What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-02-26 compared with 2024-02-27 · 503 added, 384 removed, 1101 unchanged (45% of the section changed)

1 unchanged sentence

We have market risk exposure from changes in interest rates.

When appropriate, we use derivative financial instruments to mitigate the risk from such exposure.

When appropriate, we may use derivative financial instruments to mitigate the risk from such exposure.

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

“Business and Significant Accounting Policies” and Note 11.

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

Item 8 of this Form 10-K.

A portion of our debt bears interest at variable rates.

“Fair Value Measurement” to our consolidated financial statements.

A significant portion of our debt bears interest at variable rates.

If market interest rates increase, the interest rate on our variable rate debt will increase and will create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations.

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

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 30, 2023, $146.3 million of term loan borrowings were subject to variable interest rates and we had total borrowings of $448.7 million with a weighted average borrowing rate of 3.4%, inclusive of the effects of our interest rate collar.

An increase to market rates of 1.0% as of December 30, 2023 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 $1 million.

Our exposure to risk from changes in the interest rates will change upon the maturity of our interest rate collar on July 18, 2024.

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

Item 8 of this Form 10-K for more information on our interest rate collar.

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

As of December 28, 2024, $254.2 million of term loan borrowings were subject to variable interest rates and we had total borrowings of $339.0 million with a weighted average borrowing rate of 6.5%.

Our interest rate collar matured on July 18, 2024 and our variable interest rate term loan borrowings are exposed to changes in market rates.

An increase or decrease to market rates of 1.0% would result in a $2.5 million increase or decrease to interest expense as of December 28, 2024.

“Interest Rate Derivatives” to our consolidated financial statements for more information on our interest rate collar.

Consolidated Financial Statements and Supplementary Data

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

Consolidated Balance Sheets as of December 3 0 , 202 3 and Decembe r 31, 202 2

Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended December 3 0 , 202 3 , December 3 1, 2022 , and January 1, 2022

Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended December 30, 2023, December 3 1 , 202 2 , and January 1, 2022

Consolidated Statements of Cash Flows for the Fiscal Years Ended December 30, 2023, December 31, 2022 , and January 1, 2022

Consolidated Balance Sheets as of December 28, 2024 and December 30, 2023

Consolidated Statements of Operations and Comprehensive (Loss) Income for the Fiscal Years Ended December 28, 2024, December 30, 2023, and December 31, 2022

Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended December 28, 2024, December 30, 2023, and December 31, 2022

Consolidated Statements of Cash Flows for the Fiscal Years Ended December 28, 2024, December 30, 2023, and December 31, 2022

Notes to Consolidated Financial Statements

Schedule I – Condensed Financial Information of Registrant

Table of C ontents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

and subsidiaries (the “Company”) as of December 30, 2023 and December 31, 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 30, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 28, 2024, and December 30, 2023, the related consolidated statements of operations and comprehensive (loss) income, stockholders' equity, and cash flows, for each of the three years in the period ended December 28, 2024, 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 28, 2024, and December 30, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2024, in conformity with accounting principles generally accepted in the United States of America.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Trademark and Trade name — Eyeglass World — Refer to Notes 1 and 4 to the financial statements

Goodwill and Trademarks and Trade names — America's Best and Eyeglass World — Refer to Notes 1 and 5 to the financial statements

Critical Audit Matter Description

The Company tests goodwill and trademarks and trade names for impairment annually, or more frequently as warranted by events or changes in circumstances which indicate that the carrying value of assets may not be recoverable.

The Company evaluates impairment for Eyeglass World by comparing the fair value of the reporting unit and trademark and trade names with their respective carrying value.

The Company evaluates impairment by comparing the fair value of the reporting unit and trademarks and trade names with their respective carrying value.

For each reporting unit, the Company used the income approach, which is based on a discounted cash flow analysis and calculated the fair value of the reporting unit by estimating after-tax cash flows discounted using a discount rate.

For each trademark and trade name, the Company used the relief-from-royalty method, 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.

The determination of fair value requires management to make significant estimates and assumptions related to the discount rate.

The discount rate may also incorporate certain risk premiums, such as a company-specific risk premium (CSRP), which represents the incremental return that investors may require to compensate for the risks, uncertainties and variability in the estimated future cash flows.

The changes in these assumptions could have a significant impact on the fair value which could lead to an impairment charge.

As of December 30, 2023, the Company’s consolidated balance of goodwill was $717.5 million, of which $111.1 million relates to Eyeglass World.

The consolidated balance of trademarks and trade names at the same date was

$240.5 million, of which $40.0 million relates to Eyeglass World.

The fair value of the reporting unit and trademark and trade name for Eyeglass World exceeded the carrying value as of the measurement date and, therefore, no impairment was recognized.

We identified the valuation of the reporting unit and trademark and trade name for Eyeglass World as a critical audit matter because of the significant judgments made by management to estimate the fair value and the difference between its fair value and carrying value.

For each trademark and trade name, the Company used the relief-from-royalty method, which involves estimating a royalty rate based on comparable licensing arrangements, applying that rate to revenue projections for the subject asset, and then estimating fair value using a discounted cash flow analysis.

The determination of fair value requires management to make significant estimates and assumptions related to the discount rate for goodwill and trademarks and trade names, and forecasts of costs applicable to revenue and store-level selling, general and administrative expenses (“SG&A”) for goodwill.

The discount rate may also incorporate certain risk premiums, such as a company-specific risk premium (“CSRP”), which represents the incremental return that investors may require to compensate for risks, uncertainties and variability in the estimated future cash flows.

Changes in these assumptions could have a significant impact on the

Table of C ontents

fair value which could lead to an impairment charge or an additional impairment charge.

As of December 28, 2024, the Company's recorded balance of goodwill was $606.5 million related to America’s Best and $91.8 million related to Eyeglass World.

The balance of trademarks and trade names at December 28, 2024 was $40.0 million related to Eyeglass World.

The fair value of the reporting unit for America’s Best exceeded the carrying value as of the measurement date, and the fair value of the Eyeglass World trademark and trade name approximately equaled its carrying value;

therefore, no impairment was recognized.

The carrying value of the Eyeglass World reporting unit was written down to its estimated fair value, resulting in a $19.2 million impairment charge in fiscal year 2024.

We identified the valuation of the reporting unit for America’s Best and Eyeglass World, and the trademark and trade name for Eyeglass World, as a critical audit matter because of the significant judgments made by management to estimate fair value.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the selection of the discount rate, including the CSRP, for the goodwill related to America’s Best and Eyeglass World and trademark and trade name related to Eyeglass World, and the forecasts of costs applicable to revenue and store-level SG&A for the goodwill related to America’s Best and Eyeglass World.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the discount rate, including the CSRP, used by management to estimate the fair value of the reporting unit and trademark and trade name for Eyeglass World included the following, among others:

• We tested the design and operating effectiveness of controls over management’s goodwill and trademarks and trade names 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, including the CSRP, by:

Our audit procedures related to the discount rate, including the CSRP, used by management to estimate the fair value of the reporting units for goodwill and the fair value of the trademark and trade name, and the forecasts of costs applicable to revenue and store-level SG&A used by management to estimate the fair value of the reporting unit for goodwill included the following, among others:

• We tested the design and operating effectiveness of controls over management’s impairment evaluation, including those over the determination of the fair value and related to management’s selection of the discount rate, and the forecasts of costs applicable to revenue and store-level SG&A.

• We performed a sensitivity analysis of the discount rate, the forecasts of costs applicable to revenue and store-level SG&A, including their impact on future cash flows.

• We evaluated management's ability to accurately forecast costs applicable to revenue and store-level SG&A and evaluated the reasonableness of these assumptions by comparing management's forecasts for historical periods to actual results for those periods.

• We evaluated the consistency of estimates and assumptions relating to costs applicable to revenue and store-level SG&A in the discounted cash flow model for the reporting unit to those used by management in other annual forecasting activities.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the selected discount rate, including the CSRP, by:

– Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

– Developing a range of independent estimates and comparing those to the discount rate selected by management.

– Evaluating the interaction between the discount rate and the forecasts to understand and sensitize management’s assumptions regarding risk inherent in the forecasts.

– Evaluating the forecasts to understand and sensitize management's assumptions regarding the risk inherent in the forecasts.

/s/ Deloitte & Touche LLP

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Other assets 40,058 28,336

Noncurrent assets of discontinued operations — 2,779

Total noncurrent assets 1,757,943 1,775,841

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Current operating lease obligations 99,694 85,090

Current liabilities of discontinued operations — 302

Total current liabilities 468,274 397,700

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and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive (Loss) Income

In Thousands, Except Earnings Per Share

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Interest expense, net 16,184 14,339 462

Loss on extinguishment of debt

Earnings (loss) before income taxes

(Gain) loss on extinguishment of debt

( 859 ) 599 —

Income tax provision 4,137 18,691 21,081

Earnings (loss) from continuing operations before income taxes

( 25,684 ) 9,552 52,304

Income tax provision (benefit)

1,481 6,006 15,545

Income (loss) from continuing operations, net of tax ( 27,165 ) 3,546 36,759

Income (loss) from discontinued operations, net of tax (See Note 2)

( 1,334 ) ( 69,447 ) 5,363

Net income (loss)

$ ( 28,499 ) $ ( 65,901 ) $ 42,122

Earnings (loss) per share:

Basic $ ( 0.84 ) $ 0.53 $ 1.57

Diluted $ ( 0.84 ) $ 0.52 $ 1.43

Basic Earnings (loss) per share:

Continuing operations

$ ( 0.35 ) $ 0.05 $ 0.46

Discontinued operations

$ ( 0.02 ) $ ( 0.89 ) $ 0.07

$ ( 0.36 ) $ ( 0.84 ) $ 0.53

Diluted Earnings (loss) per share:

Continuing operations $ ( 0.35 ) $ 0.05 $ 0.46

Discontinued operations $ ( 0.02 ) $ ( 0.88 ) $ 0.07

$ ( 0.36 ) $ ( 0.84 ) $ 0.52

Weighted average shares outstanding:

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Tax provision of unrealized gain on hedge instruments

259 259 3,698

Comprehensive income (loss)

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Balances at January 2, 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 )

Repurchase of 2025 Notes — — ( 1 ) — — — ( 1 )

Unrealized gain on hedge instruments, net of tax — — — 761 — — 761

Net income — — — — 128,244 — 128,244

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

Net income (loss) — — — — 42,122 — 42,122

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

Issuance of common stock 558 6 1,832 — — — 1,838

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Purchase of treasury stock ( 1,239 ) — — — — ( 28,415 ) ( 28,415 )

Repurchase of 2025 Notes — — ( 1 ) — — — ( 1 )

Unrealized gain on hedge instruments, net of tax — — — 760 — — 760

Net income — — — — 42,122 — 42,122

Net income (loss) — — — — ( 65,901 ) — ( 65,901 )

Balances at December 30, 2023 78,311 848 788,967 ( 419 ) 254,616 ( 214,594 ) 829,418

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Cash flows from financing activities:

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

Repayments on long-term debt ( 222,064 ) ( 103,000 ) ( 4 )

Proceeds from issuance of long-term debt

Proceeds from issuance of common stock 1,507 1,837 3,744

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Business and Significant Accounting Policies.

