Revenue from Contracts with Customers

9 Months Ended

Sep. 26, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The Company’s revenues are recognized either at the point of sale or upon delivery and customer acceptance, paid for at the time of sale in cash, credit card, or on account with managed care payors having terms generally between 14 and 120 days, with most paying within 90 days. Our point in time revenues include 1) retail sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers (including those covered by managed care), 2) eye exams and 3) wholesale sales of inventory in which our customer is another retail entity. Revenues recognized over time primarily include product protection plans, eye care club memberships and management fees earned from our legacy partner.

The following disaggregation of revenues is based on the timing of revenue recognition:

	Three Months Ended				Nine Months Ended
In thousands	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Revenues recognized at a point in time	$	447,403	$	394,709	$	1,111,118	$	1,211,942
Revenues recognized over time	37,950		37,193		103,946		110,626
Total net revenue	$	485,353	$	431,902	$	1,215,064	$	1,322,568

Refer to Note 11. “Segment Reporting” for the Company’s disaggregation of net revenue by reportable segment. As the reportable segments are aligned by similar economic factors, trends and customers, the reportable segment disaggregation view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors.

Contract Assets and Liabilities

The Company’s contract assets and contract liabilities primarily result from timing differences between the performance of our obligations and the customer’s payment.

Accounts Receivable

Accounts receivable associated with revenues consist primarily of trade receivables and credit card receivables. Trade receivables consist primarily of receivables from managed care payors and receivables from major retailers. While we have relationships with almost all vision care insurers in the United States and with all of the major carriers, currently, a relatively small number of payors comprise the majority of our managed care revenues, subjecting us to concentration risk. Accounts receivable are reduced by allowances for credit losses. Estimates of our allowance for credit losses are based on our historical and current operating, billing, and collection trends, as well as current conditions and reasonable and supportable forecasts about the future. Accounts receivable are written off after all collection attempts have been exhausted. Credit loss expense recognized on our receivables, which is presented in SG&A expenses in the Company’s condensed consolidated statements of operations, were approximately $0.1 million for the three months ended September 26, 2020 and $0.5 million for the nine months ended September 26, 2020 as compared to $2.4 million and $6.3 million for the three and nine months ended September 28, 2019, respectively.

The following table summarizes the activity of allowance for expected credit losses for the nine months ended September 26, 2020.

In thousands	Nine Months Ended September 26, 2020
Beginning balance as of December 28, 2019	$	(3,040)
Current-period provision for expected credit losses	(482)
Write-offs charged against the allowance	775
Other adjustments (1)	2,207
Ending balance as of September 26, 2020	$	(540)
(1) As part of our adoption of ASU 2016-13, we adjusted the allowance for certain amounts recognized in prior periods that no longer represented an allowance for credit losses. The adjustment was immaterial to the financial results of current and prior periods. See Note 2. “Details of Certain Balance Sheet Accounts” for further details.

Unsatisfied Performance Obligations (Contract Liabilities)

Our retail customers generally make payments for prescription eyewear products at the time they place an order. Amounts we collect in advance for undelivered merchandise are reported as unearned revenue in the accompanying condensed consolidated balance sheets. Unearned revenue at the end of a reporting period is estimated based on delivery times throughout the current month which generally range from approximately seven to 10 days; all unearned revenue at the end of a reporting period is recognized in the next fiscal period.

Our contract liabilities also consist of deferred revenue on services and plans obligations, primarily product protection plans and eyecare club memberships. The unamortized portion of amounts we collect in advance for these services and plans is reported as deferred revenue in the accompanying condensed consolidated balance sheets (current and non-current portions). Our deferred revenue balance as of September 26, 2020 was $77.6 million. We expect future revenue recognition of this balance of $20.4 million, $41.6 million, $12.5 million, $3.0 million, and $0.1 million in fiscal years 2020, 2021, 2022, 2023, and 2024, respectively. We recognized $27.9 million and $80.0 million of previously deferred revenues during the three and nine months ended September 26, 2020, respectively, and $27.9 million and $83.2 million during the three and nine months ended September 28, 2019, respectively.