transactions between our reportable segments. There are no differences between the measurement of our reportable segments’ assets and consolidated assets. There have been no changes from prior periods in the measurement methods used to determine reportable segment profit or loss, and there have been no asymmetrical allocations to segments. The following is a summary of certain financial data for each of our segments. Reportable segment information is presented on the same basis as our condensed consolidated financial statements, except for net revenue, which is presented on a cash basis, excluding the effects of unearned and deferred revenue, consistent with the basis on which the CODM regularly reviews performance segments. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments.
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Earnings Per Share |
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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 include the dilutive impact of potential new shares issuable upon exercise of stock options and vesting of restricted stock units. Potentially dilutive securities are excluded from the computation of diluted EPS if their effect is anti-dilutive. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows:
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Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in the fair value of the Company’s cash flow hedge derivative instruments since inception are recorded in AOCL. The following table presents the change in AOCL during the three and nine months ended September 30, 2017 and October 1, 2016, respectively, net of tax:
Amounts reclassified from AOCL to earnings are included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income. See Note 3 - Fair Value Measurements of Financial Assets and Liabilities for a description of the Company’s use of cash flow hedging derivatives. |
Subsequent Events |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Initial Public Offering The Company completed the IPO of its common stock in October 2017. See Note 1 - Description of Business and Basis of Presentation for disclosures related to the IPO and other related transactions. Stock Split Effective October 24, 2017, the Company effected a 1.96627-for-one reverse stock split of the Company’s common stock. See Note 1 - Description of Business and Basis of Presentation for disclosure related to the Company’s reverse stock split. 2017 Omnibus Incentive Plan In connection with 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 2017 Omnibus Incentive Plan provides that the total number of shares of common stock that may be issued under the plan is 4,000,000. Under the plan, we may grant stock options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards and other cash-based awards to our employees, directors, officers, consultants and advisors. Additional information about the 2017 Omnibus Incentive Plan is included in the Prospectus, see “Management-Executive Compensation-Narrative to Summary Compensation Table and 2016 Grants of Plan-Based Awards-Equity Incentive Plans.” October 2017 Issuances of Restricted Stock Units and Stock Options Effective October 25, 2017, we granted stock options to purchase 92,443 shares of our common stock at $22.00 per share to an employee under the 2017 Omnibus Incentive Plan. The stock options will vest in three equal installments on the first, second and third anniversary of the grant date. Non-cash stock based compensation expense associated with the grant will be approximately $0.8 million expensed over three years. Effective October 26, 2017, we granted an aggregate of 175,273 restricted stock units to certain employees under the 2017 Omnibus Incentive Plan, with 58,909 units vesting in two equal installments on the first and second anniversary of the grant date, and 116,364 units vesting in three equal installments on the first, second and third anniversary of the grant date. Non-cash stock based compensation expense associated with the grants will be approximately $1.3 million expensed over two years and $2.6 million expensed over three years. Second Amended and Restated Certificate of Incorporation and Bylaws The Company’s Second Amended and Restated Certificate of Incorporation became effective in connection with the completion of the IPO on October 30, 2017. The Charter, among other things, provides that the Company’s authorized capital stock consists of 200,000,000 shares of Common Stock, and 50,000,000 shares of preferred stock, par value $0.01 per share. The Company’s bylaws were also amended and restated as of October 30, 2017. Revolving Credit Facility - Joinder and Amendment Agreement On October 31, 2017, the credit agreement dated as of March 13, 2014, among Nautilus Acquisition Holdings, Inc., a wholly-owned subsidiary of the Company, NVI, as borrower, Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and