Termination of Walmart Partnership

Discontinued Operations

Details of Cost Savings Plan

Details of Certain Balance Sheet Accounts

Goodwill and Intangible Assets

Long-term Debt

Stock Incentive Plans

Revenue f rom Contracts w ith Customers

Fair Value Measurement

Stock Incentive Plan

Revenue from Contracts with Customers

Fair Value Measurement of Financial Assets and Liabilities

Deferred Revenue

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Accumulated Other Comprehensive Loss

Quarterly Financial Information

Subsequent Event

National Vision Holdings, Inc.

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We operated 1,240 and 1,188 retail optical locations in the U.S.

and its territories as of the fiscal years ended December 30, 2023 and December 31, 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”).

and its territories as of the fiscal years ended December 28, 2024 and December 30, 2023, respectively, through our four 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.

We also operate omni-channel websites for our America’s Best, Eyeglass World and Military brands, as well as a dedicated e-commerce website.

We operated 225 stores for Walmart Inc.

(“Walmart”) as of December 30, 2023;

these stores are not reflected in the store counts above and the operating results of these stores are presented as discontinued operations.

Also presented in discontinued operations are the majority of the operations formerly conducted by the Company’s Arlington Contact Lens (“AC Lens”) subsidiary, which sold eyeglasses, contact lenses and optical accessory products to retail customers through various websites, and distributed contact lenses to Walmart and Sam’s Club store locations.

Refer to Note 2.

“Termination of Walmart Partnership” for developments related to the Walmart exit.

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.

“Discontinued Operations” for more information.

We also operate a specialized health maintenance organization (“HMO”) that is licensed as a single-service health plan under California law.

The HMO issues individual vision plans in connection with our America’s Best operations in California, and until February 23, 2024, provided, or arranged for the provision of, optometric services at the offices next to certain Walmart stores throughout California.

We operate on a retail fiscal calendar that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to December 31.

The HMO issues individual vision plans in connection with our America’s Best operations in California.

We operate on a retail fiscal calendar that results in a given fiscal year consisting of a 52-week or 53-week period ending on the Saturday closest to December 31.

In a 52-week fiscal year, each quarter contains 13 weeks of operations;

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

References herein to “fiscal year 2023”, “fiscal year 2022” and “fiscal year 2021,” relate to the 52 weeks ended December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

References herein to “fiscal year 2024”, “fiscal year 2023” and “fiscal year 2022,” relate to the 52 weeks ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

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 amounts within the consolidated financial statements and footnotes to the financial statements for fiscal year 2023 and fiscal year 2022 have been reclassified to conform to the fiscal year 2024 presentation.

Retrospective reclassifications have been made to prior period financial statements and disclosures to present the discontinued operations.

Refer to Note 2.

“Discontinued Operations” for more information on discontinued operations.

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.

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The total assets of the consolidated VIEs included in the accompanying Consolidated Balance Sheets as of December 28, 2024 and December 30, 2023, were $ 7.0 million and $ 8.3 million, respectively, and the total liabilities of the consolidated VIEs were $ 8.4 million and $ 9.8 million, respectively.

Certain fiscal year 2022 and fiscal year 2021 amounts within the Consolidated Statements of Cash Flows and footnotes to the financial statements have been reclassified to conform to the fiscal year 2023 presentation.

Use of Estimates

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

On November 29, 2021, the Board authorized an increase from $ 50 million to $ 100 million in aggregate amount of shares of the Company’s

common stock that may be repurchased under the Company’s current share repurchase program.

On November 29, 2021, the Company’s Board of Directors authorized an increase from $ 50 million to $ 100 million in aggregate amount of shares of the Company’s common stock that may be repurchased under the Company’s current share repurchase program.

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.

During fiscal years 2023, 2022, and 2021, the Company repurchased 1.1 million shares of its common stock for $ 25.0 million, 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.

The Company’s original share repurchase authorization expired on December 30, 2023, and had remaining capacity of $ 25 million.

Effective February 23, 2024, the Board authorized the Company to repurchase up to $ 50 million aggregate amount of shares of the Company’s common stock until January 3, 2026.

As of December 28, 2024, $ 50 million remains available under the share repurchase authorization.

During fiscal years 2023 and 2022, the Company repurchased 1.1 million shares of its common stock for $ 25 million and 2.7 million shares of its common stock for $ 80 million, respectively, under the share repurchase program.

The authorization permits the Company to make purchases of its common stock from time to time in the open market or privately negotiated transactions, and pursuant to pre-set trading plans meeting the requirements of all applicable securities laws and regulations.

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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.

Amounts receivable under the CARES Act were $ 9.0 million as of both December 30, 2023 and December 31, 2022.

Amounts receivable under the CARES Act were $ 9.0 million as of December 28, 2024 and December 30, 2023.

Credits recognized under the CARES Act offset deferred 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.

133 was signed into law on December 27, 2020 and, among other things, allows for 100% deductibility of meals and entertainment expenses for the tax years ending in 2022 and 2021.

133 was signed into law on December 27, 2020 and, among other things, allows for 100% deductibility of meals and entertainment expenses for the tax years ended 2022 and 2021.

In 2023, the deductibility was reduced to 50% of meals and 0% of entertainment expenses.

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Accounts receivable associated with revenues consist primarily of trade receivables and credit card receivables.

Trade receivables consist primarily of receivables from managed care payors and receivables from major retailers.

Trade receivables consist primarily of receivables from managed care payors.

While we have relationships with almost all vision care insurers in the U.S.

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

The Company’s inventory consists primarily of contact lenses, eyeglass frames and unprocessed eyeglass lenses.

The Company’s inventory consists primarily of eyeglass frames, contact lenses, and unprocessed eyeglass lenses.

A significant portion of our inventory is supplied by a small number of key vendors.

During fiscal year 2023, 92 % of contact lens expenditures were with three vendors and 89 % of lens expenditures were with one vendor.

During fiscal year 2024, approximately 94 % of contact lens expenditures were with three vendors and approximately 82 % of lens expenditures were with one vendor.

This exposes us to vendor concentration risk.

We are less exposed to a supplier risk for our eyeglass frames as only 60 % of frame expenditures were with two vendors.

We are less exposed to a supplier risk for our eyeglass frames as only approximately 54 % of frame expenditures were with two vendors.

Property and Equipment

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Depreciation associated with P&E is included in Depreciation and amortization in the accompanying Consolidated Statements of Operations.

When we retire or otherwise dispose of P&E, we remove the cost and related accumulated depreciation from our accounts and recognize any gain or loss on the sale of such assets in SG&A in the Consolidated Statements of Operations.

We capitalize major replacements and remodeling, and recognize expenditures for maintenance and repairs in SG&A.

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Implementation costs are included in Other assets in our Consolidated Balance Sheets.

Amortization of capitalized implementation costs is included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income.

Amortization of capitalized implementation costs is included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Goodwill and Intangible Assets

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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 or intangible assets are 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 year 2023 was October 1, 2023.

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 year 2024 was September 29, 2024.

Costs to renew intangible assets are expensed as incurred.

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

We amortize finite-lived intangible assets on a straight-line basis over their estimated useful lives.

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

Goodwill is impaired if a reporting unit’s carrying value exceeds its fair value, and impairment is calculated as the excess between carrying value over fair value.

We consider each of our operating segments to be reporting units.

We estimate the fair value of our reporting units using the income approach, which is based on a discounted cash flow analysis and calculate the fair value of reporting units by estimating after-tax cash flows discounted using a weighted average cost of capital that includes a company-specific risk premium.

We estimate the fair value of our reporting units using the income approach, which is based on a discounted cash flow analysis and involves estimating after-tax cash flows that are discounted using a weighted average cost of capital that considers both market risk and company-specific risk.

The cash flows used in the analysis are based on financial forecasts developed internally by management and require significant judgment.

The significant unobservable inputs used in the fair value measurement of the reporting units are revenue growth rate, cost of sales, payroll expense growth rate and other store expenses growth rate.

Significant unobservable inputs used in the fair value measurement of the reporting units include, but are not limited to, revenue growth rates, costs applicable to revenue, SG&A and discount rates.

These assumptions are sensitive to future changes in the business profitability, changes in our business strategy and external market conditions, among other factors.

A decrease to the long-term revenue growth rate assumption or an increase to the expense growth rate assumptions could require us to record goodwill impairment charges.

If impairment indicators related to amortizing intangible assets are present, we estimate cash flows expected to be generated over the remaining useful lives of the related assets based on current projections.

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

A decrease to the

long-term revenue growth rate assumption or an increase to the expense growth rate assumptions could require us to record goodwill impairment charges.

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;

the discounted cash flow analysis uses a weighted average cost of capital that includes a company-specific risk premium.

the discounted cash flow analysis uses a weighted average cost of capital that considers both market risk and company-specific risk.

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

“Termination of Walmart Partnership” and Note 4.

“Goodwill and Intangible Assets” for further detail on impairment of goodwill and intangible assets.

The Company previously had an investment in a private start-up company whose principal business is licensing software to eyeglass retailers.

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.

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 expense (income), net on the Consolidated Statement of Operations of $ 2.7 million in fiscal year 2022 and $ 2.4 million in fiscal year 2021.

Finite-lived, amortizing intangible assets primarily consist of our Fred Meyer contracts and relationship.

We amortize finite-lived intangible assets on a straight-line basis over their estimated useful lives.

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

“Discontinued Operations”, Note 5.

“Goodwill and Intangible Assets”, and Note 11.

“Fair Value Measurement” for further detail on impairment of goodwill and intangible assets.

In the second quarter of fiscal year 2023, we completed an investment in an entity specializing in applying artificial intelligence-powered screening and diagnostic tools to retinal imaging.

The initial investment of $ 0.9 million and subsequent milestone payment of $ 0.9 million were both recognized in Other assets in the Consolidated Balance Sheets as of December 30, 2023 and in Other in the investing section of the Consolidated Statements of Cash Flows for fiscal year 2023.

We have agreed to invest up to an additional $ 1.5 million in the entity upon the completion of certain milestones.

During fiscal year 2024 and 2023, we invested $ 1.5 million and $ 1.8 million, respectively.

The investment is valued at cost.

In fiscal year 2024, we completed an investment in a convertible promissory note issued by this entity.

The investments are recognized in Other assets in the Consolidated Balance Sheets and in Other in the investing section of the Consolidated Statements of Cash Flows for fiscal years fiscal years 2024 and 2023.

Refer to Note 11.

“Fair Value Measurement” for more information on the promissory note.

We previously had an investment in an entity that was acquired by a third party in fiscal year 2021.

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

These proceeds were reflected in Other expense (income), net on the Consolidated Statements of Operations and Comprehensive (Loss) Income and in Other in the investing section of the Consolidated Statements of Cash Flows.

Fair Value Measurement of Assets and Liabilities

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For certain assets the Company may also use a valuation technique consistent with the income approach whereby future cash flows are converted to a single discounted amount.

