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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2023-03-01 compared with 2022-02-28 · 221 added, 290 removed, 1142 unchanged (31% of the section changed)

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A discussion of our accounting policies for derivative financial instruments is included in Note 1.

“Fair Value Measurement” and Note 12.

“Interest Rate Derivatives” to our consolidated financial statements included in Part II.

“Business and Significant Accounting Policies” and Note 9.

“Fair Value Measurement” to our consolidated financial statements included in Part II.

Item 8 of this Form 10-K.

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Our interest rate collar is intended to mitigate some of the effects of increases in interest rates.

As of fiscal year 2021, $150.0 million of term loan borrowings were subject to variable interest rates, with a weighted average borrowing rate of 2.5%.

An increase to market rates of 1.0% as of January 1, 2022 would not result in a material increase to interest expense.

Refer to Note 1.

“Business and Significant Accounting Policies” to our consolidated financial statements included in Part II.

Item 8 of this Form 10-K for more information on the cessation of LIBOR.

As of December 31, 2022, $150.0 million of term loan borrowings were subject to variable interest rates, with a weighted average borrowing rate of 3.1%.

An increase to market rates of 1.0% as of December 31, 2022 would not result in a material increase to interest expense.

Assuming a decrease to market rates of 1.0%, the resulting impact to interest expense related to the interest rate derivative would be approximately $4 million.

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Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of January 1 , 202 2 and January 2, 2021

Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended January 1, 2022 , January 2, 2021 and December 28, 2019

Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended January 1, 2022 , January 2, 2021 and December 28, 2019

Consolidated Statements of Cash Flows for the Fiscal Years Ended January 1, 2022 , January 2, 2021 and December 28, 2019

Consolidated Balance Sheets as of December 31, 2022 and January 1, 2022

Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended December 31, 2022 , January 1, 2022 and January 2, 2021

Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended December 31, 2022 , January 1, 2022 and January 2, 2021

Consolidated Statements of Cash Flows for the Fiscal Years Ended December 31, 2022 , January 1, 2022 and January 2, 2021

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of National Vision Holdings, Inc.

and subsidiaries (the “Company”) as of January 1, 2022 and January 2, 2021, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended January 1, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

and subsidiaries (the "Company") as of December 31, 2022 and January 1, 2022, the related consolidated statements of operations and comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for debt with conversion options for the year ended January 1, 2022 due to the adoption of Accounting Standards Update No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—

Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity.

Basis for Opinion

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Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both.

The goodwill balance was $777.6 million as of January 1, 2022, of which $60.1 million was allocated to the Legacy Segment Reporting Unit.

The goodwill balance was $777.6 million as of December 31, 2022, of which $60.1 million was allocated to the Legacy Segment Reporting Unit.

The fair value of the Legacy Segment Reporting Unit exceeded its

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Our audit procedures related to the discount rate used by management to estimate the fair value of the Legacy Segment Reporting Unit included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value and related to management’s selection of the discount rate.

• We tested the design, implementation, and operating effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value and related to management’s selection of the discount rate.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) the selected discount rate by:

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Consolidated Balance Sheets

As of January 1, 2022 and January 2, 2021

In Thousands, Except Par Value

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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Total current assets 473,836 514,576

Noncurrent assets

Property and equipment, net 359,775 346,436

Other assets:

Goodwill 777,613 777,613

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Other assets 21,981 16,999

Total non-current assets 1,778,515 1,766,848

Total noncurrent assets 1,817,410 1,778,515

Total assets $ 2,291,246 $ 2,293,091

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Total current liabilities 344,264 343,803

Noncurrent liabilities:

Long-term debt and finance lease obligations, less current portion and debt discount 563,388 566,081

Non-current operating lease obligations 342,241 327,371

Other non-current liabilities:

Noncurrent operating lease obligations 358,110 342,241

Deferred revenue 21,601 23,166

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Deferred income taxes, net 93,870 82,846

Total other non-current liabilities 114,986 119,182

Total noncurrent liabilities 1,045,869 1,023,308

Commitments and contingencies (See Note 11)

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200,000 shares authorized;

83,840 and 82,183 shares issued as of January 1, 2022 and January 2, 2021, respectively;

81,405 and 81,239 shares outstanding as of January 1, 2022 and January 2, 2021, respectively

84,273 and 83,840 shares issued as of December 31, 2022 and January 1, 2022, respectively;

78,992 and 81,405 shares outstanding as of December 31, 2022 and January 1, 2022, respectively

Additional paid-in capital 767,112 750,478

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Treasury stock, at cost;

2,435 and 944 shares as of January 1, 2022 and January 2, 2021, respectively

5,281 and 2,435 shares as of December 31, 2022 and January 1, 2022, respectively

( 186,179 ) ( 101,791 )

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Total liabilities and stockholders’ equity $ 2,291,246 $ 2,293,091

Fiscal year 2021 includes 52 weeks.

Fiscal year 2020 includes 53 weeks.

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statements of Operations and Comprehensive Income

For the Years Ended January 1, 2022, January 2, 2021 and December 28, 2019

In Thousands, Except Earnings Per Share

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Asset impairment 5,783 4,427 22,004

Other expense (income), net ( 2,505 ) ( 445 ) 3,611

Other income, net ( 2,552 ) ( 2,505 ) ( 445 )

Total operating expenses 1,018,542 999,809 838,129

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Interest expense, net 462 25,612 48,327

Loss on extinguishment of debt — — 9,786

Earnings before income taxes 60,813 149,325 38,680

Income tax provision (benefit) 21,081 2,403 ( 2,309 )

Income tax provision 18,691 21,081 2,403

Net income $ 42,122 $ 128,244 $ 36,277

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Consolidated Statements of Stockholders’ Equity

For the Years Ended January 1, 2022, January 2, 2021 and December 28, 2019

Common Stock Additional

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Purchase of treasury stock ( 19 ) — — — — ( 689 ) ( 689 )

Conversion option related to convertible senior notes, net of allocated costs and tax — — 71,385 — — — 71,385

Unrealized gain (loss) on hedge instruments, net of tax — — — ( 586 ) — — ( 586 )

Net income — — — — 36,277 — 36,277

Balances at December 28, 2019 79,678 805 700,121 ( 3,814 ) 107,132 ( 27,807 ) 776,437

Balances at January 2, 2021 81,239 821 795,697 ( 4,400 ) 142,880 ( 28,496 ) 906,502

Cumulative effect of change in accounting principle — — ( 71,385 ) — 7,271 — ( 64,114 )

Balances at December 29, 2019 - as adjusted 79,678 805 700,121 ( 3,814 ) 106,603 ( 27,807 ) 775,908

Balances at January 3, 2021 - as adjusted 81,239 821 724,312 ( 4,400 ) 150,151 ( 28,496 ) 842,388

Issuance of common stock 1,657 17 11,465 — — — 11,482

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Purchase of treasury stock ( 1,491 ) — — — — ( 73,295 ) ( 73,295 )

Conversion option related to convertible senior notes, net of allocated costs and tax — — 71,385 — — — 71,385

Unrealized gain (loss) on hedge instruments, net of tax — — — 2,460 — — 2,460

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Balances at January 1, 2022 81,405 838 750,478 ( 1,940 ) 278,395 ( 101,791 ) 925,980

Cumulative effect of change in accounting principle — — ( 71,385 ) — 7,271 — ( 64,114 )

Balances at January 3, 2021 - as adjusted 81,239 821 724,312 ( 4,400 ) 150,151 ( 28,496 ) 842,388

Issuance of common stock 433 4 3,282 — — — 3,286

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Purchase of treasury stock ( 2,846 ) — — — — ( 84,388 ) ( 84,388 )

Settlement of 2025 Notes — — ( 1 ) — — — ( 1 )

Unrealized gain (loss) on hedge instruments, net of tax — — — 761 — — 761

Net income — — — — 42,122 — 42,122

Balances at January 1, 2022 81,405 $ 838 $ 750,478 $ ( 1,940 ) $ 278,395 $ ( 101,791 ) $ 925,980

Balances at December 31, 2022 78,992 $ 842 $ 767,112 $ ( 1,179 ) $ 320,517 $ ( 186,179 ) $ 901,113

Fiscal years 2022 and 2021 include 52 weeks.