letter of credit issuer, and the lenders from time to time party thereto and the other parties thereto (the “Credit Agreement”), was amended pursuant to a joinder and amendment agreement to (a) increase the size of the first lien revolving credit facility thereunder from $75.0 million to $100.0 million and (b) extend the maturity of such facility to October 15, 2022 (subject to customary springing maturity provisions to the extent the existing first lien term loans are not extended). KCM, Goldman Sachs Bank USA and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint lead arrangers with respect to the joinder and amendment agreement and in aggregate received fees of $0.7 million, of which $0.3 million was received by KCM. KKR Credit, the global credit business of KKR, did not participate in the new first lien loans and currently has no interest in our outstanding loans. First Lien Credit Agreement - Joinder and Amendment Agreement On November 20, 2017, the Credit Agreement was amended pursuant to a joinder and amendment agreement to, among other things, (a) establish new first lien term loans in an aggregate principal amount of $570.0 million to refinance all of the first lien term loans outstanding immediately prior to the amendment, (b) extend the maturity of such term loans to November 20, 2024 and (c) reprice the rates applicable to such term loans by amending the definitions of ABR, Applicable Margin and LIBOR Rate (each, as defined in the Credit Agreement). Pursuant to the joinder and amendment agreement, the initial new Applicable Margins are (i) 2.75% for the new first lien term loans that are LIBOR Loans (as defined in the Credit Agreement), which is 25 basis points lower than the previous interest rate margin and (ii) 1.75% for the new first lien term loans that are ABR Loans (as defined in the Credit Agreement), which is 25 basis points lower than the previous interest rate margin. The joinder and amendment agreement further provides that the above Applicable Margins for the new term loans will be based on NVI’s public corporate credit rating from Moody’s as follows: (i) if NVI’s rating is lower than Ba3 (stable), the Applicable Margin will be 2.75% for LIBOR Loans and 1.75% for ABR Loans and (ii) if NVI’s rating is Ba3 (stable) or better, the Applicable Margin will step down to 2.50% for LIBOR Loans and 1.5% for ABR Loans, as specified in the joinder and amendment agreement. KCM, Goldman Sachs Bank USA and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint lead arrangers with respect to the joinder and amendment agreement and in aggregate received fees of $0.7 million, of which $0.3 million was received by KCM. KKR Credit, the global credit business of KKR, did not participate in the new first lien loans and currently has no interest in our outstanding loans. 1-800 Contacts Matter On November 8, 2017, the court in the 1-800 Contacts Matter entered an order preliminarily approving the settlement agreement, subject to a settlement hearing. Pursuant to this order, the Company deposited 50% of the settlement amount, or $3.5 million, into an escrow account, to be distributed subject to and in accordance the terms of the settlement agreement and any further order of the court. See Note 8 - Commitments and Contingencies for additional details. |
Description of Business and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by U.S. GAAP for complete consolidated financial statements. The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited consolidated balance sheet for the fiscal year then ended. These unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 30, 2017, the consolidated results of operations for the three and nine months ended September 30, 2017 and October 1, 2016, and consolidated cash flows for the nine months ended September 30, 2017 and October 1, 2016. Certain information and footnote disclosures normally included in our annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted; however, we believe that the disclosures included herein are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2016 included in the Company’s final prospectus dated October 25, 2017 (the “Prospectus”), as filed with the Securities and Exchange Commission (the “SEC”) on October 27, 2017 pursuant to Rule 424(b)(4) under the Securities Act Securities Act of 1933, as amended (the “Securities Act”). The significant accounting policies followed by the Company are set forth in Note 1 within those consolidated financial statements. We use the same accounting policies in preparing interim condensed consolidated financial information and annual consolidated financial statements. There were no changes in our significant accounting policies during the nine months ended September 30, 2017, except for the adoption of Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting and ASU No. 2017-04, Intangibles - Goodwill and Other, neither of which had a material effect on the Company’s consolidated financial condition, results of operations, or cash flows. The condensed consolidated financial statements include our accounts and those of our subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2017 contains 52 weeks and will end on December 30, 2017. All three and nine month periods presented herein contain 13 and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Deferred Offering Costs | Deferred Offering Costs We capitalize legal and accounting fees directly relating to the IPO. These deferred offering costs will be offset against offering proceeds during the fourth fiscal quarter of 2017. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. ASU No. 2014-09 provides new guidance related to the core principle that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. During 2016, the FASB issued additional ASUs to clarify certain aspects of ASU No. 2014-09, including ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) in March 2016, and ASU No. 2016-10, Identifying Performance Obligations and Licensing in April 2016. The guidance is effective for fiscal years beginning after December 15, 2017, and interim reporting periods within that fiscal year. The Company will adopt this new guidance in the first quarter of 2018 using the modified retrospective method. The most significant components of the new guidance to the Company relate to performance obligations surrounding our bundled product and service offerings and the reporting of revenue on a gross versus net basis with respect to our management and services agreement with Walmart, and the timing of revenue recognition associated with our discount club membership fees. We are currently finalizing our assessment, but we do not expect the adoption of this new guidance to have a significant impact on the timing or amount of revenue recognized in our consolidated financial results based on our implementation progress to-date. We do expect incremental additional disclosures in the notes to our consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases. The new guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with such classification affecting the pattern of expense recognition in the statement of operations. The guidance is effective for fiscal years beginning after December 15, 2018, and interim reporting periods within that fiscal year. A modified transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company will adopt this new guidance in the first quarter of 2019. We are evaluating the impact of implementation of this new guidance on our consolidated financial statements, but expect that adoption will have a material impact to the Company’s total assets and liabilities since we have a significant number of operating leases not currently recognized on our consolidated balance sheets. In April 2016, FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This new guidance simplifies the accounting for share-based payment transactions, including income tax consequences, classification of certain items on the statement of cash flows, forfeitures, and minimum statutory withholding requirements. This new guidance is effective for fiscal years beginning after December 15, 2016, and interim reporting periods within that fiscal year. We adopted this new guidance in the first quarter of 2017. The adoption of this new guidance did not have a material effect on the Company’s financial condition, results of operations, or cash flows. In January 2017, FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other. This new guidance removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance will be applied prospectively, and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this new guidance during the first quarter of 2017. The adoption of this new guidance did not have a material effect on the Company’s financial condition, results of operations, or cash flows. |
Details of Certain Balance Sheet Accounts (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable, Net |
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Schedule of Inventories |
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Schedule of Property and Equipment, Net |
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Schedule of Other Payables and Accrued Expenses |
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Schedule of Other Noncurrent Liabilities |
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Fair Value Measurements of Financial Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Cash Flow Hedge Derivative Contracts | Our cash flow hedge position related to interest rate derivative contracts is as follows:
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Stock Incentive Plan (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | The following presents a roll-forward of stock options, giving retroactive effect to the reverse stock split, for the nine months ended September 30, 2017:
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Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Agreements with Equity Sponsors | Under certain agreements we have entered into with our equity sponsors, we recorded the following expenses related to management and/or advisory fees:
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Data by Segment | The following is a summary of certain financial data for each of our segments. Reportable segment information is presented on the same basis as our condensed consolidated financial statements, except for net revenue, which is presented on a cash basis, excluding the effects of unearned and deferred revenue, consistent with the basis on which the CODM regularly reviews performance segments. Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments.
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Earnings Per Share (Tables) |
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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:
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Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following table presents the change in AOCL during the three and nine months ended September 30, 2017 and October 1, 2016, respectively, net of tax:
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Description of Business and Basis of Presentation - Nature of Operations (Details) |
Sep. 30, 2017
distribution_center
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store_brand
laboratory
|
Dec. 31, 2016
store
|
---|---|---|
Accounting Policies [Abstract] | ||
Number of optical laboratories | laboratory | 3 | |
Number of distribution centers | distribution_center | 2 | |
Number of retail optical locations | store | 996 | 943 |
Number of store brands | store_brand | 5 |
Description of Business and Basis of Presentation - Stock Split (Details) |
Oct. 24, 2017
$ / shares
shares
|
Oct. 30, 2017
shares
|
Sep. 30, 2017
$ / shares
shares
|
Dec. 31, 2016
$ / shares
shares
|
---|---|---|---|---|
Subsequent Event [Line Items] | ||||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | shares | 200,000,000 | 200,000,000 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Stock split conversion ratio | 1.96627 | |||
Common stock, par value (in usd per share) | $ / shares | $ 0.01 | |||
Common stock, shares authorized | shares | 200,000,000 | 200,000,000 |
Description of Business and Basis of Presentation - Deferred Offering Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Dec. 30, 2017 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Sale of Stock [Line Items] | |||
Deferred offering costs | $ 3,200 | ||
Deferred offering costs accrued | $ 2,694 | $ 0 | |
Forecast | |||
Sale of Stock [Line Items] | |||
Deferred offering costs accrued | $ 1,600 | ||
Forecast | Additional Paid-in Capital | |||
Sale of Stock [Line Items] | |||
Estimated increase to be recorded to additional paid-in-capital related to IPO | $ 371,000 |
Description of Business and Basis of Presentation - Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Accounting Policies [Abstract] | ||||
Effective income tax rate | 9.50% | 34.10% | 35.20% | 39.40% |
Income tax benefit related to recapitalization dividend | $ 1.4 | |||
Reduction of effective income tax rate related to recapitalization dividend (percent) | 5.30% | |||
Reduction of effective income tax rate related to other items (percent) | 0.50% | |||
Increase in tax expense related to change in deferred tax asset valuation allowance | $ 0.4 | |||
Increase in effective tax rate related to change in deferred tax asset valuation allowance (percent) | 1.50% |
Description of Business and Basis of Presentation - Correction of an Error (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Jul. 01, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of products | $ 115,752 | $ 99,096 | $ 349,099 | $ 299,420 | |
Net income | $ 1,546 | $ 3,026 | $ 17,120 | $ 24,467 | |
Inventory Valuation | Restatement Correction | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of products | $ 2,100 | ||||
Net income | $ (1,300) |
Description of Business and Basis of Presentation - Cost Method Investment (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Sep. 30, 2017 |
|
Accounting Policies [Abstract] | ||
Cost method investment, original cost | $ 1.0 | |
Impairment of cost method investment | $ 1.0 |
Details of Certain Balance Sheet Accounts - Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other payables and accrued expenses: | ||
Employee compensation and benefits | $ 29,238 | $ 18,984 |
Advertising | 1,588 | 1,058 |
Self-insurance reserves | 6,773 | 7,235 |
Reserves for customer returns and remakes | 7,075 | 4,611 |
Capital expenditures | 8,424 | 9,202 |
Legacy management and services agreement | 5,306 | 4,591 |
Rental expenses | 1,514 | 2,172 |
Fair value of derivative liabilities | 8,499 | 8,218 |