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.

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

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.

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We record self-insurance liabilities based on claims filed, including the development of those claims and an estimate of claims incurred but not yet reported.

Should a different amount of claims occur compared to what was estimated, or costs of the claims increase or decrease beyond what was anticipated, liabilities may need to be adjusted accordingly.

Should a different amount of claims occur compared to what was estimated, or costs of the claims increase or decrease beyond what was anticipated, liabilities may need to be adjusted

We periodically update our estimates and record such adjustments in the period in which such determination is made.

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Derivative Financial Instruments

The Company uses interest rate derivatives to manage the exposure of its Term Secured Overnight Financing Rate (“Term SOFR”)-based debt to fluctuations in interest rates.

The Company has used interest rate derivatives to manage the exposure of its Term Secured Overnight Financing Rate (“Term SOFR”)-based debt to fluctuations in interest rates.

If our derivatives are designated as cash flow hedges, we formally document our hedge relationships, including identification of the hedging instruments and the hedged items, as well as our risk management objectives and strategies for undertaking the hedge transactions.

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Fair value represents estimated amounts we would receive or pay upon a termination of interest rate derivatives prior to their scheduled expiration dates.

The fair value was based on information that is model-driven and whose inputs were observable (Level 2 inputs) such as Term SOFR forward rates.

The fair value is based on information that is model-driven and whose inputs were observable (Level 2 inputs) such as Term SOFR forward rates.

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

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The impact of credit risk, as well as the ability of each party to fulfill its obligations under our derivative financial instruments, is considered in determining the fair value of the contracts.

We do not have any credit risk-related contingent features or collateral requirements associated with our derivative contracts.

We were party to an interest rate collar to offset the variability of cash flows in Term SOFR-indexed debt interest payments.

The interest rate collar matured on July 18, 2024.

“Interest Rate Derivatives” for further details.

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Revenue Recognition

Net product sales include sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers (including those covered by managed care) and sales of inventory in which our customer is another retail entity.

Net product sales include sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers (including those covered by managed care).

Net sales of services and plans include sales of eye exams, eye care club membership fees, product protection plans (i.e.

warranties) and HMO vision plan fees.

Net sales of services and plans also include fees we earn for managing certain Vision Centers located in Walmart stores and performing laboratory processing services for our Legacy partner.

At our America’s Best brand, our signature offer is two pairs of eyeglasses and a free eye exam for one low price (“two-pair offer”).

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Shipping and handling costs are accounted for as fulfillment costs and are included in costs applicable to revenue.

An increasing percentage of our customers receive vision insurance coverage through managed care payors.

These payors represent an increasingly significant portion of our overall revenues and our revenue growth and represented approximately 40 % of our revenues from continuing operations in fiscal year 2024.

We record reductions in revenue for estimated price concessions granted to managed care providers.

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Costs of services and plans include costs associated with warranty programs, eye care club memberships, HMO vision plan fees, eye care practitioner and eye exam technician payroll, taxes and benefits and optometric and other service costs.

Depreciation and amortization are excluded from costs applicable to revenue and are presented separately on the accompanying Consolidated Statements of Operations.

Depreciation and amortization are excluded from costs applicable to revenue and are presented separately on the accompanying Consolidated Statements of Operations and Comprehensive (Loss) Income.

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.

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Advertising expenses were $ 138.6 million, $ 137.2 million and $ 138.5 million for fiscal years 2024, 2023 and 2022, respectively.

We lease our stores, distribution centers, corporate offices, and most of our laboratories.

We lease our stores, distribution center, corporate offices, and most of our laboratories.

These leases generally have noncancelable lease terms of between five and 10 years, with an option to renew for additional terms of one to 10 years or more.

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For Vista Optical locations in Fred Meyer stores, we pay the greater of fixed rent or a percentage of sales after certain minimum thresholds are achieved.

The Company’s leases generally require us to pay insurance, real estate taxes and common area maintenance expenses, substantially all of which are variable and not included in the measurement of the lease liability.

The Company’s leases generally require us to pay insurance, real estate taxes and common area maintenance expenses,

substantially all of which are variable and not included in the measurement of the lease liability.

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

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

With respect to lease accounting guidance, the Company’s management & services agreement with its Legacy partner does not contain a lease arrangement.

The lease liability is measured at the present value of future lease payments over the lease term less TIAs receivable, and the ROU asset is measured at the lease liability amount, adjusted for prepaid lease payments, TIAs received and the lessee’s initial direct costs.

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

Factors incorporated into the calculation of the lease incremental borrowing rate include lease term, borrowing rates on the Company’s long-term debt, fixed rates on interest rate swaps, Term SOFR 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, Term SOFR 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.

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We assess non-store long-lived assets, including capitalized software costs in use or under development, for impairment if events or changes in circumstances indicate that the carrying value of those assets may not be recoverable.

In fiscal year 2021, we impaired $ 0.8 million related to a write-off of certain capitalized software costs that were deemed to be obsolete due to a decision to cease further development.

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

In fiscal year 2023, we impaired $ 5.6 million of capitalized software costs related to the impending termination of the agreement between AC Lens and Walmart.

Store fleet review

During fiscal year 2024, we completed a comprehensive store fleet review and decided on actions to address identified stores.

As a result of this review, we announced plans to close 39 stores and convert four Eyeglass Word stores into America’s Best stores.

As of December 28, 2024, 12 of these locations were closed and four Eyeglass Word stores were converted into America’s Best stores.

Total costs incurred as a result of the store fleet review were immaterial for fiscal year 2024 due to severance and other charges being offset by non-cash gains related to remeasurements of store leases.

Substantially all of the costs were recognized in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

During fiscal year 2024, we recognized $ 10.5 million of non-cash intangible asset impairment and $ 4.3 million of non-cash tangible long-lived and ROU asset impairment related to the stores we planned to close as part of the store fleet review.

Both charges were recognized in Asset impairment in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Refer to Note 5.

“Termination of Walmart Partnership” for more information related to impairment charges related to the Legacy segment and AC Lens.

Goodwill and Intangible Assets and Note 11.

“Fair Value Measurement” for additional information on the impairment charges.

All costs incurred related to the store fleet review were recognized in the corporate and other category.

Liabilities related to this plan are recorded in Other payables and accrued expenses in the Consolidated Balance Sheets.

Discontinued Operations

In accordance with ASC 205-20 “Presentation of Financial Statements:

Discontinued Operations,” a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.

In the period in which the component meets held-for-sale or discontinued operations criteria, the major current assets, non-current assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations.

Our operations related to Walmart, including our former Legacy reportable segment, as well as the majority of our AC Lens operations, met the requirements to be classified as discontinued operations.

Accordingly, we classified the results of these operations as discontinued operations in the Consolidated Statements of Operations and Comprehensive (Loss) Income for all periods presented.

The results of all discontinued operations, less applicable income taxes, are reported as components of net income separate from the net income of continuing operations, and certain assets and liabilities associated with these operations were classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheets for the periods presented.

Additionally, the cash flows and comprehensive (loss) income of discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows and Consolidated Statements of Operations and Comprehensive (Loss) Income, respectively, for all periods presented.

All amounts included in the notes to the consolidated financial statements relate to continuing operations unless otherwise noted.

For additional information, see Note 2.

“Discontinued Operations.”

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

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Adoption of New Accounting Pronouncements

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

In August 2020, the FASB issued ASU No.

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

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

This new guidance simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity.

The guidance also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share.

ASU 2020-06 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021.

The company early adopted the guidance in the first quarter of 2021 using the modified retrospective approach and recognized a cumulative effect of the change of $ 7.3 million as an adjustment to the opening balance of retained earnings.

Upon adoption of ASU 2020-06 the Company eliminated the equity components related to its convertible debt and increased the related liability components by $ 82.9 million.

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.

Future Adoption of Accounting Pronouncements

Reference Rate Reform.

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.

Refer to Note 5.

“Long-term Debt” and Note 13.

“Interest Rate Derivatives” for more information on our transition from LIBOR to Term SOFR.

Segment reporting.

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This update provides, among other things, enhanced segment disclosure requirements including disclosures about significant segment expenses.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years

beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company adopted this guidance in the fourth quarter of fiscal year 2024 and has provided the applicable disclosures in.

“Segment Reporting.”

Future Adoption of Accounting Pronouncements

Income taxes.

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The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

Expense Disaggregation Disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive (Loss) Income (Topic 220-40):

Expense Disaggregation Disclosures (“ASU 2024-03”).

This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and SG&A, and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation and amortization.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

Induced Conversions of Convertible Debt Instruments.

In November 2024, FASB issued ASU 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion or extinguishment of convertible debt.

This guidance is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods, with early and retrospective adoption permitted.

The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

The FASB issued other accounting guidance during fiscal year 2024 that is not currently applicable or expected to have a material impact on the Company’s financial statements, and therefore, is not described above.

Termination of Walmart Partnership

On July 20, 2023, the Company received a notice of non-renewal from Walmart Inc.

(“Walmart”) of the Management & Services Agreement by and between NVI and Walmart, dated as of May 1, 2012 (as amended, supplemented or otherwise modified from time to time, the “Walmart MSA”).

Discontinued Operations

On July 20, 2023, the Company received a notice of non-renewal from Walmart of the Management & Services Agreement by and between NVI and Walmart, dated as of May 1, 2012 (as amended, supplemented or otherwise modified from time to time, the “Walmart MSA”).

In accordance with the terms of the Walmart MSA and the notice, the agreement terminated as of February 23, 2024 (the “Termination Date”).

In connection with the termination of the Walmart MSA, the Amended and Restated Supplier Agreement between NVI and Walmart, dated as of January 17, 2017 (the “Walmart Supplier Agreement”), and certain other related agreements also terminated as of the Termination Date.

In connection with the termination of the Walmart MSA, the Amended and Restated Supplier Agreement between NVI and Walmart, dated as of January 17, 2017;

the agreement between FirstSight Vision Services, Inc.

(“FirstSight”), a wholly-owned subsidiary of the Company, and Walmart, which arranged for the provision by FirstSight of optometric services at optometric offices next to certain Walmart stores throughout California;

and certain other related agreements also terminated as of the Termination Date.

The Walmart MSA includes provisions governing the transition period and post-termination obligations of the parties.

In connection with the termination of the Walmart MSA, the agreement between FirstSight Vision Services, Inc.

Additionally, another wholly-owned subsidiary of the Company, Arlington Contacts Lens Service, Inc.

(“AC Lens”), has delivered notices of non-renewal of the agreements it has with Walmart and its affiliate Sam’s Club regarding wholesale contact lenses distribution and related services, such that these agreements will terminate as of June 30, 2024, unless an earlier date is agreed by the parties, and the Company will wind down its remaining AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that the Company provided to Walmart and Sam’s Club.

Additionally, in view of the termination of the Walmart MSA and impending wind down of AC Lens operations, the Company took actions in fiscal year 2023 to streamline corporate overhead including optimizing non-customer facing labor costs, as well as reducing travel expenses and third-party spend.