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Consolidated Statements of Cash Flows

For the Years Ended January 1, 2022, January 2, 2021 and December 28, 2019

Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020

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Inventory adjustments 2,371 2,481 4,852

Loss on extinguishment of debt — — 9,786

Other 2,122 94 5,092

Changes in operating assets and liabilities:

Accounts receivable, net 1,182 ( 13,697 ) ( 6,925 )

Accounts receivable ( 24,816 ) 1,182 ( 13,697 )

Inventories ( 1,860 ) ( 14,876 ) 11,430

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Cash, cash equivalents and restricted cash, end of year $ 230,624 $ 306,876 $ 375,159

Supplemental cash flow information:

Supplemental cash flow disclosure information:

Cash paid for interest $ 16,940 $ 24,897 $ 30,786

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and Subsidiaries

Index to Notes to Condensed Consolidated Financial Statements

Business and Significant Accounting Policies

Details of Certain Balance Sheet Accounts

Goodwill and Intangible Assets

Long-term Debt

Stock Incentive Plans

Revenue From Contracts With Customers

Fair Value Measurement

Deferred Revenue

Commitments and Contingencies

Interest Rate Derivatives

Earnings Per Share

Segment Reporting

Accumulated Other Comprehensive Loss

National Vision Holdings, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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We are a leading value retailer of eyeglasses and contact lenses in the United States.

We operated 1,278 and 1,205 retail optical locations in the United States and its territories as of the fiscal years ended January 1, 2022 and January 2, 2021, respectively, through our five store brands, including America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on select U.S.

We operated 1,354 and 1,278 retail optical locations in the United States and its territories as of the fiscal years ended December 31, 2022 and January 1, 2022, respectively, through our five store brands, including America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on select U.S.

Army/Air Force military bases (“Military”) and within select Fred Meyer stores, and our management & services arrangement with Walmart (“Legacy”).

We sell contact lenses and optical accessory products to retail customers through proprietary retail web sites and web sites on behalf of certain independent retailers and insurance companies.

We sell eyeglasses, contact lenses and optical accessory products to retail customers through proprietary retail web sites and web sites on behalf of certain independent retailers and insurance companies.

We also distribute contact lenses to Walmart and Sam’s Club store locations.

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in a 53-week fiscal year, each of the first, second and third quarters include 13 weeks of operations and the fourth quarter includes 14 weeks of operations.

References herein to “fiscal year 2021,” and “fiscal year 2019,” relate to the 52 weeks ended January 1, 2022 and December 28, 2019, respectively, and references to “fiscal year 2020,” relate to the 53 weeks ended January 2, 2021.

References herein to “fiscal year 2022” and “fiscal year 2021,” relate to the 52 weeks ended December 31, 2022 and January 1, 2022, respectively, and references to “fiscal year 2020,” relate to the 53 weeks ended January 2, 2021.

Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years.

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All intercompany balances and transactions have been eliminated in consolidation.

Certain fiscal year 2020 and fiscal year 2019 amounts within the Consolidated Statements of Cash Flows, Consolidated Statements of Operations and footnotes to the financial statements have been reclassified to conform to the fiscal year 2021 presentation.

The Company has consolidated certain entities meeting the definition of a variable interest entity (“VIE”) as the Company concluded that it is the primary beneficiary of the entities under the provisions of Accounting Standards Codification 810, Consolidation.

At January 1, 2022, the variable interest entities include 30 professional corporations.

The total assets of the consolidated VIEs included in the accompanying Consolidated Balance Sheets as of year-end 2021 and 2020, were $ 6.0 million and $ 5.9 million, respectively, and the total liabilities of the consolidated VIEs were $ 6.8 million and $ 11.4 million, respectively.

At December 31, 2022, the variable interest entities include 31 professional corporations.

The total assets of the consolidated VIEs included in the accompanying Consolidated Balance Sheets as of December 31, 2022 and January 1, 2022, were $ 7.9 million and $ 6.0 million, respectively, and the total liabilities of the consolidated VIEs were $ 8.3 million and $ 6.8 million, respectively.

Use of Estimates

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Actual results could differ from those estimates.

Secondary Public Offerings and Share Repurchases

On August 7, 2019, the Company entered into an Underwriting Agreement by and among the Company, KKR Vision Aggregator L.P.

(the “Selling Stockholder”), and Goldman Sachs & Co.

LLC, as underwriter (the “Underwriter”), relating to an underwritten offering of 9,149,908 shares of the Company’s common stock, par value $ 0.01 per share.

The offering was completed on August 12, 2019.

In connection with the offering, our Board of Directors authorized, and the Company completed, a repurchase of 819,134 shares out of the 9,149,908 shares of common stock subject to the offering from the Underwriter at $ 30.52 per share, which was the price the Underwriter purchased the shares from the Selling Stockholder in the offering.

The Company did not receive any proceeds from the offering.

As a result of this underwritten offering and concurrent share repurchase, the Selling Stockholder no longer owned any shares of our common stock.

The secondary offering constituted a vesting event whereby a final portion of the performance-based options vested and the remaining portion of unvested performance options awarded under the 2014 Stock Incentive Plan was forfeited.

As a result of the offering, we incurred $ 4.2 million of non-cash stock-based compensation expense and additionally recorded $ 2.8 million in long-term cash incentive compensation expense and $ 0.4 million in offering related SG&A expenses for fiscal year 2019.

Share Repurchases

Effective November 8, 2021, the Company's Board of Directors authorized the Company to repurchase up to $ 50 million aggregate amount of shares of the Company's common stock.

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On February 23, 2022, our Board of Directors authorized a $ 100 million increase to the share repurchase authorization, for a total authorization of $ 200 million.

Repurchases may be made from time to time in the Company’s discretion through one or more open market or privately negotiated transactions, and pursuant to pre-set trading plans meeting the requirements of all applicable securities laws and regulations.

Repurchases may be made from time to time in the Company’s discretion through one or more open market or privately negotiated transactions, and pursuant to pre-set trading plans meeting

the requirements of all applicable securities laws and regulations.

Shares may be repurchased under the program through December 30, 2023.

The timing and amounts of any such repurchases will depend on a variety of factors, including the market price of the Company’s shares and general market and economic conditions.

The Company expects to fund the share repurchases using cash on hand.

During fiscal year 2021, the Company repurchased 1.4 million shares of its common stock for $ 69.9 million under the share repurchase program.

After these repurchases, $ 130 million remains available under the share repurchase authorization.

The timing and amounts of any such repurchases will depend on a variety of factors, including the market price of the Company’s shares, general market and economic conditions, legal requirements and tax implications.

During fiscal years 2022 and 2021, the Company repurchased 2.7 million shares of its common stock for $ 80.0 million, and 1.4 million shares of its common stock for $ 69.9 million, respectively, under the share repurchase program.

After these repurchases, approximately $ 50 million remains available under the share repurchase authorization.

The Company expects to fund any future share repurchases using existing cash balances.

Repurchased shares are reflected in Treasury stock on the Consolidated Balance Sheets.

Related Party Transactions

During fiscal year 2019, KKR Capital Markets LLC acted as a lead arranger with respect to debt issuance and refinancing transactions, and received $ 1.0 million in fees, in connection therewith.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, accelerates a company’s ability to recover Alternative Minimum Tax (“AMT”) refundable credits that otherwise could have been claimed in 2020 and 2021, to 2018 and 2019, with an option to elect recovery of the full credit amount for 2018.

The Company has elected to apply the AMT refundable credit provision of the CARES Act and has reclassified $ 1.3 million of AMT credits from Deferred income taxes, net as of December 28, 2019 to Prepaid expenses and other assets as of January 2, 2021.

The CARES Act also includes a technical correction wherein qualified improvement property placed in service in 2018 and after is eligible for 100% bonus depreciation.

This provision of the CARES Act resulted in an increase in our NOL carry-forwards with an offsetting increase in our gross deferred tax liability relating to property and equipment of approximately $ 25.0 million ($ 6.4 million tax impact) as of January 2, 2021.

In addition, as a result of the employee retention credits made available under the CARES Act for U.S.

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The Company recognizes government grants for which there is a reasonable assurance of compliance with grant conditions and receipt of credits.

We elected to offset credits recognized under the CARES against payroll taxes that would otherwise be payable.

Amounts receivable under the CARES Act were $ 9.0 million as of December 31, 2022 and $ 0.0 million as of January 1, 2022.

We elected to offset credits recognized under the CARES Act against payroll taxes that would otherwise be payable as of January 1, 2022.

In addition to the CARES Act, the Consolidated Appropriations Act, 2021, H.R.

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we evaluate these assets annually for impairment, or more frequently if events and circumstances indicate that it is more likely than not that goodwill is impaired.

Our annual testing date for impairment of goodwill and indefinite-lived intangible assets is the first day of the fourth fiscal quarter, which for fiscal years 2021 and 2020 was October 3, 2021, and September 27, 2020, respectively.

Our annual testing date for impairment of goodwill and indefinite-lived intangible assets is the first day of the fourth fiscal quarter, which for fiscal years 2022 and 2021 was October 2, 2022, and October 3, 2021, respectively.

Costs to renew intangible assets are expensed as incurred.

Finite-lived, amortizing intangible assets primarily consist of our contracts and relationships with certain retailers and our customer database tool.