Professional fees | 2,938 | 1,298 |
Supplies and other store support expenses | 3,033 | 3,489 |
Litigation settlements | 7,469 | 422 |
Other | 8,889 | 8,122 |
Total other payables and accrued expenses | 90,746 | 69,402 |
Other non-current liabilities: | ||
Fair value of derivative liabilities | 13,061 | 15,518 |
Tenant improvements | 22,831 | 21,089 |
Deferred rental expenses | 7,169 | 6,256 |
Self-insurance reserves | 4,147 | 3,908 |
Above market leases | 952 | 1,705 |
Other | 1,554 | 2,021 |
Total other non-current liabilities | $ 49,714 | $ 50,497 |
Fair Value Measurements of Financial Assets and Liabilities - Narrative (Details) - Level 2 - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Term Loan | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | $ 928.8 | $ 753.0 |
Term Loan | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | 913.5 | 742.9 |
Capital Lease Obligations | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | 10.6 | 2.9 |
Capital Lease Obligations | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instruments | $ 8.9 | $ 2.7 |
Fair Value Measurements of Financial Assets and Liabilities - Cash Flow Hedge Derivative Contracts (Details) |
Sep. 30, 2017
USD ($)
agreement
|
Dec. 31, 2016
USD ($)
|
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities, current | $ 8,499,000 | $ 8,218,000 |
Fair value of derivative liabilities, noncurrent | 13,061,000 | 15,518,000 |
Estimated reclassification from AOCL to earnings in next 12 months | $ 8,500,000 | |
Interest Rate Swap | Cash Flow Hedges | ||
Derivatives, Fair Value [Line Items] | ||
Number of interest rate swap agreements | agreement | 3 | |
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedges | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount | $ 500,000,000 | 500,000,000 |
Fair value of derivative liabilities, current | 8,499,000 | 8,218,000 |
Fair value of derivative liabilities, noncurrent | 13,061,000 | 15,518,000 |
Hedge position in AOCL, net of tax | $ 13,223,000 | $ 14,556,000 |
Related Party Transactions - Expenses Related to Management and Advisory Fees (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Related Party Transaction [Line Items] | ||||
Debt issuance costs | $ 2,702 | |||
KKR | ||||
Related Party Transaction [Line Items] | ||||
Expenses related to management and/or advisory fees | $ 220 | $ 213 | 2,993 | $ 638 |
Debt issuance costs | 2,300 | |||
Berkshire | ||||
Related Party Transaction [Line Items] | ||||
Expenses related to management and/or advisory fees | $ 52 | $ 50 | $ 156 | $ 149 |
Related Party Transactions - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
9 Months Ended | ||
---|---|---|---|
Feb. 02, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||
Dividends paid per share of common stock (in usd per share) | $ 1.51 | ||
Common stock, shares, outstanding | 110,500 | 56,477 | 56,202 |
Tax benefit from cash distribution to vested option holders | $ 1.4 | ||
Reduction in additional paid-in capital related to dividends in excess of retained earnings | $ 171.0 | ||
Stock Options | |||
Related Party Transaction [Line Items] | |||
Cash distribution per share to vested option holders (in usd per share) | $ 1.51 | ||
Cash distribution to vested option holders | $ 3.7 | ||
Reduction in exercise price for unvested options (in usd per share) | $ 1.51 |
Equity Method Investment - Narrative (Details) - USD ($) $ in Millions |
Aug. 29, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||
Equity method investment | $ 2.6 | $ 3.3 | |
Equity Method Investee | |||
Schedule of Equity Method Investments [Line Items] | |||
Secured convertible promissory note receivable | $ 1.5 | ||
Fixed interest rate on note receivable (percent) | 5.00% | ||
Equity Method Investee | Base Rate | |||
Schedule of Equity Method Investments [Line Items] | |||
Variable interest rate on note receivable (percent) | 0.25% |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
May 31, 2017 |
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Loss Contingencies [Line Items] | |||||
Litigation settlement | $ 0 | $ 0 | $ 7,000 | $ 0 | |
1-800 Contacts Matter | |||||
Loss Contingencies [Line Items] | |||||
Amount of litigation settlement | $ 7,000 | ||||
Litigation settlement | $ 7,000 |
Segment Reporting - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
store
|
Oct. 01, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
store
segment
|
Oct. 01, 2016
USD ($)
|
Dec. 31, 2016
store
|
|
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Number of retail vision centers | 996 | 996 | 943 | ||
Legacy | |||||
Segment Reporting Information [Line Items] | |||||
Number of retail vision centers | 227 | 227 | |||
Revenue associated with managing operations of partner | $ | $ 9.1 | $ 9.7 | $ 28.3 | $ 29.9 |
Segment Reporting - Financial Data by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Segment product revenues | $ 283,648 | $ 246,638 | $ 867,192 | $ 756,787 |