The following table details charges recognized in the periods shown.

We may incur other exit-related costs, which may be material.

We anticipate approximately $ 8 million of additional costs to be incurred in connection with the termination of the Walmart partnership in 2024.

Fiscal Year 2023

Impairment charges

Employee compensation benefits

Professional fees and other expenses

Inventory obsolescence

The table below summarized the Company’s Other payables and accrued expenses balance related to the termination of the Walmart partnership.

AC Lens delivered notices of non-renewal of the agreements it has with Walmart and its affiliate Sam’s Club regarding wholesale contact lenses distribution and related services, such that these agreements terminated during the three months ended June 29, 2024, and the Company wound down the majority of AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that the Company provided to Walmart and Sam’s Club.

We determined that the various terminations of agreements described above as well as the subsequent decision to consolidate our distribution network and close the distribution center in Ohio constituted triggering events, and accordingly, we recognized impairment charges during the year ended December 30, 2023, consisting primarily of goodwill impairment of our former Legacy segment.

During fiscal year 2024 and 2023, we recorded $ 4.4 million and $ 5.2 million, respectively, of net expense associated with the termination of the Walmart MSA and wind down of AC Lens, which consisted of employee compensation benefits, early termination fees, and other exit related costs.

These charges were recorded in both Selling, general, and administrative expenses and Costs applicable to revenue for discontinued operations.

The plan has been substantially completed and we do not anticipate additional material costs related to this plan.

As a result of the termination of the Walmart MSA and wind down of AC Lens operations, our former Legacy reportable segment and certain other results previously included in corporate and other as well as related effects of unearned and deferred revenue, met the criteria to be presented as discontinued operations.

Accordingly, the assets and liabilities and results of operations of the discontinued operations have been presented in the tables below.

Refer to Note 3.

“Details of Cost Savings Plan” for more information on the cost savings plan related to our continuing operations.

Major classes of assets and liabilities related to discontinued operations are presented in the table below.

We have retained working capital and deferred tax balances related to discontinued operations;

consequently, these items are not part of the disposal group.

December 28, 2024 As of

December 30, 2023

Noncurrent assets:

Property and equipment, net

Right of use assets

Other intangible assets, net — 99

Total noncurrent assets of discontinued operations

Current liabilities:

Current operating lease obligations $ — $ 302

Total current liabilities of discontinued operations

The following table presents income (loss) from discontinued operations, net of tax:

Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

Net product sales

$ 126,960 $ 320,907 $ 308,013

Net sales of services and plans

4,513 49,190 52,716

Total net revenue

131,473 370,097 360,729

Costs applicable to revenue (exclusive of depreciation and amortization):

109,637 240,578 234,257

Services and plans

2,585 25,677 23,665

Total costs applicable to revenue

112,222 266,255 257,922

Operating expenses:

Selling, general and administrative expenses

21,851 87,126 82,746

Depreciation and amortization 1,331 8,378 11,266

Asset impairment 248 79,714 284

Other expense (income), net

( 87 ) ( 60 ) 2

Total operating expenses 23,343 175,158 94,298

Earnings (loss) from discontinued operations before income taxes

( 4,092 ) ( 71,316 ) 8,509

Income tax provision (benefit) from discontinued operations

( 2,758 ) ( 1,869 ) 3,146

Income (loss) from discontinued operations, net of tax

$ ( 1,334 ) $ ( 69,447 ) $ 5,363

The following table presents significant non-cash items and cash flows from investing activities related to discontinued operations:

Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization $ 1,331 8,378 11,266

Asset impairment 248 79,714 284

Stock-based compensation expense — 971 756

Inventory adjustments 442 ( 177 ) ( 297 )

( 1,647 ) — —

Cash flows from investing activities:

Purchase of property and equipment — ( 1,781 ) ( 4,059 )

Other 1,738 — —

Details of Cost Savings Plan

In connection with the discontinued operations, the Company implemented a cost savings plan that included optimizing non-customer facing labor costs, as well as reducing travel expenses and third-party spend.

We have incurred $ 1.9 million since the inception of the cost savings plan, which is included within our continuing operations results.

The plan has been substantially completed and we do not anticipate additional material costs related to this plan.

The liability related to this plan is recorded in Other payables and accrued expenses in the Consolidated Balance Sheets, and the remaining payments related to this liability were made after December 28, 2024.

This disclosure excludes the impact of the Walmart partnership termination and wind down of AC Lens operations, which are currently presented under discontinued operations.

Employee Compensation Benefits

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Expenses recognized during the period

Expenses paid during the period

Payments during the period

Balance at December 28, 2024

Impairment charges

We determined that the various terminations of agreements described above as well as the subsequent decision to consolidate our distribution network and close the distribution center in Ohio constituted triggering events, and accordingly, performed impairment tests during the year ended December 30, 2023 on assets related to the Walmart partnership.

We used the discounted cash flow method of the income approach in our analyses and considered projected cash flows for the remaining terms of the various agreements and other costs related to the termination of the Walmart partnership, and used discount rates between 7.8 % and 10.0 % depending on the asset or asset group being valued.

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

These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy.

The impairment charges recognized during the year ended December 30, 2023 resulting from the termination of the Walmart partnership include $ 60.1 million related to goodwill of the Legacy segment, $ 9.1 million related to the Walmart contracts and relationship intangible asset, and $ 10.5 million related to property and equipment at Walmart stores and associated with our AC Lens business.

These expenses were recognized in Corporate/Other, and the impairment charges are reflected in Asset impairment in the Consolidated Statements of Operations and Comprehensive Income.

The assets impaired during the year ended December 30, 2023 as a result of the termination of the Walmart partnership were written down to their fair values totaling $ 1.5 million as of the respective valuation dates.

We adjusted the useful lives of the impaired intangible and fixed assets to be aligned with the respective contract termination dates.

The impairment testing date for (i) goodwill related to the Legacy segment, (ii) the Walmart contracts and relationships intangible asset and (iii) property and equipment located in Walmart stores was contemporaneous with the date that we received notice of non-renewal from Walmart.

Other assets related to the AC Lens operations and Walmart partnership were tested at various dates during the third and fourth quarters.

We did not impair certain assets that we believe can be sold or used in other stores in our Owned & Host segment after the Termination Date.

We determined that all long-lived Walmart and AC Lens assets were held and used as of December 30, 2023 and were not available for immediate sale.

Refer to the Note 1.

“Description of Business and Basis of Presentation” for more details on our impairment testing.

Employee compensation benefits

During the year ended December 30, 2023, we recognized $ 0.6 million in Costs of services and plans and $ 5.1 million in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to retention bonus programs implemented for certain associates to ensure continuity of business, as well as termination benefits for certain associates that have occurred and are probable to occur within the next 12 months.

Of the amounts recorded in Selling, general and administrative expenses, $ 1.5 million is related to termination benefits for associates affected by the actions taken to streamline corporate overhead.

The liability for employee compensation benefits is recorded in Other payables and accrued expenses in the Consolidated Balance Sheets.

Professional Fees and Other expenses

During the year ended December 30, 2023, we recognized $ 1.2 million in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to professional fees and other expenses, including advisory fees to assist with the exit.

Inventory Obsolescence

During the year ended December 30, 2023, we recognized $ 0.2 million in Costs applicable to revenue in the Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to inventory obsolescence.

During fiscal year 2024 and 2023, we recognized $ 0.1 million and $ 1.8 million, respectively, in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income, in the corporate and other category, related to termination benefits for certain associates;

these charges were recognized in accordance with FASB guidance on employers’ accounting for post-employment benefits and guidance on accounting for costs associated with exit or disposal activities, as appropriate.

Details of Certain Balance Sheet Accounts

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Reserves for customer returns and remakes 4,840 9,093

Legacy management & services agreement 6,068 6,488

Payable to Walmart

Income tax payable 3,641 1,863

Supplies and other store support expenses 5,038 5,434

Litigation settlements 4,950 500

Other 22,976 16,719

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Owned & Host Segment $ 736,901 $ ( 38,596 ) $ 736,901 $ ( 19,357 )

Legacy Segment 60,069 ( 60,069 ) 60,069 —

Corporate/Other 8,107 ( 8,107 ) 8,107 ( 8,107 )

$ 805,077 $ ( 87,533 ) $ 805,077 $ ( 27,464 )

The Owned & Host Segment’s goodwill contains $ 606.5 million related to America’s Best and $ 91.8 million related to Eyeglass World.

Accumulated goodwill impairment relates to our Legacy, Fred Meyer, Military and AC Lens reporting units.

Accumulated goodwill impairment relates to our Eyeglass World, Fred Meyer and Military reporting units.

We tested the Eyeglass World goodwill for impairment as of September 29, 2024 as part of our annual goodwill impairment testing process and recognized an impairment of $ 19.2 million in fiscal 2024.

The impairment of Eyeglass World goodwill was due primarily to reduced projections of future growth and profitability.

Refer to Note 1.

“Business and Significant Accounting Policies” and Note 11.

“Fair Value Measurement” for more information on the goodwill impairment charge.

Indefinite-lived intangible assets by major asset class are as follows:

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Amortization Remaining Life

Contracts and relationships:

Fred Meyer contracts and relationships (1)

$ 8,400 $ ( 169 ) 12 $ 35,000 $ ( 14,915 ) 13

Fred Meyer 35,000 ( 14,915 ) 13 35,000 ( 13,389 ) 14

Other 151 ( 113 ) 1 151 ( 63 ) 2

$ 8,551 $ ( 282 ) $ 35,151 $ ( 14,978 )

(1) We recognized an impairment of $ 9.1 million on the Legacy contracts and relationships in fiscal year 2023.

(1) The gross carrying amount shown for this asset as of December 28, 2024 reflects the fair value as of the impairment testing date.

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

We tested the Fred Meyer contract and relationship intangible asset for recoverability as of September 28, 2024 due to the decision to close certain Fred Meyer stores as part of our store fleet review in the current period and recognized an impairment of $ 10.5 million in fiscal 2024.

Refer to Note 1.

“Termination of Walmart Partnership” for more information on our relationship with Walmart.

“Business and Significant Accounting Policies” and Note 11.

“Fair Value Measurement” for more information on the store fleet review and the impairment charge, respectively.

We intend to maintain our intangible assets.

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Thereafter 4,847

Long-term Debt

Long-term debt consists of the following:

Our debt consists of the following:

In thousands As of

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Revolving Loans, due June 13, 2028

Long-term debt before unamortized discount and issuance costs

Debt before unamortized discount and issuance costs

338,962 448,747

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( 1,602 ) ( 1,066 )

Long-term debt less debt discount and issuance costs

Debt less debt discount and issuance costs

337,169 445,184

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The remainder of the net proceeds are being used for general corporate purposes.