We amortize finite-lived intangible assets on a straight-line basis over their estimated useful lives, ranging from four to 23 years.

We amortize finite-lived intangible assets on a straight-line basis over their estimated useful lives, ranging from three to 23 years.

Amortization expense associated with finite-lived intangible assets is included in Depreciation and amortization in the accompanying Consolidated Statements of Operations.

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If the projected net undiscounted cash flows are less than the carrying value of the related assets, we then measure impairment based on a discounted cash flow model and record an impairment charge as the excess of carrying value over estimated fair value.

We use the relief-from-royalty method to estimate fair value of our trademarks and tradenames, which involves estimating a royalty rate based on comparable licensing arrangements, applying that rate to the revenue projections for the subject asset, and then estimating fair value using a discounted cash flow analysis.

We use the relief-from-royalty method to estimate fair value of our trademarks and trade names, which involves estimating a royalty rate based on comparable licensing arrangements, applying that rate to the revenue projections for the subject asset, and then estimating fair value using a discounted cash flow analysis.

We record an impairment charge as the excess of carrying value over estimated fair value.

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During fiscal year 2021, the Company’s equity method investee was acquired by a third party and in connection therewith the Company sold all of its ownership interests and received $ 2.4 million upon the consummation of the sale.

These proceeds were included in Other in the investing section of the Consolidated Statements of Cash Flows for fiscal year 2021.

As a result of this transaction, and as the carrying value of the investment was zero , the Company recorded a gain on sale of equity method investment of $ 2.4 million in Other expense (income), net on the Consolidated Statements of Operations for fiscal year 2021.

In connection with the transaction, the Company is a party to an earnout agreement whereby we may be entitled to variable earnout payments based upon the achievement by the investee of certain performance metrics over a one year period.

The Company will recognize income for payments received under the earnout once they are realized or realizable.

The Company subsequently received $ 2.7 million in fiscal year 2022 related to an earnout associated with the sale.

These proceeds were included in Other in the investing section of the Consolidated Statements of Cash Flows.

As a result of this transaction, and as the carrying value of the investment was zero , the Company recorded a gain on sale of equity method investment in Other income, net on the Consolidated Statement of Operations of $ 2.7 million in fiscal year 2022 and $ 2.4 million in fiscal year 2021.

Fair Value Measurement of Assets and Liabilities

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The carrying value of the Company’s cash equivalents and restricted cash, accounts receivables, accounts payable and other payables and accrued expenses, approximate fair value due to their short-term nature.

Non-financial assets such as P&E, ROU assets and intangible assets are subject to nonrecurring fair value measurements if impairment indicators are present.

Non-financial assets such as P&E, right of use (“ROU”) assets and intangible assets are subject to nonrecurring fair value measurements if impairment indicators are present.

Factors we consider important that could trigger an impairment review include a significant under-performance compared to expected operating results, a significant or adverse change in customer business climate, and a significant negative industry or economic trend.

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In thousands Balance Sheet Classification As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

Current portion Prepaid Expenses and Other Current Assets $ 1,047 $ 964

Non-current portion Other Assets 1,956 2,313

Noncurrent portion Other Assets 2,125 1,956

Total estimated recoveries from reinsurance $ 3,172 $ 2,920

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We do not hold or enter into financial instruments for trading or speculative purposes.

The gain or loss res ulting from fair value adjustments for highly effective cash flow hedges is recorded in Accumulated other comprehensive loss (“AOCL”) in the accompanying Consolidated Balance Sheets until the hedged item is recognized as interest expense in the Consolidated Statements of Operations.

The gain or loss resulting from fair value adjustments of derivatives not deemed to be highly effective cash flow hedges is recognized in interest expense immediately.

We perform periodic assessments of the effectiveness of our derivative contracts designated as hedges.

The gain or loss res ulting from fair value adjustments for highly effective cash flow hedges is recorded in Accumulated other comprehensive loss (“AOCL”) in the accompanying Consolidated Balance Sheets until the hedged item is recognized as Interest expense, net in the Consolidated Statements of Operations.

The gain or loss resulting from fair value adjustments of derivatives not deemed to be highly effective cash flow hedges is recognized in Interest expense, net immediately.

We perform periodic assessments of the effectiveness of our derivative contracts designated as hedges, if applicable.

To manage credit risk associated with our interest rate hedging program, we select as counterparties major financial institutions with investment grade credit ratings.

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all unearned revenue at the end of a reporting period is recognized in the next fiscal period.

Revenue is recognized net of sales taxes and returns and include amounts billed to customers related to shipping and handling costs.

Revenue is recognized net of sales taxes and returns and includes amounts billed to customers related to shipping and handling costs.

The returns allowance is based on historical return patterns.

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The Company considers its revenue from managed care customers to include variable consideration and estimates such amounts associated with managed care customer revenues using the history of concessions provided and cash receipts from managed care providers.

We reduced our net revenue for variable considerations of $ 10.2 million and $ 7.5 million during the fiscal years 2021 and 2020, respectively.

We reduced our net revenue for variable considerations of $ 14.8 million, $ 10.2 million and $ 7.5 million during the fiscal years 2022, 2021 and 2020, respectively.

Refer to Note 7.

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As a component of the Company’s procurement program, the Company frequently enters into contracts with its vendors that provide for payments of rebates or other allowances.

These vendor payments are reflected when earned or as progress is made toward earning the rebate or allowance and, depending on the terms of the agreement with the vendor, are treated either as a reduction of the carrying value of the inventory and a resultant reduction of cost of products.

These vendor payments are reflected when earned or as progress is made toward earning the rebate or allowance and, depending on the terms of the agreement with the vendor, are treated as a reduction of the carrying value of the inventory and a resultant reduction of cost of products.

Rebates that have been earned but not yet received are recognized as an increase to Accounts receivable, net or a reduction to Accounts payable, depending on the nature of the agreement with the vendor, until the payment has been received.

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Non-capital expenditures associated with opening new stores, including rent, marketing expenses, travel and relocation costs, and training costs, are recorded in SG&A as incurred.

Certain vendor contracts provide for marketing co-op allowances, such allowances are reflected when earned or as progress is made toward earning the allowance and are treated as a reduction of SG&A.

Certain vendor contracts provide for marketing co-op allowances;

such allowances are reflected when earned or as progress is made toward earning the allowance and are treated as a reduction of SG&A.

Advertising expenses were $ 141.4 million, $ 149.6 million and $ 86.5 million for fiscal years 2022, 2021 and 2020, respectively.

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Our lease arrangements frequently include tenant improvement allowances (TIAs), which are contractual amounts received or receivable from a lessor for improvements made to leased properties by the Company.

For operating leases, TIAs are treated as a reduction of the lease payments used to measure the ROU assets in the accompanying Consolidated Balance Sheet as of fiscal year 2021 and are amortized as a reduction in rental expense over the life of the respective leases.

For operating leases, TIAs are treated as a reduction of the lease payments used to measure the ROU assets in the accompanying Consolidated Balance Sheets and are amortized as a reduction in rental expense over the life of the respective leases.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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As the rate implicit in the Company’s leases is not easily determinable, the Company’s incremental borrowing rate is used in calculating the present value of the sum of the lease payments.

Factors incorporated into the calculation of the lease incremental borrowing rate include lease term, borrowing rates on the Company’s long-term debt, fixed rates on interest rate swaps, LIBOR margins for issuers of similar credit rating to NVI and effect of collateralization.

Factors incorporated into the calculation of the lease incremental borrowing rate include lease term, borrowing rates

on the Company’s long-term debt, fixed rates on interest rate swaps, LIBOR margins for issuers of similar credit rating to NVI and effect of collateralization.

For finance leases, a lease ROU asset is recorded as property and equipment and corresponding amounts are recorded as finance lease debt obligations at the net present value of the minimum lease payments to be made over the lease term for new finance leases.

Stock-Based Compensation

We measure stock-based compensation cost, which consists of grants of stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), and restricted stock awards (“RSAs”) to associates and non-associate directors, based on the estimated grant date fair value of the awards.

We measure stock-based compensation cost, which consists of grants of stock options, restricted stock units (“RSUs”), performance stock units (“PSUs”), and restricted stock awards (“RSAs”) to associates and non-employee directors, based on the estimated grant date fair value of the awards.

We recognize compensation expense for all awards containing only a service requirement over the requisite service period using a straight-line recognition method.

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Long-lived Asset Impairment

Non-financial assets such as P&E, right of use (“ROU”) assets and intangible assets are subject to nonrecurring fair value measurements if impairment indicators are present.

Non-financial assets such as P&E, ROU assets and intangible assets are subject to nonrecurring fair value measurements if impairment indicators are present.