Segment services and plans revenues | 62,441 | 54,578 | 186,297 | 162,294 |
Total net revenue | 346,089 | 301,216 | 1,053,489 | 919,081 |
Cost of products | 115,752 | 99,096 | 349,099 | 299,420 |
Cost of services and plans | 46,606 | 39,568 | 135,474 | 115,033 |
Total costs applicable to revenue | 162,358 | 138,664 | 484,573 | 414,453 |
SG&A | 151,251 | 134,457 | 445,714 | 395,385 |
Asset impairment | 0 | 0 | 1,000 | 52 |
Debt issuance costs | 2,702 | |||
Litigation settlement | 0 | 0 | 7,000 | 0 |
Other expense, net | 568 | 563 | 744 | 1,217 |
EBITDA | 31,912 | 27,532 | 111,756 | 107,974 |
Depreciation and amortization | 15,352 | 13,217 | 44,404 | 38,237 |
Interest expense, net | 14,851 | 9,728 | 40,965 | 29,377 |
Earnings before income taxes | 1,709 | 4,587 | 26,387 | 40,360 |
Operating Segments | Owned & Host | ||||
Segment Reporting Information [Line Items] | ||||
Segment product revenues | 211,035 | 184,292 | 649,526 | 560,794 |
Segment services and plans revenues | 48,119 | 40,331 | 146,415 | 122,455 |
Total net revenue | 259,154 | 224,623 | 795,941 | 683,249 |
Cost of products | 63,159 | 54,157 | 190,604 | 163,059 |
Cost of services and plans | 39,395 | 32,816 | 113,902 | 94,831 |
Total costs applicable to revenue | 102,554 | 86,973 | 304,506 | 257,890 |
SG&A | 103,851 | 91,000 | 304,168 | 260,537 |
Asset impairment | 0 | 0 | ||
Debt issuance costs | 0 | |||
Litigation settlement | 0 | |||
Other expense, net | 0 | 0 | 0 | 0 |
EBITDA | 52,749 | 46,650 | 187,267 | 164,822 |
Operating Segments | Legacy | ||||
Segment Reporting Information [Line Items] | ||||
Segment product revenues | 24,503 | 25,134 | 78,828 | 79,099 |
Segment services and plans revenues | 12,864 | 12,220 | 37,840 | 37,749 |
Total net revenue | 37,367 | 37,354 | 116,668 | 116,848 |
Cost of products | 11,427 | 11,749 | 37,138 | 37,118 |
Cost of services and plans | 4,579 | 2,933 | 11,909 | 8,723 |
Total costs applicable to revenue | 16,006 | 14,682 | 49,047 | 45,841 |
SG&A | 12,904 | 12,984 | 39,087 | 39,783 |
Asset impairment | 0 | 0 | ||
Debt issuance costs | 0 | |||
Litigation settlement | 0 | |||
Other expense, net | 0 | 0 | 0 | 0 |
EBITDA | 8,457 | 9,688 | 28,534 | 31,224 |
Operating Segments | Corporate/Other | ||||
Segment Reporting Information [Line Items] | ||||
Segment product revenues | 46,421 | 37,977 | 134,371 | 113,639 |
Segment services and plans revenues | 3,110 | 4,408 | 11,274 | 13,483 |
Total net revenue | 49,531 | 42,385 | 145,645 | 127,122 |
Cost of products | 40,699 | 33,240 | 120,116 | 98,309 |
Cost of services and plans | 2,632 | 3,819 | 9,663 | 11,479 |
Total costs applicable to revenue | 43,331 | 37,059 | 129,779 | 109,788 |
SG&A | 34,496 | 30,473 | 102,459 | 95,065 |
Asset impairment | 1,000 | 52 | ||
Debt issuance costs | 2,702 | |||
Litigation settlement | 7,000 | |||
Other expense, net | 568 | 563 | 744 | 1,217 |
EBITDA | (28,864) | (25,710) | (98,039) | (79,000) |
Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Segment product revenues | 1,689 | (765) | 4,467 | 3,255 |
Segment services and plans revenues | (1,652) | (2,381) | (9,232) | (11,393) |
Total net revenue | 37 | (3,146) | (4,765) | (8,138) |
Cost of products | 467 | (50) | 1,241 | 934 |
Cost of services and plans | 0 | 0 | 0 | |
Total costs applicable to revenue | 467 | (50) | 1,241 | 934 |
SG&A | 0 | 0 | 0 | 0 |
Asset impairment | 0 | 0 | ||
Debt issuance costs | 0 | |||
Litigation settlement | 0 | |||
Other expense, net | 0 | 0 | 0 | 0 |
EBITDA | $ (430) | $ (3,096) | $ (6,006) | $ (9,072) |
Earnings Per Share - Reconciliation of Basic and Diluted EPS Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 1,546 | $ 3,026 | $ 17,120 | $ 24,467 |
Weighted average shares outstanding for basic EPS | 56,414 | 56,211 | 56,363 | 56,176 |
Effect of dilutive securities: | ||||
Stock options | 2,045 | 959 | 1,918 | 638 |
Weighted average shares outstanding for diluted EPS | 58,459 | 57,170 | 58,281 | 56,814 |
Basic EPS (in usd per share) | $ 0.03 | $ 0.05 | $ 0.30 | $ 0.44 |
Diluted EPS (in usd per share) | $ 0.03 | $ 0.05 | $ 0.29 | $ 0.43 |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive options outstanding excluded from EPS | 0 | 0 | 339 | 92 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Oct. 01, 2016 |
Sep. 30, 2017 |
Oct. 01, 2016 |
|
Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 401,887 | |||
Ending balance | $ 254,588 | 254,588 | ||
Cash Flow Hedges | ||||
Accumulated Other Comprehensive Loss, Net of Tax [Roll Forward] | ||||
Beginning balance | (14,605) | $ (18,909) | (14,556) | $ (11,284) |
Other comprehensive loss before reclassification | (228) | (401) | (2,424) | (8,026) |
Amount reclassified from AOCL | 1,610 | 0 | 3,757 | 0 |
Net current period other comprehensive income (loss), net of tax | 1,382 | (401) | 1,333 | (8,026) |
Ending balance | $ (13,223) | $ (19,310) | $ (13,223) | $ (19,310) |
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