Prior to February 15, 2025, the 2025 Notes are convertible at the option of the holder only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the Last Reported Sale Price (as defined in the Indenture) per share of the Company’s common stock exceeds 130 % of the Conversion Price (as defined in the Indenture) for each of at least 20 Trading Days (as defined in the Indenture), whether or not consecutive, during the 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter;

Prior to February 15, 2025, the 2025 Notes were convertible at the option of the holders only under certain circumstances, which were not attained:

(i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the Last Reported Sale Price (as defined in the Indenture) per share of the Company’s common stock exceeded 130 % of the Conversion Price (as defined in the Indenture) for each of at least 20 Trading Days (as defined in the Indenture), whether or not consecutive, during the 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter;

(ii) during the five consecutive business days immediately after any ten consecutive Trading Day period (such ten consecutive trading day period, the “measurement period”) in which the Trading Price (as defined in the Indenture) per $ 1,000 principal amount of the 2025 Notes for each Trading Day of the measurement period was less than 98 % of the product of the Last Reported Sale Price per share of the Company’s common stock on such Trading Day and the conversion rate (as described below) on such Trading Day;

(iii) upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the Indenture.

(iv) if the Company calls such Notes for redemption.

On or after February 15, 2025 until 5:00 p.m., New York City time, on the second Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, the 2025 Notes will be convertible at the option of the holder at any time.

The 2025 Notes 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:

On or after February 15, 2025, until 5:00 p.m., New York City time, on the second Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, the 2025 Notes are convertible at the option of the holders at any time, into cash up to the amount of $1,000, with any excess amount convertible into shares, based on the applicable conversion rate at such time.

The 2025 Notes were 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:

issuance of stock dividends, splits and combinations;

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and certain other corporate transactions.

The Company can choose to settle upon conversion in cash, shares or a combination.

Based on the initial conversion rate, the 2025 Notes were 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 December 30, 2023, the 2025 Notes are convertible into 9.7 million shares of our common stock and a maximum of 12.4 million shares of our common stock.

As of December 28, 2024, the 2025 Notes were convertible into 2.7 million shares of our common stock and a maximum of 3.5 million shares of our common stock.

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

The holders of our term loan would have preference over the holders of the 2025 Notes in the event of a liquidation.

The Company adopted ASU 2020-06 as of January 3, 2021.

ASU 2020-06 eliminates the cash conversion and the beneficial conversion feature models.

Under the new convertible debt framework, the Company eliminated the equity components and increased the debt balance.

Refer to Note 1.

“Description of Business and Basis of Presentation” for further discussion of the adoption of ASU 2020-06.

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.

On November 14, 2023, the Company repurchased $ 100.0 million aggregate principal amount of the 2025 Notes for an aggregate cash repurchase price of $ 99.3 million.

The repurchase of the 2025 Notes was accounted for as an extinguishment of debt and resulted in a loss on extinguishment of debt of $ 0.6 million on its Consolidated Statement of Operations during fiscal year ended December 30, 2023, which includes a write-off of related deferred issuance costs of $ 0.9 million and third-party fees of $ 0.4 million.

After giving effect to the repurchase, $ 302.5 million principal amount remains outstanding from an initial issued principal balance of $ 402.5 million.

Our effective interest rate remained at 3.2 % as of December 28, 2024.

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

On August 12, 2024, the Company repurchased $ 217.7 million aggregate principal amount of the 2025 Notes for an aggregate cash repurchase price of $ 215.0 million plus accrued and unpaid interest on such notes.

The repurchase was accounted for as an extinguishment of debt and resulted in an extinguishment gain of $ 0.9 million on the Company’s Consolidated Statements of Operations during the twelve months ended December 28, 2024, which includes a write-off of related deferred issuance costs of $ 1.0 million and immediate recognition of third party-fees of $ 0.8 million.

The 2025 Notes mature on May 15, 2025, and due to the upcoming maturity the outstanding principal balance of $ 84.8 million is reflected as a current liability in the accompanying Consolidated Balance Sheets as of December 28, 2024.

As of December 28, 2024, the Company has $ 293.6 million of availability under its revolving credit facility, in addition to $ 73.9 million of cash on hand, which provides the Company with sufficient liquidity to repay the remaining balance of the 2025 Notes as they become due.

After giving effect to the repurchases, $ 84.8 million principal amount remains outstanding from an initial issued principal balance of $ 402.5 million.

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

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Amortization of issuance costs $ 1,282 $ 2,293 $ 2,283

As of December 30, 2023, the remaining period for the unamortized debt issuance costs balance related to the 2025 Notes was approximately one year .

As of December 30, 2023, the stock price conditions under which the 2025 Notes can be converted at the holders’ option were not met.

As of December 28, 2024, the remaining period for the unamortized debt issuance costs balance related to the 2025 Notes was less than one year .

Credit Agreement

Reference is made to (i) that certain Second Joinder and Restatement Agreement, dated as of June 13, 2023 (the “Second Restatement Agreement”), by and among the New Lenders party thereto, the Letter of Credit Issuers party thereto, Nautilus Acquisition Holdings, Inc.

(“Holdings”), a Delaware corporation and a wholly-owned subsidiary of the Company, NVI, the subsidiaries of NVI party thereto, as guarantors, Bank of America, N.A.

(“Holdings”), a Delaware corporation and a wholly-owned subsidiary of

the Company, NVI, the subsidiaries of NVI party thereto, as guarantors, Bank of America, N.A.

in its capacity as administrative agent and as collateral agent and (ii) the Second Amended and Restated Credit Agreement, dated as of June 13, 2023 (the “Credit Agreement”).

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We recognized $ 0.2 million of other refinancing fees in Interest expense (income), net during fiscal year 2023.

On August 9, 2024, Holdings, NVI and certain other subsidiaries of the Company entered into a Joinder Agreement (the “Joinder Agreement”) to the Credit Agreement.

The Joinder Agreement provides for, among other things, the establishment of incremental term loans in an aggregate principal amount of $ 115.0 million, provided to NVI on August 9, 2024.

These incremental term loans under the Joinder Agreement have the same terms as the existing term loans under the Credit Agreement.

The additional borrowings resulted in $ 0.9 million of fees deferred on the Consolidated Balance Sheets during the twelve months ended December 28, 2024.

After giving effect to additional borrowings, $ 254.2 million principal remains outstanding under Term Loan A.

The Second Restatement Agreement contains customary affirmative covenants, negative covenants, and events of default substantially comparable to the Original Credit Agreement.

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We were in compliance with all covenants related to our long-term debt as of December 28, 2024.

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.

The borrowing capacity remaining as of December 28, 2024 was $ 293.6 million due to a reduction of $ 6.4 million for letters of credit outstanding.

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Fiscal Year In thousands

2025 $ 101,338

Stock Incentive Plans

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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 2017 Omnibus Incentive Plan is 4,000,000 .

The total number of shares of common stock originally issuable under the 2017 Omnibus Incentive Plan was 4,000,000 .

On June 12, 2024, the Company’s stockholders approved the amendment and restatement of the 2017 Omnibus Incentive Plan, increasing the number of shares of common stock authorized for issuance by an additional 5,600,000 shares.

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

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RSUs and PSUs 16,457 18,312 10,758

RSAs — 314 852

Associate stock purchase plan 128 151 159

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$ 12,496 $ 14,362 $ 9,520

Stock options RSUs and PSUs

RSUs and PSUs

Unrecognized compensation cost ( in thousands )

$ 126 $ 30,791

Expected remaining weighted-average period of expense recognition (in years) 1.71

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In thousands except per share values Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

Weighted average grant date fair value per share of options granted $ — $ — $ 23.39

Fair value of options vested $ 635 $ 1,251 $ 3,073

Aggregate intrinsic value of options exercised $ 76 $ 147 $ 979

The fair value of service-based options was estimated using the Black-Scholes-Merton option pricing model.

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

Expected volatility 52.49 % to 54.03 %

Expected term range (in years) 6.00

Expected risk-free interest rate 0.97 % to 1.07 %

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

Most service-based options vest in three equal installments on the first, second and third anniversaries of the grant date.

The risk-free interest rate was based on the U.S.

Treasury yield curve.

The dividend yield was based on our expectation of not paying dividends on our common stock for the foreseeable future.

Performance-based options

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There were no vests of performance-based options during fiscal years 2024, 2023, and 2022.

There were no exercises of performance-based options during fiscal year 2023.

The aggregate intrinsic value of performance-based options exercised during fiscal years 2022 and 2021 was immaterial and $ 37.3 million, respectively.

There were no exercises of performance-based options during fiscal year 2024 and 2023.

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

The following tables summarize RSU and PSU awards activity:

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State ( 1,106 ) ( 2,111 ) ( 55 )

Income tax provision (benefit) $ 4,137 $ 18,691 $ 21,081

Income tax provision (benefit) from continuing operations

1,481 6,006 15,545

Our income tax provision (benefit) differs from the amounts computed by multiplying earnings (loss) before income taxes by the statutory federal income tax rate as shown in the following table:

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1,240 1,133 ( 27 )

Benefit of tax credits ( 747 ) ( 1,143 ) ( 1,229 )

Meals and entertainment 369 433 —

Other, net 1,857 ( 701 ) 1,152

Net income tax provision (benefit) $ 4,137 $ 18,691 $ 21,081

Effective income tax rate ( 6.7 ) % 30.7 % 14.1 %

The tax legislation signed into law on December 22, 2017 makes broad and complex changes to the U.S.

tax code including, but not limited to:

(1) reducing the U.S.

federal rate from 35% to 21%, effective January 1, 2018;

(2) eliminating the corporate alternative minimum tax (“AMT”) and changing how the credits can be realized;

(3) creating new limitations on deductions for interest expense;

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

Net income tax provision (benefit) from continuing operations

1,481 6,006 15,545

Effective income tax rate from continuing operations

( 5.8 ) % 62.9 % 29.7 %

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 made after December 31, 2022.

Due to the mechanics of the 15% alternative minimum tax, the Company is not currently subject to it.

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:

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As of fiscal year end 2024, our consolidated VIEs had available U.S.

federal NOL carry-forwards aggregating to $ 21.7 million that can be utilized to reduce future federal income taxes, of which $ 21.6 million of carry-forward losses do not expire and $ 0.1 million of carry-forward losses expire at the end of fiscal year 2037.

federal NOL carry-forwards aggregating to $ 17.7 million that can be utilized to reduce future federal income taxes, all of which does not expire.

We believe it is more likely than not that we will realize a tax benefit for these NOL’s in the future except for $ 11.7 million of NOL carry-forwards ($ 2.5 million tax effected) on certain consolidated VIEs where we recognized a full valuation allowance as of fiscal year end 2024.

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

For the fiscal year end 2023, we have no federal credits remaining, but carry various state tax credits totaling $ 0.3 million are available to offset certain future taxes.

These state credits carry a valuation allowance of $ 0.2 million as we do not expect to be able to utilize them in future tax years.

For the fiscal year end 2024, we carry various state tax credits totaling $ 0.3 million that are available to offset certain future taxes.

These state credits carry a valuation allowance of $ 0.2 million for the portion that we do not expect to be able to utilize 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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For sales of in-store non-prescription eyewear and related accessories, and paid eye exams, we recognize revenue at the point of sale.

Our point in time revenues include 1) retail sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers (including those covered by managed care), 2) eye exams and 3) wholesale sales of inventory in which our customer is another retail entity.