We evaluate impairment of long-lived tangible and ROU store assets at the store level, which is the lowest level at which independent cash flows can be identified, when events or conditions indicate the carrying values of such assets may not be recoverable.

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The asset impairments recognized in fiscal years 2021 and 2020 include $ 0.8 million and $ 1.1 million, respectively, related to a write-off of certain capitalized software costs that were deemed to be obsolete due to a decision to cease further development.

During fiscal year 2019 there was no impairment of non-store long-lived assets or capitalized software costs.

We did not recognize impairment related to capitalized software costs in fiscal year 2022.

We account for deferred income taxes based on the asset and liability method.

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Deferred tax assets also include future tax benefits to be derived from the utilization of tax loss carry-forwards and application of certain carry-forward credits.

The net carrying amount of deferred income tax assets and liabilities is recorded in non-current deferred income tax liabilities in the accompanying Consolidated Balance Sheets.

The net carrying amount of deferred income tax assets and liabilities is recorded in noncurrent deferred income tax liabilities in the accompanying Consolidated Balance Sheets.

Deferred income taxes are measured using enacted tax rates in effect for the years in which those differences are expected to be recovered or settled.

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Adoption of New Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-02, Leases .

This new guidance establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.

Leases are classified as either finance or operating, with such classification affecting the pattern of expense recognition in the statement of operations.

Disclosure of key information about leasing arrangements is also required.

We adopted ASU No.

2016-02, as amended, as of December 30, 2018 (the first day of fiscal year 2019), using the modified retrospective transition approach without adjusting the comparative periods presented.

We elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward historical lease classification for leases in existence as of the adoption date, to not assess whether any expired or existing contracts are leases or contain leases and to not assess whether unamortized initial direct costs for existing leases meet the definition of initial direct costs.

In addition, we elected the practical expedients to not separate lease components from non-lease components and to not apply this new guidance to leases with terms of less than 12 months.

Upon adoption, we recorded operating lease liabilities of approximately $ 339.6 million as of December 30, 2018.

The Company treated TIAs and deferred rent of $ 24.3 million and $ 11.9 million, respectively, as of December 30, 2018 as reductions of lease payments and prepaid rent of $ 5.8 million as of December 30, 2018 as an increase in lease payments used to measure ROU assets and recorded $ 308.5 million of lease ROU assets upon adoption.

The difference between the additional lease assets and lease liabilities net of the deferred tax impact was $ 0.5 million, which was recorded as an adjustment to fiscal year 2019 opening retained earnings.

Adoption of this new guidance did not result in significant changes to our results of operations or cash flows.

“Leases” for additional information.

Other Comprehensive Income.

In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) .

This guidance allows for an optional reclassification from accumulated other comprehensive income or loss to retained earnings for stranded tax effects as a result of the newly enacted federal corporate income tax rate under the 2017 Tax Cuts and Jobs Act enacted into law on December 22, 2017 (the “Tax Legislation”).

This guidance is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted.

We adopted the guidance during the first quarter of fiscal year 2019, and did not reclassify the stranded income tax benefit resulting from adoption of the Tax Legislation from AOCL into earnings.

There were no other impacts to the Company’s financial condition, result of operations, or cash flows.

Cloud Computing.

In August 2018, the FASB issued ASU No.

2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

We obtain a variety of software solutions and tools through cloud computing arrangements.

This new guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years and may be adopted on a prospective or retrospective basis.

We adopted the accounting standard on a prospective basis in the first quarter of 2020.

The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations, or cash flows.

Credit Losses .

In June 2016, the FASB issued ASU No.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) .

This new guidance requires an entity to assess impairment of its financial instruments based on its estimate of expected credit losses.

Initial adoption of ASU 2016-13 is required to be reported on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for certain provisions that are required to be applied prospectively.

This guidance is effective for fiscal years beginning after December 15, 2019, and for interim reporting periods within those fiscal years.

We adopted ASU No.

2016-13 as of December 29, 2019 (the first day of fiscal year 2020), using the modified retrospective approach without adjusting the comparative periods presented.

Upon adoption, the Company recorded a $ 0.7 million increase to the allowance for credit losses related to a note receivable from our former equity method investee.

After adjusting for deferred taxes, we recorded a $ 0.5 million decrease in Retained earnings through a cumulative-effect adjustment.

Adoption of this new guidance did not have a material impact on the Company’s financial condition, results of operations or cash flows.

Convertible Instruments and Contracts in an Entity’s Own Equity.

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In addition, as a result of the adoption, our deferred tax liabilities decreased by $ 18.8 million and additional paid-in capital decreased by $ 71.4 million.

The following table summarizes the impact of adoption on the Company’s Consolidated Statement of Operations for fiscal year 2021:

Fiscal Year 2021

In thousands (except earnings per share) With ASU 2020-06 Adoption Without ASU 2020-06 Adoption (1)

Impact of Adoption (2)

Income from operations $ 174,937 $ 174,937 $ —

Interest expense, net 25,612 41,635 ( 16,023 )

Earnings before income taxes 149,325 133,302 16,023

Income tax provision 21,081 17,482 3,599

Net income $ 128,244 $ 115,820 $ 12,424

Weighted average shares outstanding for basic EPS 81,820 81,820 —

Weighted average shares outstanding for diluted EPS 96,134 83,222 12,912

Earnings per share:

Basic $ 1.57 $ 1.42 $ 0.15

Diluted $ 1.43 $ 1.39 $ 0.04

(1)Antidilutive shares are excluded from the computation of weighted average shares outstanding for diluted EPS.

The 2025 Notes would have been antidilutive for the fiscal year ended 2021 without the adoption of ASU 2020-06 and are, therefore, excluded from the computation of diluted EPS.

(2) Impact of adoption on basic earnings per share is calculated using impact on net income divided by basic weighted average shares outstanding during the period.

Future Adoption of Accounting Pronouncements

Reference Rate Reform.

In March 2020, the FASB issued ASU No.

2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

This guidance provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that may be affected by the cessation of the London Inter-bank Offered Rate (“LIBOR.”) An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022.

A substantial portion of our debt is subject to interest payments that are indexed to LIBOR;

The Financial Accounting Standards Board (“FASB”) has issued guidance at various points over the last several years that provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that may be affected by the cessation of the London Inter-bank Offered Rate (“LIBOR.”) We are currently able to apply this new guidance for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2024.

A portion of our debt is subject to interest payments that are indexed to LIBOR;

additionally, we are party to an interest rate derivative based on LIBOR.

We are currently evaluating the effect of this guidance and have not applied the provisions of this guidance during the current fiscal year.

Our credit agreement contains methodologies for replacing LIBOR with an alternative reference rate;

our interest rate derivative does not contain replacement provisions, but we expect an orderly transition of our derivative’s reference rate.

We currently do not anticipate material effects on our operating results, financial position or cash flows as a result of adopting the new guidance.

Notwithstanding, it is possible that the adoption of this guidance will have a material adverse effect on any or all of our operating results, financial position or cash flows.

The FASB issued other accounting guidance during fiscal year 2022 that is not currently applicable or expected to have a material impact on the Company’s consolidated financial statements, and therefore, is not described above.

Details of Certain Balance Sheet Accounts

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$ 230,624 $ 306,876 $ 375,159

The following tables provide additional details of certain balance sheet accounts as of the dates shown below:

In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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$ 79,892 $ 55,697

(1) Includes CARES Act receivable in the amount of $ 9.0 million and $ 0.0 million as of December 31, 2022 and January 1, 2022, respectively.

In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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Associate compensation and benefits $ 37,451 $ 55,670

$ 55,670 $ 51,081

Self-insurance liabilities 8,744 9,034

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Legacy management & services agreement 6,488 5,518

Fair value of derivative liabilities 2,846 5,116

Supplies and other store support expenses 4,215 5,511

Litigation settlements 500 2,100

Lease concessions 357 3,142

Fair value of derivative liabilities — 2,846

Other 15,746 13,555

$ 94,225 $ 119,323

(1) Includes CARES Act deferred employer payroll taxes in the amount of $ 0.0 million and $ 12.8 million as of January 1, 2022 and January 2, 2021, respectively.

In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

Other non-current liabilities:

Other noncurrent liabilities:

Fair value of derivative liabilities $ — $ 488

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The gross carrying amount and accumulated impairment of the Company’s goodwill balances for 2022 and 2021 are as follows:

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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Finite-lived, amortizing intangible assets by major asset class are as follows:

As of January 1, 2022 As of January 2, 2021

As of December 31, 2022 As of January 1, 2022

In thousands Gross Carrying

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We extended our relationship with Walmart in fiscal year 2020.

We extended our relationship with Fred Meyer in fiscal year 2022.

Refer to Note 14.

“Segment Reporting” for more information.

We are in the process of renewing our agreement with Fred Meyer and intend to maintain our intangible assets.

“Segment Reporting” for more information on these relationships.

We intend to maintain our intangible assets.

Aggregate amortization expense is included in Depreciation and amortization in the accompanying Consolidated Statements of Operations.

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In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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Less current maturities — —

Long-term debt - non-current portion 543,566 624,611

Long-term debt - noncurrent portion 546,231 543,566

Finance lease obligations 21,294 26,514

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Long-term debt and finance lease obligations, less current portion and debt discount $ 563,388 $ 566,081

In May 2020, we completed the issuance of the 2025 Notes, pursuant to an indenture between the Company and U.S.

In May 2020, we completed the issuance of $ 402.5 million in aggregate principal amount of 2.50 % convertible senior notes due on May 15, 2025 (the “2025 Notes”), pursuant to an indenture between the Company and U.S.

Bank, dated as of May 12, 2020 (the “Indenture”).

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The 2025 Notes are initially convertible at a conversion rate of 32.0783 shares of common stock per $1,000 principal amount of 2025 Notes, which is equivalent to an initial conversion price of approximately $ 31.17 per share of common stock.

The conversion rate will be subject to adjustment upon the occurrence of certain specified events including, but not limited to:

The conversion rate will be subject to adjustment upon the occurrence of certain specified events

including, but not limited to:

issuance of stock dividends, splits and combinations;

distribution of rights, options and

distribution of rights, options and warrants;

spin-offs and other distributed property;

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Based on the initial conversion rate, the 2025 Notes are convertible into 12.9 million shares of our common stock and we reserved for the possible issuance of 16.5 million shares, which is the maximum amount that could be issued upon conversion.

As of January 1, 2022, the 2025 Notes can be converted by holders based on condition (i) above.

“Earnings Per Share” for the treatment of earnings per share in relation to the 2025 Notes.

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As a result of adopting ASU 2020-06, our effective interest rate decreased from 9.1 % as of January 2, 2021 to 3.2 % starting in the first quarter of 2021.

We recognized interest expense for the interest coupon and amortization of issuance costs of $ 10.1 million and $ 2.2 million during fiscal 2021, respectively, and $ 6.4 million and $ 10.9 million during fiscal 2020, respectively.

As of January 1, 2022, the remaining period for the unamortized debt issuance costs balance was approximately three years .

We recognized the following in interest expense, net related to the 2025 Notes:

In thousands Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020

Contractual interest expense $ 10,062 $ 10,063 $ 6,401

Amortization of issuance costs $ 2,283 $ 2,213 $ 10,896

As of December 31, 2022, the remaining period for the unamortized debt issuance costs balance was approximately two years .

An immaterial amount of the principal balance of the 2025 Notes was converted during fiscal year 2022.

As of December 31, 2022, the stock price conditions under which the 2025 Notes can be converted at the holders’ option were not met.

Credit Agreement

On July 18, 2019, our credit agreement, dated as of October 9, 2018 was amended and restated to establish a new first lien term loan of $ 420.0 million to repay all principal, interest fees and other amounts outstanding before the amendment and establish a new revolving credit facility in an aggregate principal amount of $ 300.0 million, including a $ 20.0 million letter of credit sublimit.

In connection with the principal repayments of our existing debt, the Company wrote off associated deferred debt issuance costs of $ 6.0 million and associated unamortized debt discount of $ 3.8 million, in the third quarter of 2019.

On March 17, 2020, as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic, we borrowed the remaining $ 146.3 million in available funds under our revolving credit facility.

On May 5, 2020, we entered into an agreement with the lenders to amend certain provisions of our credit agreement.

This amendment was intended to prevent the effects of the COVID-19 pandemic, including the temporary closure of our stores, from creating uncertainty relative to our ability to comply with certain financial covenants and allow the Company to focus on prudent management of the business over the quarters ahead.

The amendment suspended certain financial maintenance covenants contained in our credit agreement until testing at the end of the second fiscal quarter of 2021.

Capitalized terms used but not defined herein shall have the meanings assigned to such terms in our credit agreement.

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The amendment also contains covenants that, among other things, limit NVI’s ability to incur additional debt, create liens against assets, make acquisitions, pay dividends or distributions on its stock, merge or consolidate with another entity and transfer or sell assets.

We were in compliance with all covenants related to our long-term debt as of January 1, 2022.

During the third quarter of 2019, we partially prepaid $ 25.0 million on the term loan.

On May 12, 2020, we fully prepaid the $ 294.3 million outstanding under our revolving credit facility and partially prepaid $ 75.0 million on the term loan.

We were in compliance with all covenants related to our long-term debt as of December 31, 2022.

During the second quarter of 2021, the Company partially prepaid $ 117.4 million of term loan principal and wrote off associated deferred debt issuance costs of $ 0.7 million.

During the fourth quarter of 2021, the Company partially prepaid $ 50.0 million of term loan principal and wrote off associated deferred debt issuance costs of $ 0.3 million.

As a result of the prepayments made in fiscal years 2019, 2020, and 2021, the Company has no additional mandatory principal payments on the term loan until maturity on July 18, 2024 and no amounts outstanding under the revolving credit facility.

The borrowing capacity remaining as of January 1, 2022 was $ 293.6 million due to a reduction of $ 6.4 million for letters of credit outstanding.

As a result of the repayment of the outstanding balance on our revolving credit facility, the Company reclassified a proportionate share of unamortized debt issuance costs to Other assets.

As a result of prepayments of term loan principal, the Company has no additional mandatory principal payments on the term loan until maturity on July 18, 2024 and no amounts outstanding under the revolving credit facility.

The borrowing capacity remaining as of December 31, 2022 was $ 293.6 million due to a reduction of $ 6.4 million for letters of credit outstanding.

Scheduled annual maturities of debt are as follows:

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2017 Omnibus Incentive Plan (the “2017 Omnibus Incentive Plan”).

The total number of shares of common stock that may be issued under the plan is 4,000,000 .

The plan authorizes the grant of stock options, stock appreciation rights, RSAs, RSUs, PSUs, other equity-based awards and other cash-based awards to our associates, directors, officers, consultants and advisers.

The total number of shares of common stock that may be issued under the 2017 Omnibus Incentive Plan is 4,000,000 .

The plan authorizes the grant of stock options, stock appreciation rights, RSAs, RSUs, PSUs, other equity-based awards and other cash-based awards to our associates, non-employee directors, officers, consultants and advisers.

The Vision Holding Corp.

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After-tax stock based compensation expense $ 10,084 $ 11,098 $ 7,997

Stock options RSUs and PSUs RSAs

Stock options RSUs and PSUs

Unrecognized compensation cost ( in thousands )

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Service-based options

The following tables summarize service-based stock option activity, including service-based options under the Vision Holding Corp.

Amended and Restated 2013 Equity Incentive Plan, the 2014 Stock Incentive Plan, and the 2017 Omnibus Incentive Plan.

The following tables summarize service-based stock option activity.

No service-based options were granted in fiscal year 2022.

Number of Options Outstanding (In thousands) Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (In thousands) ($)

Outstanding options at January 1, 2022 726 $ 28.91 6.83 $ 13,891

Granted 111 46.19

Exercised ( 71 ) 24.17

Forfeited ( 27 ) 37.47

Outstanding options at January 1, 2022 726 $ 28.91 6.83 $ 13,891

Vested and exercisable at January 1, 2022 376 $ 23.85 6.17 $ 9,067

Outstanding options at December 31, 2022 628 $ 29.07 5.95 $ 6,733

Vested and exercisable at December 31, 2022 518 $ 26.60 5.59 $ 6,524

In thousands except per share values Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020

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The following is a summary of the assumptions used in this model for service-based options:

2021 2020 2019

Expected volatility 52.49 % to 54.03 %

39.54 % to 55.81 %

34.50 % to 37.10 %

Expected term range (in years) 6.00

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0.47 % to 1.13 %

1.68 % to 2.94 %

The expected term was based on the mid-point between the weighted average time to vesting and the contractual time to maturity .

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Exercised ( 1 ) 11.91

Forfeited — —

Outstanding options at January 1, 2022 50 $ 15.70 5.56 $ 1,604

Vested and exercisable at January 1, 2022 50 $ 15.70 5.56 $ 1,604

Outstanding options at December 31, 2022 49 $ 15.74 4.56 $ 1,132

Vested and exercisable at December 31, 2022 49 $ 15.74 4.56 $ 1,132

There were no grants of performance-based options during fiscal years 2022, 2021, and 2020.

There were no vests of performance-based options during fiscal year 2021.

The fair value of performance-based options vested during fiscal years 2020 and 2019 was $ 1.4 million and $ 4.4 million, respectively.