Revenues recognized over time primarily include product protection plans, eye care club memberships and management fees earned from our Legacy partner.

Refer to Note 2.

“Termination of Walmart Partnership” for developments related to the Legacy segment, AC Lens and FirstSight;

the following discussion of revenues generated by these businesses is applicable to fiscal years 2023, 2022 and 2021.

Revenues recognized over time primarily include product protection plans (i.e.

warranties) and eye care club memberships.

Revenues Recognized at a Point in Time

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Within our Owned & Host segment services and plans revenues, eye exam services sold on a stand-alone basis are also recognized at the point of sale which occurs immediately after the exam is performed.

Within our Legacy segment, product revenues include sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers in transactions where the retail customer uses a managed-care payor;

and wholesale sales of the same inventory types to the Legacy partner.

The revenue recognition for the retail sales are identical to similar sales in the Owned & Host segment.

Wholesale sales of inventory to the Legacy partner are recognized at the point in time when control of the inventory has been transferred in accordance with the contractual terms and conditions of sale.

Since the wholesale sales of inventory to the Legacy partner are a separate performance obligation in our management & services agreement with the Legacy partner, we considered the appropriate allocation of consideration to wholesale inventory sales.

We concluded that the difference between the stand-alone-selling price of the wholesale inventory and the contractual prices was not material.

Within our Legacy segment services and plans revenues, eye exam services sold to retail customers are recognized at the point of sale which occurs immediately after the exam is performed.

Corporate/Other

Revenues from our non-reportable Corporate/Other segment are attributable to wholly owned subsidiaries AC Lens and FirstSight.

AC Lens sells contact lenses and optical accessory products to retail customers through e-commerce, and recognizes revenue when products have been delivered to the customer.

AC Lens also distributes contact lenses at its cost to Walmart and Sam’s Club under fee for services arrangements.

This revenue is recorded on a gross basis as AC Lens is the principal in the arrangement since AC Lens controls the products in those transactions before the products are transferred to the customer.

FirstSight issues individual vision plans in connection with our America’s Best operations in California, and, until February 23, 2024, provided or arranged for the provision of optometric services at certain optometric offices next to Walmart and Sam’s Club stores in California.

Other revenues

Revenues from our non-reportable segments are attributable to our dedicated e-commerce website and FirstSight operations.

Our dedicated e-commerce website was previously managed by AC Lens and was transitioned to NVI.

Our e-commerce website sells contact lenses and optical accessory products to retail customers, and recognizes revenue when products have been delivered to the customer.

FirstSight issues individual vision plans in connection with our America’s Best operations in California.

Revenues Recognized Over Time

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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 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

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.

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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.

These fees are recorded on a net basis and are based primarily on sales of products and product protection plans to non-managed care customers.

We determined that under the terms of the arrangement our Legacy partner controls the products and services in the transaction with the retail customer and therefore we act as the agent in those transactions.

We recognize this service revenue using the “right to invoice” method because our right to payment corresponds directly with the value of the management services provided to our Legacy partner.

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

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Refer to Note 16.

“Segment Reporting” for the Company’s disaggregation of net revenue by reportable segment and product type.

As the reportable segments are aligned by similar economic factors, trends and customers, the reportable segment disaggregation view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors.

“Segment Reporting” for the Company’s disaggregation of net revenue by reportable segment/category and by product type.

As our operating segments are aligned by similar economic factors, trends and customers, the reportable segment view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors.

Information related to our leases is presented below:

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(a) The discount rate used to determine the lease assets and lease liabilities was derived upon considering (i) incremental borrowing rates on our term loan and revolving credit facility;

(ii) fixed rates on interest rate swaps;

(iii) Term SOFR margins for issuers of similar credit rating;

and (iv) effect of collateralization.

(ii) Term SOFR margins for issuers of similar credit rating;

and (iii) effect of collateralization.

As a majority of our leases are five -year and 10 -year leases, we determined a lease discount rate for such tenors and determined this discount rate is reasonable for leases that were entered into during the period.

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“Interest Rate Derivatives” for further details.

Convertible Promissory Note

On December 17, 2024, the Company purchased $ 1.3 million principal amount of a convertible promissory note issued by a private company.

The convertible promissory note is an investment that will convert to an equity stake in the private company upon a predetermined conversion event and is also convertible by us under certain circumstances.

The Company elected the fair value option in accordance with accounting guidance for financial instruments to record the convertible promissory note.

The fair value option allows an entity to account for the entire financial instrument at fair value with subsequent changes in fair value recognized in earnings through the consolidated statements of operations at each reporting date.

The Company elected the fair value option to account for the convertible promissory note because the Company believes it reflects the fair value of the note receivable and embedded features.

As of December 28, 2024, given the time from the execution of the note until the end of our fiscal year, we determined the fair value of the convertible promissory note approximated its carrying value of $ 1.3 million;

this investment is included in Other assets on the Consolidated Balance Sheets.

Refer to Note 1.

“Business and Significant Accounting Policies” for information on equity investments in this entity.

Non-recurring fair value measurements

We recognized impairments of $ 39.9 million during fiscal year 2024, primarily related to our EGW goodwill asset, Fred Meyer contracts and relationships intangible asset and our long-lived tangible store assets and ROU assets.

Comparatively, we recognized $ 2.7 million, and $ 5.5 million in fiscal years 2023 and 2022, respectively, primarily related to our long-lived tangible store assets and ROU assets.

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

These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy.

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

Refer to Note 2.

“Termination of Walmart Partnership” for more information on impairment charges related to the termination of the Walmart partnership.

“Discontinued Operations” for more information on impairment charges related to the termination of the Walmart partnership.

This section discusses fair value measurements unrelated to the termination of the Walmart partnership.

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The cash flows used in estimating fair value were discounted using market rates from 8.5 % to 11.5 %.

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

These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy.

The estimated remaining fair value of the assets impaired during fiscal years 2024, and 2023, was $ 5.6 million, and $ 2.8 million, respectively;

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Substantially all of the remaining fair value of the impaired store assets in fiscal years 2024 and 2023 represents the fair value of ROU assets.

Finite-Lived Intangible Assets

Related to the impairment recognized for the Fred Meyer contracts and relationships intangible asset, we estimated fair value using the discounted cash flow method of the income approach.

The cash flows included assumptions about future extensions of our relationship with Fred Meyer, as well as assumptions about future revenue growth and profitability, and were discounted using a rate of 9 %.

Refer to Note 1.

“Business and Significant Accounting Policies.”

“Business and Significant Accounting Policies” and Note 5.

“Goodwill and Intangible Assets” for more details on the Fred Meyer contracts and relationships intangible asset.

We used the discounted cash flow method of the income approach in our analyses and considered projected cash flows with a discount rate of 10.5 %.

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

This non-recurring fair value measurement is classified as Level 3 measurements in the fair value hierarchy.

The impairment charge recognized during the year ended December 28, 2024 resulting from the annual impairment testing was $ 19.2 million related to the goodwill of Eyeglass World.

The impairment charge is recognized in corporate and other and reflected in Asset impairment in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Refer to Note 1.

“Business and Significant Accounting Policies” and Note 5.

“Goodwill and Intangible Assets” for more details on the impairment charge.

Additional fair value information

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The carrying amounts of accounts payable and other payables and accrued expenses approximate fair value due to the short-term nature of those items.

Long-term Debt - Term Loan A and Revolving Loans

Term Loan A and Revolving Loans

Since the borrowings under the $ 254.2 million outstanding principal Term Loan A and $ 300.0 million aggregate principal Revolving Loans utilize variable interest rate setting mechanisms such as Term SOFR, the fair values of these borrowings are deemed to approximate the carrying values.

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Refer to Note 6.

“Long-term Debt.”

Long-term Debt - 2025 Notes

“Debt” for more information on these borrowings.

The estimated fair value of the 2025 Notes was approximately $ 83.3 million and $ 303.3 million, as of December 28, 2024 and December 30, 2023, respectively.

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Refer to Note 6.

“Long-term Debt” for more information on the 2025 Notes.

“Debt” for more information on the 2025 Notes.

Deferred Revenue

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The Company records an allowance for the estimated amount of future warranty costs when the related revenue is recognized, which is recorded in Other payables and accrued expenses on the accompanying Consolidated Balance Sheets.

Expense associated with warranty costs is presented in Cost of services and plans in the accompanying Consolidated Statements of Operations.

Expense associated with warranty costs is presented in Cost of services and plans in the accompanying Consolidated Statements of Operations and Comprehensive (Loss) Income.

Estimated future warranty costs are primarily based on historical experience of identified warranty claims.

However, there can be no assurance that future warranty costs will not exceed historical amounts.

However, there can be no assurance that

future warranty costs will not exceed historical amounts.

The following details the activity in our product warranty liability accounts:

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We match a portion of such deferred wages.

The expense for the plan was $ 7.8 million, $ 6.4 million and $ 8.7 million in the fiscal years ended 2023, 2022 and 2021, respectively.

Expense associated with our 401(k) plan is presented in SG&A in the Consolidated Statements of Operations.

The expense for the plan was $ 7.5 million, $ 7.2 million, and $ 5.8 million in fiscal years 2024, 2023, and 2022, respectively.

Expense associated with our 401(k) plan is presented in SG&A in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Legal Proceedings

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On September 29, 2023, the state court set the PAGA action for trial on October 7, 2024.

Mediation has been scheduled in March 2024.

The Company continues to dispute the plaintiff’s allegations and will vigorously defend the litigation.

The parties attended mediation on March 11, 2024, but a resolution of the matter was not reached at that time.

Following mediation, the parties agreed to a settlement of all claims alleged by the named plaintiff on behalf of himself and all putative class members and other aggrieved employees.

The Company will pay $ 4.5 million for the gross settlement fund in connection with the settlement.

The settlement is subject to approval by the court following a fairness hearing.

The parties agreed to move the federal and state court actions to state court for review of the settlement terms agreed to by the parties.

On June 6, 2023, the Company was served with notice of a former employee’s intention to file a representative action against the Company pursuant to California’s Private Attorneys General Act based on alleged violations of California’s wage and hour laws.

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On August 15, 2023, the parties filed a stipulation to stay the case in the Southern District of California pending the resolution of the lawsuit pending in the Northern District of California.

On August 21, 2023, the court entered an Order to Show Cause why the action should not be either dismissed or transferred to

the federal court for the Northern District of California.

On August 21, 2023, the court entered an Order to Show Cause why the action should not be either dismissed or transferred to the federal court for the Northern District of California.

Following the parties’ submission of their respective responses, the court dismissed the action without prejudice on September 11, 2023.

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On January 22, 2024, the plaintiff filed a demand for arbitration of the claims set forth in the Complaint previously filed in state court in June 2023.

Company filed its response to the arbitration demand and the parties have engaged in limited discovery.

We dispute the plaintiff’s allegations and intend to vigorously defend the litigation.

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.

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 “Securities Class Action”).

The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 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.

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The plaintiffs filed their response in opposition to this motion on October 5, 2023.