The aggregate intrinsic value of performance-based options exercised during fiscal years 2021, 2020, and 2019 was $ 37.3 million, $ 20.0 million, and $ 29.9 million, respectively.

There were no vests of performance-based options during fiscal years 2022 and 2021.

The fair value of performance-based options vested during fiscal year 2020 was $ 1.4 million.

The aggregate intrinsic value of performance-based options exercised during fiscal years 2022 was immaterial .

The aggregate intrinsic value of performance-based options exercised during fiscal years 2021 and 2020 was $ 37.3 million and $ 20.0 million, respectively.

The following tables summarize RSU, PSU and RSA awards activity:

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Forfeited ( 48 ) 38.03 ( 31 ) 41.85 — —

Outstanding at January 1, 2022 364 $ 36.67 317 $ 38.34 17 $ 48.39

Outstanding at December 31, 2022 786 $ 35.36 361 $ 38.86 — $ —

Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020

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Restricted stock units (RSUs)

Most RSUs vest in three equal installments on the first, second and third anniversaries of the grant date.

The RSUs outstanding as of January 1, 2022 have $ 17.5 million intrinsic value.

Most RSUs vest in three equal installments on the first, second and third anniversary of the grant date.

The RSUs outstanding as of December 31, 2022 have $ 30.5 million intrinsic value.

Non-employee directors were granted RSUs in fiscal year 2022.

Performance stock units (PSUs)

PSUs are settled after the end of a three-year performance period (i.e., cliff vesting), which begins on the first day of the grant year and are based on the Company’s achievement of certain performance targets.

The performance stock units outstanding as of January 1, 2022 have $ 15.2 million intrinsic value.

While the PSU amounts shown in the table above reflect achievement at target, the number of PSUs ultimately vested will be based on a comparison of certified performance results to predefined performance criteria that include threshold, target and maximum attainment levels.

Restricted stock awards (RSAs)

Most RSAs outstanding vest one year from grant date.

As of fiscal year end 2021, the intrinsic value of the awards was $ 0.8 million.

The performance stock units outstanding as of December 31, 2022 have $ 14.0 million intrinsic value.

While the PSU amounts shown in the tables above reflect achievement at target, the number of PSUs ultimately vested will be based on a comparison of certified performance results to predefined performance criteria that include threshold, target and maximum attainment levels.

Associate Stock Purchase Plan (ASPP)

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Participants may contribute to the ASPP, not to exceed $ 25,000 under the ASPP in any calendar year.

As of January 1, 2022, the amount of shares issued to eligible participants through the ASPP was not material.

During fiscal year 2022, the amount of shares issued to eligible participants through the ASPP was not material.

The income tax provision (benefit) consists of:

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Increase (decrease) in deferred tax asset valuation allowance 477 ( 441 ) ( 216 )

Executive compensation limitation 1,218 283 —

Stranded tax effect of matured interest rate swaps — ( 2,125 ) —

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(4) changing rules related to limitations of net operating loss (“NOL”) carryforwards, and (5) enhancing and extending through 2026 the option to claim accelerated depreciation deductions on qualified property.

In August 2022, the U.S.

government enacted the Inflation Reduction Act (“IRA”) which, among other things, provides for a 15% corporate alternative minimum tax based on a prescribed measure of income as well as a 1% excise tax on stock repurchases.

We are continuing to evaluate the provisions of the IRA but currently do not anticipate either of these provisions will have a material effect on our financial statements or operations, or our current share repurchase program.

The sources of the differences between the financial accounting and tax bases of our assets and liabilities that give rise to the deferred tax assets and deferred tax liabilities and the tax effects of each are as follows:

In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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NOL carry-forwards $ 5,708 $ 4,068

Deferred interest expense carry-forwards — 180

AMT payment and employment credits 2,290 3,541

Credit Carryforwards 547 2,290

Deferred revenue 6,376 5,700

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Operating lease liabilities 115,870 105,728

Other — 1,349

Subtotal 144,847 135,343

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Amortization of intangible assets ( 70,946 ) ( 72,111 )

Convertible debt discount — ( 18,819 )

Unrealized gains on hedging instruments ( 3,568 ) —

Right of use asset ( 97,954 ) ( 90,751 )

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Net deferred tax liabilities $ ( 93,870 ) $ ( 82,846 )

As of fiscal year end 2021, we had available U.S.

federal NOL carry-forwards aggregating to $ 7.8 million that can be utilized to reduce future federal income taxes.

The Company has $ 7.5 million of carry-forward losses that do not expire and $ 0.3 million of carry-forward losses expiring at the end of fiscal year 2037, respectively.

As of fiscal year end 2022, our consolidated VIEs had available U.S.

federal NOL carry-forwards aggregating to $ 14.8 million that can be utilized to reduce future federal income taxes, of which $ 14.7 million of carry-forward losses do not expire and $ 0.1 million of carry-forward losses expire at the end of fiscal year 2037.

We believe it is more likely than not that we will realize a tax benefit for these NOL’s in the future except for $ 8.9 million of NOL carry-forwards ($ 1.9 million tax effected) on certain consolidated VIEs where we recognized a full valuation allowance as of fiscal year end 2022.

In addition, we have NOL carry-forwards in varying amounts and with varying expiration dates in various states in which we operate.

We believe it is more likely than not that we will realize a tax benefit for these NOL’s in the future except for $ 4.3 million of NOL carry-forwards ($ 0.9 million tax effected) on certain professional corporations where we recognized a full valuation allowance as of fiscal year end 2021.

Non-expiring federal and state employment credits totaling $ 2.3 million are available to offset certain future taxes.

For the fiscal year end 2022, we have no federal credits remaining, but carry various state tax credits totaling $ 0.5 million are available to offset certain future taxes.

These state credits carry a valuation allowance of $ 0.3 million as we do not expect to be able to utilize them in future tax years.

We have a $ 0.9 million deferred income tax asset for capital losses associated with the losses realized on the sale of our equity method non-consolidated investee and other investments.

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warranties), eye care club memberships and HMO vision plan fees.

We offer extended warranty plans in our Owned & Host segment that generally provide for repair and replacement of eyeglasses for primarily a one-year term after purchase.

We offer extended warranty plans in our Owned & Host segment that generally provide repair and replacement of eyeglasses for primarily a one-year term after purchase.

We recognize service revenue under these programs on a straight-line basis over the warranty or service period which is consistent with our efforts expended to satisfy the obligation.

We offer three - or five-year eyecare club memberships in our Owned & Host segment to our contact lens customers.

We offer three-year eyecare club memberships in our Owned & Host segment to our contact lens customers.

For these programs we apply the portfolio approach of recognizing revenues of contracts with similar characteristics and use estimates and assumptions that reflect the size and composition of the portfolio of contracts.

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We determine the value delivered based on the expected timing and amount of customer usage of benefits over the terms of the contracts.

The unamortized portion of amounts we collect in advance for these services and plans are reported as Deferred revenue (current and non-current portions) in the accompanying Consolidated Balance Sheets.

The unamortized portion of amounts we collect in advance for these services and plans are reported as Deferred revenue (current and noncurrent portions) in the accompanying Consolidated Balance Sheets.

Sales of services and plans in our Legacy segment include fees earned for managing the operations of our Legacy partner.

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The majority of leases where we received a concession did not result in a substantial increase in our obligations.

Lease concessions of $ 0.4 million and $ 3.1 million were recorded in Other payables and accrued expenses as of January 1, 2022 and January 2, 2021, respectively.

“Details of Certain Balance Sheet Accounts” for further details.

Lease concessions of $ 0.3 million and $ 0.4 million were recorded in Other payables and accrued expenses as of December 31, 2022 and January 1, 2022, respectively.

In thousands As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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77,186 60,930

Other non-current liabilities:

Other noncurrent liabilities:

Finance Long-term debt and finance lease obligations, less current portion and debt discount 17,157 22,515

Operating Non-current operating lease obligations 342,241 327,371

Operating Noncurrent operating lease obligations 358,110 342,241

Total lease liabilities $ 456,590 $ 429,685

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We used the incremental borrowing rate on December 30, 2018 for operating leases that commenced prior to that date.

(a) Finance lease assets are recorded net of accumulated amortization of $ 16.8 million and $ 12.4 million as of January 1, 2022 and January 2, 2021, respectively.

(b) TIA and deferred rent are treated as reductions of lease payments used to measure ROU assets in the accompanying Consolidated Balance Sheets as of January 1, 2022 and January 2, 2021.

(c) Current operating lease liabilities are measured net of TIA receivables of $ 6.6 million and $ 3.8 million as of January 1, 2022 and January 2, 2021, respectively.

(a) Finance lease assets are recorded net of accumulated amortization of $ 21.3 million and $ 16.8 million as of December 31, 2022 and January 1, 2022, respectively.

(b) TIA and deferred rent are treated as reductions of lease payments used to measure ROU assets in the accompanying Consolidated Balance Sheets as of December 31, 2022 and January 1, 2022.

(c) Current operating lease liabilities are measured net of TIA receivables of $ 6.7 million and $ 6.6 million as of December 31, 2022 and January 1, 2022, respectively.

In thousands Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020

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Lease Term and Discount Rate As of

January 1, 2022 As of

December 31, 2022 As of

January 1, 2022

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Right of use assets acquired under operating leases $ 110,387 $ 91,451 $ 68,081

The following table summarizes the maturity of our lease liabilities as of January 1, 2022:

The following table summarizes the maturity of our lease liabilities as of December 31, 2022:

In thousands Operating Leases (a)

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Tangible Long-lived and Right of Use (“ROU”) Store Assets

We recognized impairments of $ 4.4 million, $ 22.0 million and $ 8.9 million in fiscal years 2021, 2020 and 2019, respectively, related to our long-lived tangible store assets and ROU assets.

We recognized impairments of $ 5.8 million, $ 4.4 million and $ 22.0 million in fiscal years 2022, 2021 and 2020, respectively, primarily related to our long-lived tangible store assets and ROU assets.

The impairments were primarily driven by lower than projected customer sales volume in certain stores.

The cash flows used in estimating fair value were discounted using a market rate of 7.5 %.

The cash flows used in estimating fair value were discounted using market rates from 7.5 % to 10 %.

A decrease in the estimated cash flows would lead to a lower fair value measurement, as would an increase in the discount rate.

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Long-term Debt - 2025 Notes

The Company has $ 402.5 million in aggregate principal amount of 2.50 % convertible senior notes due on May 15, 2025 issued and outstanding as of January 1, 2022.

The estimated fair value of the 2025 Notes was approximately $ 674.9 million as of January 1, 2022.

The estimated fair value of the 2025 Notes is based on the prices the 2025 Notes have traded in the market as of January 1, 2022, as well as overall market conditions on the date of valuation, stated coupon rates, the number of coupon payments each year and the maturity dates, and represents a Level 2 measurement.

The estimated fair value of the 2025 Notes was approximately $ 553.9 million and $ 674.9 million, as of December 31, 2022 and January 1, 2022, respectively.

The estimated fair value of the 2025 Notes is based on the prices the 2025 Notes have traded in the market as well as overall market conditions on the date of valuation, stated coupon rates, the number of coupon payments each year and the maturity dates, and represents a Level 2 measurement.

Refer to Note 4.

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Current $ 34,808 $ 27,393 $ 62,201

Non-current 304 22,862 23,166

Noncurrent 311 21,290 21,601

$ 35,119 $ 48,683 $ 83,802

1 unchanged sentence

In thousands Product Protection Plans Eye Care

Clubs HMO Memberships Total

Beginning of the year $ 34,147 $ 45,580 $ 79,727

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Current $ 38,335 $ 26,990 $ 65,325

Non-current 337 20,491 — 20,828

Noncurrent 304 22,862 23,166

$ 38,639 $ 49,852 $ 88,491

Unsatisfied Performance Obligations (Contract Liabilities)

We recognized $ 58.9 million of deferred revenues outstanding at the beginning of the period during the fiscal year ended 2021, and $ 70.7 million of revenues from sale of club memberships and product protection plans during the fiscal year ended 2021.

We recognized $ 55.9 million of deferred revenues outstanding at the beginning of the period during the fiscal year ended 2020, and $ 52.8 million of revenues from sale of club memberships and product protection plans during the fiscal year ended 2020.

Deferred revenue recorded as of fiscal year end 2021 is expected to be reflected in future operating results as follows:

During fiscal years 2022 and 2021, we recognized $ 65.2 million and $ 58.9 million, respectively, of deferred revenues outstanding at the beginning of each respective period.

Deferred revenue recorded as of the end of fiscal year 2022 is expected to be reflected in future operating results as follows:

Fiscal Year In thousands

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Contractual Commitments

As of January 1, 2022, the Company had contractual commitments of approximately $ 118.1 million consisting of agreements for merchandise purchases, technology and advertising.

As of December 31, 2022, the Company had contractual commitments of approximately $ 120.6 million consisting of agreements for merchandise purchases, technology and advertising.

Warranty Costs

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We are currently and may in the future become subject to various claims and pending or threatened lawsuits in the ordinary course of our business.

Eyeglass World, LLC, which was acquired by the Company in 2009, is a defendant in a state court action filed on July 24, 2017 by a former sublease holder in Albuquerque, New Mexico.

The lawsuit seeks compensatory and punitive damages for claims of conversion, misappropriation of trade secrets, negligent misrepresentation, and tortious interference with existing and prospective contractual relationships arising from the Company’s alleged unauthorized use of confidential information.

On January 31, 2022, in order to avoid the burden and expense of further litigation, the parties agreed to a settlement of all claims alleged by the plaintiff.

On February 9, 2022, the Company paid the settlement amount and on February 11, 2022, a notice of stipulated dismissal with prejudice was filed by the parties with the court to dismiss the action.

On September 23, 2022, we were served with notice of a lawsuit filed by a former employee in California state court alleging, on behalf of a proposed class of employees, several violations of California wage and hour laws.

On December 9, 2022, the case was removed to the federal District Court for the Northern District of California.

We believe that the claims are without merit and intend to oppose the certification of a class and to defend the litigation vigorously.

On January 27, 2023, a purported class action complaint was filed in federal court in the Northern District of Georgia against the Company and two of the Company’s officers.

The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 for materially false and misleading statements made between May 2021 and May 2022.

The complaint seeks unspecified damages as well as equitable relief.

We believe that the claims alleged are without merit and intend to defend the litigation vigorously.

Interest Rate Derivatives

We are party to an interest rate collar to offset the variability of cash flows in LIBOR-indexed debt interest payments.

The aggregate notional amount of the interest rate collar was $ 375.0 million as of January 1, 2022.

The fair value of our interest rate collar instrument was $ 3.3 million as of January 1, 2022 and is not designated as a cash flow hedge.

The interest rate swaps we held at the end of fiscal year 2020 matured in the first quarter of 2021.

The fair value of our interest rate derivative instruments was $ 12.8 million as of January 2, 2021, $ 1.5 million of which was designated as a cash flow hedge.

The aggregate notional amount of the interest rate collar, which is not designated as a cash flow hedge, was $ 350.0 million as of December 31, 2022.

The fair value of our interest rate collar instrument was an asset of $ 14.1 million ($ 10.0 million in Prepaid expenses and other current assets and $ 4.1 million in Other assets) as of December 31, 2022.

The fair value of our interest rate collar instrument was a liability of $ 3.3 million ($ 2.8 million in Other payables and accrued expenses and $ 0.5 million in Other liabilities) as of January 1, 2022.

“Details of Certain Balance Sheet Accounts” and Note 9.

“Fair Value Measurement” for further details.

Due to changes in the interest rates applicable to the Company’s term loan and revolving credit facility during f iscal year 2020 , the interest rate collar ceased to be a highly effective hedge.

Gains (losses) on the change in fair value of the interest rate collar of approximately $ 4.2 million and $( 2.6 ) million were recorded in interest expense, net during fiscal years 2021 and 2020, respectively.

Interest expense, net related to our interest rate derivatives considered to be highly effective hedges for fiscal years 2021 and 2020 was $ 1.5 million and $ 7.7 million, respectively.

We recognized (gains) losses on the change in fair value of the interest rate collar of $( 18.0 ) million and $( 4.2 ) million in interest expense , net during fiscal years 2022 and 2021, respectively.

We recognized $ 1.5 million in interest expense, net during fiscal year 2021 related to our interest rate swaps that were considered to be highly effective hedges and that matured during fiscal year 2021.

Cash flows related to derivatives qualifying as hedges are included in the same section of the Consolidated Statements of Cash Flows as the underlying assets and liabilities being hedged.

Cash flows during fiscal years 2022 and 2021 related to derivatives not qualifying as hedges were included in the operating section of the Consolidated Statements of Cash Flows and were immaterial.

Certain forecasted hedged transactions were deemed not probable of occurring as a result of the Company’s repayments of debt balances.

During the second quarter of 2020, as a result of the partial repayment of the Company’s LIBOR based debt balances, the Company subsequently reclassified net unrealized losses of approximately $ 2.5 million from AOCL to interest expense, net during fiscal year 2020.

During the second and fourth quarters of 2021, as a result of the partial repayments of the Company’s LIBOR based term-loan debt balances, the Company subsequently reclassified unrealized losses of $ 3.4 million from AOCL to interest expense, net during fiscal year 2021.