The court heard oral argument on this motion on January 18, 2024.

We dispute these allegations and intend to defend the litigation vigorously.

On March 30, 2024, the court granted the Company’s motion and dismissed the amended complaint with prejudice.

On April 29, 2024, the plaintiffs filed a motion for reconsideration of the order granting the motion to dismiss.

The Company and named officers filed a response in opposition to the plaintiffs’ motion for reconsideration on May 13, 2024, and the plaintiffs then filed a reply in support of their motion on May 28, 2024.

The Company disputes the allegations asserted by plaintiffs and will continue to defend the litigation vigorously.

On May 23, 2024, a stockholder derivative complaint was filed by a stockholder in the Delaware Court of Chancery, purportedly on behalf of the Company (the “Derivative Action”).

The Derivative Action is based on the same alleged facts and circumstances as the Securities Class Action and names certain of the Company’s officers, including our Chief Executive Officer and Chief Operating Officer, and the Company’s directors who were members of the Company’s Board of Directors during the relevant time period as defendants.

The Derivative Action alleges claims for breach of fiduciary duty, unjust enrichment, and violations of the Exchange Act and seeks to recover damages on behalf of the Company.

On July 24, 2024, the Company along with the named defendants, filed a motion to dismiss the complaint.

On September 9, 2024, the plaintiff filed an amended complaint.

Defendants filed a motion to dismiss the amended complaint on October 31, 2024.

The plaintiff filed an opposition to the motion to dismiss on December 16, 2024, and the defendants filed a reply brief on January 15, 2025.

The defendants dispute the allegations made by the plaintiff and intend to vigorously defend the litigation.

Interest Rate Derivatives

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

We were party to an interest rate collar to offset the variability of cash flows in Term SOFR-indexed debt interest payments.

During the second quarter of 2023, we amended the reference rate of the collar from LIBOR to Term SOFR.

The aggregate notional amount of the interest rate collar, which is not designated as a cash flow hedge, was $ 325.0 million as of December 30, 2023.

The fair value of our interest rate collar instrument was an asset of $ 5.6 million, which is recorded in Prepaid expenses and other current assets as of December 30, 2023.

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.

“Details of Certain Balance Sheet Accounts” and Note 10.

“Fair Value Measurement” for further details.

The interest rate collar matured on July 18, 2024.

We recognized (gains) losses on the change in fair value of the interest rate collar of $( 0.5 ) million, $( 2.3 ) million, and $( 18.0 ) million in Interest expense , net during fiscal years 2024, 2023, and 2022, respectively.

The interest rate collar will mature on July 18, 2024.

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 2024, 2023 and 2022 related to derivatives not qualifying as hedges were included in the operating section of the Consolidated Statements of Cash Flows and were immaterial.

As of December 30, 2023, the Company expects to reclassify approximately $ 0.4 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.

Earnings Per Share

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In thousands, except EPS Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

Income (loss) from continuing operations, net of tax

$ ( 27,165 ) $ 3,546 $ 36,759

Income (loss) from discontinued operations, net of tax

( 1,334 ) ( 69,447 ) 5,363

Net income (loss)

$ ( 28,499 ) $ ( 65,901 ) $ 42,122

After-tax interest expense for 2025 Notes — — 9,483

Numerator for diluted EPS $ ( 65,901 ) $ 42,122 $ 137,727

Weighted average shares outstanding for basic EPS 78,313 79,831 81,820

Weighted average shares outstanding, Basic

78,592 78,313 79,831

Effect of dilutive securities:

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Restricted Stock — 191 277

2025 Notes — — 12,912

Weighted average shares outstanding for diluted EPS 78,313 80,298 96,134

Basic EPS $ ( 0.84 ) $ 0.53 $ 1.57

Diluted EPS $ ( 0.84 ) $ 0.52 $ 1.43

Weighted average shares outstanding, Diluted

78,592 78,596 80,298

Basic earnings (loss) per share

Continuing operations

$ ( 0.35 ) $ 0.05 $ 0.46

Discontinued operations

$ ( 0.02 ) $ ( 0.89 ) $ 0.07

$ ( 0.36 ) $ ( 0.84 ) $ 0.53

Diluted earnings (loss) per share

Continuing operations

$ ( 0.35 ) $ 0.05 $ 0.46

Discontinued operations

$ ( 0.02 ) $ ( 0.88 ) $ 0.07

$ ( 0.36 ) $ ( 0.84 ) $ 0.52

Anti-dilutive securities excluded from diluted weighted average common shares 8,771 12,513 13,282

Some of the EPS totals in the table above may not foot due to rounding differences

Segment Reporting

The Company’s reportable segments were determined on the same basis as used by the Chief Operating Decision Maker (“CODM”) to evaluate performance internally.

Our operations consist of two reportable segments:

The Company’s operating segments were determined on the same basis as used by the Chief Operating Decision Maker (“CODM”) to evaluate performance internally.

Our CODM is our chief executive officer.

Our operations consist primarily of one reportable segment:

• Owned & Host store brands - Our owned brands consist of our America’s Best and Eyeglass World operating segments.

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Eyeglass World locations offer eye exams, primarily provided by independent optometrists, and have on-site laboratories.

Our two Host operating segments consist of Military and Fred Meyer.

Our Host operating segments consist of Military and Fred Meyer.

These brands provide eye exams principally by independent optometrists in nearly all locations.

We have aggregated our America’s Best, Eyeglass World, Military and Fred Meyer operating segments into a single reportable segment due to similar economic characteristics and similarity of the nature of products and services, production processes, class of customers, regulatory environment and distribution methods of those brands.

• Legacy - As of December 30, 2023, the Company managed the operations of, and supplied inventory and lab processing services to, 225 Legacy retail Vision Centers.

We earned management fees as a result of providing such services and therefore we recorded revenue related to sales of products and product protection plans to our Legacy partner’s customers on a net basis.

We also sold to our Legacy partner wholesale merchandise that was stocked in retail locations and provided central lab processing for the finished eyeglasses and frames expected to be sold to our Legacy partner’s customers.

Sales of services and plans in our Legacy segment consisted of fees earned for managing the operations of our Legacy partner and revenues associated with the provision of eye exams for our managed care customers.

Revenues associated with managing operations of our Legacy partner were $ 30.6 million, $ 34.7 million and $ 41.7 million for fiscal years ended 2023, 2022 and 2021, respectively.

The Walmart MSA terminated on February 23, 2024 and we no longer operate Vision Centers for Walmart.

In addition to the single reportable segment identified above, we have two other operating segments:

our dedicated e-commerce website and FirstSight.

Our dedicated e-commerce website was previously managed by AC Lens and was transitioned to NVI in fiscal year 2024;

the continuing operations for all periods presented reflect the results of this website.

FirstSight sells single-service health plans in connection with the operations of America’s Best operations in California.

The results of these two segments are presented separately from our reportable segment and do not meet the quantitative thresholds to be reportable segments.

The “corporate and other” category represents corporate overhead support expenses as well certain non-cash charges, including asset impairment, stock-based compensation expense, and the impact of certain events, gains, or losses excluded from the assessment of segment performance.

Other adjustments to reportable segment results represent adjustments necessary for the presentation of consolidated financial results in accordance with U.S.

GAAP, specifically effects of the change in unearned and deferred revenue during the period.

Our former Legacy reportable segment and the majority of our former AC Lens operations as well as related effects of unearned and deferred revenue are classified as discontinued operations.

Refer to Note 2.

“Termination of Walmart Partnership” for developments related to the Legacy segment, AC Lens and FirstSight.

The “Corporate/Other” category includes the results of operations of our other operating segments and corporate overhead support.

Revenues from the Corporate/Other segments are attributable to the AC Lens and FirstSight

operating segments.

AC Lens primarily sells contact lenses and optical accessory products to retail customers through e-commerce.

AC Lens also distributes contact lenses to certain Walmart and Sam’s Club under fee for services arrangements.

FirstSight sells single service health plans in connection with the operations of America’s Best operations in California, and, until February 23, 2024, arranged for the provision of optometric services at the offices next to Walmart stores throughout California, at which time the agreements between FirstSight and Walmart terminated.

None of those segments met the quantitative thresholds for determining reportable segments for any of the periods presented.

The “Reconciliations” category represents other adjustments to reportable segment results necessary for the presentation of consolidated financial results in accordance with U.S.

GAAP for the two reportable segments.

The operating segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our CODM to allocate resources and assess performance.

Our CODM is our chief executive officer.

The Company considers each of our brands to be an operating segment and has further concluded that presenting the results of our reportable segments provides meaningful information consistent with the objectives of ASC 280, Segment Reporting .

Strategic initiatives and financial objectives for each reportable segment are determined at the corporate level.

Each operating segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives, and has a general manager responsible for the sales and marketing initiatives and financial results for product lines within the segment.

Our reportable segment profit measure is earnings before interest, tax, depreciation and amortization (“EBITDA”), or net revenue, less costs applicable to revenue, less SG&A expenses.

Depreciation and amortization, asset impairment and other corporate costs that are not allocated to the reportable segments (including interest expense) are excluded from segment EBITDA.

There are no revenue transactions between our reportable segments.

There are no differences between the measurement of our reportable segments’ assets and consolidated assets.

“Discontinued Operations” for information related to our discontinued operations.

The operating segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly provided to, and reviewed by, our CODM to allocate resources and assess performance.

The Company considers each of our brands to be an operating segment and has further concluded that presenting the results of our reportable segment provides meaningful information consistent with the objectives of ASC 280, Segment Reporting .

The CODM uses segment EBITDA, calculated as net revenue, less costs applicable to revenue, less SG&A expenses, to evaluate the performance, and make decisions about the allocation of resources to segments predominantly in the annual budget and forecasting process.

The CODM considers budget-to-actual variances on a monthly and quarterly basis when making decisions about the allocation of resources to each segment.

Consistent with what the CODM reviews, depreciation and amortization and interest expense(income), net are excluded from segment EBITDA.

There are no differences between the measurement of our reportable segment’s assets and consolidated assets.

There have been no changes from prior periods in the measurement methods used to determine reportable segment profit or loss, and there have been no asymmetrical allocations to segments.

We incurred $ 0.6 million and $ 1.5 million of costs during fiscal years 2022 and 2021, 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 and other administrative expenses.

Incremental expenses related to the COVID-19 pandemic were allocated to the reportable segments.

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

Reportable segment information is presented on the same basis as our consolidated financial statements, except for net revenue and associated costs applicable to revenue, which are presented on a cash basis, including point of sales for managed care payors and excluding the effects of unearned and deferred revenue, consistent with what the CODM regularly reviews.

Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segments.

Fiscal Year 2023

In thousands Owned & Host Legacy Corporate/Other Reconciliations Total

Asset information is not included in the following summary since the CODM does not regularly review such information for the reportable segment.

The following table is a summary of certain financial data for our Owned & Host reportable segment, and other categories, and includes a reconciliation to the Company’s consolidated earnings (loss) from continuing operations before income taxes.

Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

Owned & Host revenue:

Net product sales $ 1,433,777 $ 1,396,355 $ 1,317,673

Net sales of services and plans 360,470 333,693 299,695

Total net revenue 1,730,048 150,894 252,427 ( 6,901 ) 2,126,468

Total Owned & Host revenue

1,794,247 1,730,048 1,617,368

Owned & Host costs applicable to revenue (exclusive of depreciation and amortization)

Cost of products 410,527 401,385 380,717

Cost of services and plans 330,801 310,643 265,598

Total costs applicable to revenue 712,028 70,902 219,626 ( 1,646 ) 1,000,910

SG&A 670,337 56,790 264,756 — 991,883

Asset impairment — — 82,413 — 82,413

Other expense (income), net

Owned & Host SG&A

708,623 670,337 629,421

Loss on extinguishment of debt

Owned & Host segment EBITDA

344,296 347,683 341,632

EBITDA $ 347,683 $ 23,202 $ ( 314,803 ) $ ( 5,255 )

Depreciation and amortization 98,252

Interest expense, net 14,339

Earnings (loss) before income taxes

Fiscal Year 2022

In thousands Owned & Host Legacy Corporate/Other Reconciliations Total

Net product sales $ 1,317,673 $ 99,161 $ 242,822 $ ( 11,341 ) $ 1,648,315

Net sales of services and plans 299,695 52,716 — 4,678 357,089

Total net revenue 1,617,368 151,877 242,822 ( 6,663 ) 2,005,404

Cost of products 380,717 46,375 211,872 ( 2,640 ) 636,324

Cost of services and plans 265,598 23,665 — — 289,263

Total costs applicable to revenue 646,315 70,040 211,872 ( 2,640 ) 925,587

SG&A 629,421 58,217 227,717 — 915,355

Asset impairment — — 5,783 — 5,783

Other expense (income), net

Other segments EBITDA

( 2,042 ) ( 899 ) ( 79 )

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

Depreciation and amortization 99,956

Interest expense, net 462

Earnings before income taxes $ 60,813

Fiscal Year 2021

In thousands Owned & Host Legacy Corporate/Other Reconciliations Total

Net product sales $ 1,375,983 $ 103,249 $ 236,299 $ 2,813 $ 1,718,344

Net sales of services and plans 307,732 62,228 — ( 8,779 ) 361,181

Total net revenue 1,683,715 165,477 236,299 ( 5,966 ) 2,079,525

Cost of products 377,489 49,258 205,670 699 633,116

Cost of services and plans 246,342 25,321 — — 271,663

Total costs applicable to revenue 623,831 74,579 205,670 699 904,779

SG&A 618,413 57,838 224,547 — 900,798

Asset impairment — — 4,427 — 4,427

Other expense (income), net

Corporate and other

( 261,454 ) ( 227,847 ) ( 196,589 )

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

Effects of unearned and deferred revenue

1,049 ( 5,172 ) ( 3,508 )

Depreciation and amortization ( 91,349 ) ( 89,874 ) ( 88,690 )

Interest expense, net ( 16,184 ) ( 14,339 ) ( 462 )

Earnings before income taxes $ 149,325

Earnings (loss) from continuing operations before income taxes

$ ( 25,684 ) $ 9,552 $ 52,304

The following table presents a reconciliation of revenue:

In thousands Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

$ 1,794,247 1,730,048 $ 1,617,368

Other segments revenue

27,621 33,139 33,307

Effects of unearned and deferred revenue

1,452 ( 6,816 ) ( 6,000 )

Total consolidated revenue

$ 1,823,320 $ 1,756,371 $ 1,644,675

Entity-wide Information

The following table presents our consolidated net product revenue information:

The following table presents our consolidated net revenue information:

In thousands Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

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Total net product revenues 1,463,139 1,423,229 1,340,302

In fiscal years 2023, 2022 and 2021, respectively, revenues from Walmart, recognized in our Legacy segment and Corporate/Other category, represented $ 297.1 million, $ 291.5 million and $ 300.8 million of our total net revenue.

Net sales of services and plans

233,621 207,833 177,476

Product protection plans

72,854 72,069 75,119

Eyecare clubs

53,706 53,240 51,778

Total net sales of services and plans revenues

360,181 333,142 304,373

Total net revenue

$ 1,823,320 $ 1,756,371 $ 1,644,675

Accumulated Other Comprehensive Loss

Changes in the fair value of the Company’s cash flow hedge derivative instruments from their inception are recorded in AOCL if the instruments are deemed to be highly effective as cash flow hedges.

The following table presents the changes in AOCL, net of tax during the fiscal years 2023, 2022 and 2021, respectively:

The following table presents the changes in AOCL, net of tax:

In thousands Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

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Balance at beginning of fiscal year $ ( 419 ) $ ( 1,179 ) $ ( 1,940 )

Other comprehensive income (loss) before reclassification — — ( 10 )

Tax effect of other comprehensive income (loss) before reclassification — — 3

Amount reclassified from AOCL 548 1,019 1,020

Tax effect of amount reclassified from AOCL ( 129 ) ( 259 ) ( 259 )

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

Net current period other comprehensive income (loss), net of tax 419 760 761

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“Interest Rate Derivatives” for a description of the Company’s use of cash flow hedging derivatives.

Quarterly Financial Information (Unaudited)

The unaudited quarterly financial information reflects all normal and recurring accruals and adjustments necessary for a fair presentation of net income for interim periods.

Quarterly results are not necessarily indicative of a full year’s operations because of various factors.

The following tables present unaudited quarterly financial information:

Fiscal Year 2024

In thousands, except EPS Fourth Quarter Ended December 28, 2024 Third Quarter Ended September 28, 2024 Second Quarter Ended June 29, 2024 First Quarter Ended March 30, 2024

Total net revenue $ 437,278 $ 451,515 $ 451,733 $ 482,794

Total costs applicable to revenue 185,001 189,929 193,580 195,546

Income (loss) from operations ( 25,571 ) ( 8,821 ) 591 23,442

Income (loss) from continuing operations, net of tax ( 29,437 ) ( 8,440 ) ( 1,041 ) 11,753

Income (loss) from discontinued operations, net of tax 846 ( 28 ) ( 2,084 ) ( 68 )

Net income (loss) $ ( 28,591 ) $ ( 8,468 ) $ ( 3,125 ) $ 11,685

Weighted average shares outstanding, Basic 78,754 78,655 78,575 78,384

Weighted average shares outstanding, Diluted 78,754 78,655 78,575 78,826

Basic Earnings (loss) per share:

Continuing operations $ ( 0.37 ) $ ( 0.11 ) $ ( 0.01 ) $ 0.15

Discontinued operations $ 0.01 $ ( 0.00 ) $ ( 0.03 ) $ ( 0.00 )

$ ( 0.36 ) $ ( 0.11 ) $ ( 0.04 ) $ 0.15

Diluted Earnings (loss) per share:

Continuing operations $ ( 0.37 ) $ ( 0.11 ) $ ( 0.01 ) $ 0.15

Discontinued operations $ 0.01 $ ( 0.00 ) $ ( 0.03 ) $ ( 0.00 )

$ ( 0.36 ) $ ( 0.11 ) $ ( 0.04 ) $ 0.15

Fiscal Year 2023

In thousands, except EPS Fourth Quarter Ended December 30, 2023 Third Quarter Ended September 30, 2023 Second Quarter Ended July 1, 2023 First Quarter Ended April 1, 2023

Total net revenue $ 420,953 $ 438,820 $ 431,786 $ 464,812

Total costs applicable to revenue 184,377 183,829 180,322 186,127

Income (loss) from operations ( 12,418 ) 3,547 5,561 27,800

Income (loss) from continuing operations, net of tax ( 14,739 ) ( 366 ) 3,637 15,014

Income (loss) from discontinued operations, net of tax ( 1,248 ) ( 73,432 ) 1,977 3,256

Net income (loss) $ ( 15,987 ) $ ( 73,798 ) $ 5,614 $ 18,270

Weighted average shares outstanding, Basic 78,269 78,163 78,101 78,721

Weighted average shares outstanding, Diluted 78,269 78,163 78,343 92,136

Basic Earnings (loss) per share:

Continuing operations $ ( 0.19 ) $ ( 0.00 ) $ 0.05 $ 0.19

Discontinued operations $ ( 0.02 ) $ ( 0.94 ) $ 0.03 $ 0.04

$ ( 0.20 ) $ ( 0.94 ) 0.07 $ 0.23

Diluted Earnings (loss) per share:

Continuing operations $ ( 0.19 ) $ ( 0.00 ) $ 0.05 $ 0.16

Discontinued operations $ ( 0.02 ) $ ( 0.94 ) $ 0.03 $ 0.04

$ ( 0.20 ) $ ( 0.94 ) $ 0.07 $ 0.20

Subsequent Event

Subsequent to year-end we have initiated a plan to identify additional cost savings that include headcount reductions, the costs for which are expected to amount to approximately $ 1 million and which we expect will be recorded in the first quarter of 2025.

Schedule I - Condensed Financial Information of Registrant

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Total current assets 974 233

Deferred income taxes 10,245 7,844

Deferred income taxes, net

11,618 10,245

Investment in subsidiary 970,199 1,201,291

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Other payables and accrued expenses $ 249 $ 1,130

Current maturities of long-term debt

Long-term debt, less current portion and debt discount — 300,000

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And Subsidiaries (Parent Company Only)

Condensed Statements of Operations and Comprehensive Income

Condensed Statements of Operations and Comprehensive (Loss) Income

Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022

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Interest expense, net 6,639 12,040 12,345

Loss on extinguishment of debt

(Gain) loss on extinguishment of debt

( 859 ) 599 —

Earnings (loss) before income taxes ( 6,036 ) ( 12,853 ) ( 12,611 )

5 unchanged sentences

$ ( 28,499 ) $ ( 65,901 ) $ 42,122

Comprehensive income:

Comprehensive income (loss):

Net income (loss)

3 unchanged sentences

Tax provision of unrealized gain on hedge instruments

259 259 3,698

Comprehensive income (loss)

7 unchanged sentences

Cash flows from operating activities

Net cash provided by operating activities $ ( 6,780 ) $ ( 9,744 ) $ 16,530

Net cash provided by (used for) operating activities

$ ( 6,082 ) $ ( 6,780 ) $ ( 9,744 )

Cash flows from investing activities

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NVHI was incorporated in Delaware on February 14, 2014 under the name Nautilus Parent, Inc.

There were no financial transactions between the inception date and March 13, 2014, the date the majority ownership of NVI was transferred from private equity funds managed by Berkshire Partners LLC to affiliates of Kohlberg Kravis Roberts & Co.

In October 2017, we completed the initial public offering of our common stock.

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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, including information on a repurchase of $ 100.0 million aggregate principal amount of our 2025 Notes in November 2023.

“Debt” to the NVHI consolidated financial statements for details of the 2025 Notes, including information on the repurchases of $ 217.7 million and $ 100.0 million of aggregate principal amount of our 2025 Notes in August 2024 and November 2023, respectively.

Guarantees and Restrictions

3 unchanged sentences

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