As of January 1, 2022, the Company expects to reclassify approximately $ 0.8 million of unrealized losses on derivative instruments, net of tax, from AOCL into earnings in the next 12 months as the derivative instruments mature.

As of December 31, 2022, the Company expects to reclassify approximately $ 0.8 million of unrealized losses on derivative instruments, net of tax, from AOCL into earnings in the next 12 months as the derivative instruments mature.

“Accumulated Other Comprehensive Loss” for further details.

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Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period.

Diluted EPS is computed by dividing net income by the weighted average shares outstanding for the period and includes the dilutive impact of potential new shares issuable upon vesting and exercise of stock options, vesting of restricted stock units, and assumed conversion of $ 402.5 million of aggregate principal amount of 2025 Notes.

Potential shares of common stock are excluded from the computation of diluted EPS if their effect is anti-dilutive.

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Diluted EPS $ 0.52 $ 1.43 $ 0.44

Anti-dilutive options, RSUs outstanding, and 2025 Notes excluded from EPS 94 13,325 294

Anti-dilutive securities excluded from diluted weighted average common shares 13,282 94 13,325

Segment Reporting

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On January 22, 2020, we entered into an amendment to our management & services agreement with Walmart which provided for a six month extension of the term and added five additional Vision Centers in Walmart stores to the agreement in fiscal year 2020.

On July 17, 2020, NVI and Walmart entered into a further amendment to the management & services agreement, to extend the current term and economics of the agreement by three years , to February 23, 2024, and provide that the agreement will automatically renew for an additional three year term unless, no later than seven months prior to the end of the term, one party gives the other party written notice of non-renewal.

On July 17, 2020, NVI and Walmart entered into a further amendment to the management & services agreement, to extend the current term and economics of the agreement by three years , to February 23, 2024, and will automatically renew for a three-year period unless, no later than July 2023, either party gives written notice of non-renewal .

In addition, the amendment deleted certain provisions that are no longer applicable and updated certain administrative provisions.

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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.

We incurred $ 1.5 million and $ 8.6 million of costs during fiscal years 2021 and 2020, respectively, directly related to adapting the Company’s operations to the COVID-19 pandemic such as personal protective equipment and other supplies needed to operate our stores safely and certain other costs such as compensation, a tangible appreciation bonus paid to our customer-facing doctors and associates in fiscal year 2020, and other administrative expenses.

Incremental expenses related to the COVID-19 pandemic were allocated to the reportable segments in fiscal year 2021 but were included in the Corporate/Other category in fiscal year 2020.

We incurred $ 0.6 million, $ 1.5 million and $ 8.6 million of costs during fiscal years 2022, 2021 and 2020, respectively, directly related to adapting the Company’s operations to the COVID-19 pandemic such as personal protective equipment and other supplies needed to operate our stores safely and certain other costs such as compensation, a tangible appreciation bonus paid to our customer-facing doctors and associates in fiscal year 2020, and other administrative expenses.

Incremental expenses related to the COVID-19 pandemic were allocated to the reportable segments in fiscal years 2022 and 2021 but were included in the Corporate/Other category in fiscal year 2020.

The following is a summary of certain financial data for each of our segments.

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Asset impairment — — 5,783 — 5,783

Other expense (income), net — — ( 2,505 ) — ( 2,505 )

Other income, net — — ( 2,552 ) — ( 2,552 )

EBITDA $ 341,632 $ 23,620 $ ( 199,998 ) $ ( 4,023 )

1 unchanged sentence

Interest expense, net 462

Income before income taxes $ 149,325

Earnings before income taxes $ 60,813

Fiscal Year 2021

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Asset impairment — — 4,427 — 4,427

Other expense (income), net — — ( 445 ) — ( 445 )

Other income, net — — ( 2,505 ) — ( 2,505 )

EBITDA $ 441,471 $ 33,060 $ ( 195,840 ) $ ( 6,665 )

1 unchanged sentence

Interest expense, net 25,612

Income before income taxes $ 38,680

Earnings before income taxes $ 149,325

Fiscal Year 2020

8 unchanged sentences

Asset impairment — — 22,004 — 22,004

Other expense (income), net — — 3,611 — 3,611

Loss on extinguishment of debt — — 9,786 — 9,786

Other income, net — — ( 445 ) — ( 445 )

EBITDA $ 334,824 $ 22,979 $ ( 173,514 ) $ ( 5,697 )

1 unchanged sentence

Interest expense, net 48,327

Income before income taxes $ 30,489

Earnings before income taxes $ 38,680

Entity-wide Information

6 unchanged sentences

Total net product revenues $ 1,648,315 $ 1,718,344 $ 1,418,283

In fiscal years 2021 and 2020, respectively, revenues from Walmart, recognized in our Legacy segment and Corporate/Other category, represented $ 300.8 million and $ 268.6 million of our total net revenue, subjecting us to customer concentration risk.

In fiscal years 2022, 2021 and 2020, respectively, revenues from Walmart, recognized in our Legacy segment and Corporate/Other category, represented $ 291.5 million, $ 300.8 million and $ 268.8 million of our total net revenue, subjecting us to customer concentration risk.

Accumulated Other Comprehensive Loss

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In Thousands, Except Par Value

As of January 1, 2022 As of January 2, 2021

As of December 31, 2022 As of January 1, 2022

Current assets:

Cash and cash equivalents $ 841 $ 1,683

Accounts receivable, net — 1,409

Prepaid expenses and other current assets — 734

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Investment in subsidiary 1,368,303 1,388,583

Total non-current assets 1,393,558 1,268,846

Total noncurrent assets 1,376,147 1,393,558

Total assets $ 1,376,988 $ 1,395,975

3 unchanged sentences

Long-term debt, less current portion and debt discount 396,801 394,514

Non-current liabilities:

Noncurrent liabilities:

Other liabilities 77,738 74,139

Deferred income taxes — 16,742

Total other non-current liabilities 74,139 53,050

Total other noncurrent liabilities 77,738 74,139

Stockholders’ equity:

1 unchanged sentence

200,000 shares authorized;

83,840 and 82,183 shares issued as of January 1, 2022 and January 2, 2021, respectively;

81,405 and 81,239 shares outstanding as of January 1, 2022 and January 2, 2021, respectively

84,273 and 83,840 shares issued as of December 31, 2022 and January 1, 2022, respectively;

78,992 and 81,405 shares outstanding as of December 31, 2022 and January 1, 2022, respectively

Additional paid-in capital 767,112 750,478

2 unchanged sentences

Treasury stock, at cost;

2,435 and 944 shares as of January 1, 2022 and January 2, 2021, respectively

5,281 and 2,435 shares as of December 31, 2022 and January 1, 2022, respectively

( 186,179 ) ( 101,791 )

1 unchanged sentence

Total liabilities and stockholders’ equity $ 1,376,988 $ 1,395,975

Fiscal year 2021 includes 52 weeks.

Fiscal year 2020 includes 53 weeks.

Fiscal years 2022 and 2021 include 52 weeks.

The accompanying notes are an integral part of these condensed financial statements.

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Cash flows from investing activities

Investment in subsidiary 46,600 ( 404,537 ) ( 15,090 )

Dividend from (investment in) subsidiary 89,550 46,600 ( 404,537 )

Net cash provided by (used for) investing activities 89,550 46,600 ( 404,537 )

Cash flows from financing activities

Repayments on long-term debt ( 4 ) — —

Borrowings on long-term debt, net of discounts — — 402,500

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The 2025 Notes pay interest semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2020, at an annual rate of 2.50 % and are convertible into cash, shares of common stock or a combination of cash and shares of common stock, at our election, based on the applicable conversion rate at such time.

NVHI contributed the proceeds from of the 2025 Notes to NVI as additional investments during the fiscal year 2020.

NVHI contributed the proceeds from the 2025 Notes to NVI as additional investments during the fiscal year 2020.

“Long-term Debt” to the NVHI consolidated financial statements for details of the 2025 Notes.

2 unchanged sentences

“Long-term Debt” to the NVHI consolidated financial statements, NVI used proceeds from the 2025 Notes to fully repay the outstanding amount on its revolving credit facility of $ 294.3 million and partially repaid $ 75 million on the term loan.

As of January 1, 2022, NVI had $ 150.0 million of principal amount of long-term debt outstanding under its term loan and no outstanding balance under its $ 300.0 million revolving credit facility, which includes $ 6.4 million in outstanding letters of credit.

As of December 31, 2022, NVI had $ 150.0 million of principal amount of long-term debt outstanding under its term loan and no outstanding cash borrowings under its $ 300.0 million revolving credit facility, which includes $ 6.4 million in outstanding letters of credit.

Under the terms of NVI’s amended credit agreement, provided no event of default has occurred and is continuing, NVI is permitted to pay dividends to NVHI with certain restrictions.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk