National Vision Holdings Inc
For the period ended Mar 30, 2024. Filed May 8, 2024.
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Mar 30, 2024 · Filed May 8, 2024
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2. Discontinued Operations
- 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 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.
As a result of the termination of the Walmart MSA, our Walmart store operations, including our former Legacy reportable segment and certain other results previously included in our Corporate/Other and Reconciliations categories, met the criteria to be presented as discontinued operations as of March 30, 2024. Accordingly, the assets and liabilities and results of operations of the discontinued operations have been presented in the tables below.
Refer to Note 3. “Costs Related to Wind Down Activities” for more information on the additional wind down activities 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.
| In thousands | As ofMarch 30, 2024 | As ofDecember 30, 2023 |
|---|---|---|
| Noncurrent assets: | ||
| Property and equipment, net | $— | $1,791 |
| Right of use assets | — | 304 |
| Other intangible assets, net | — | 99 |
| Total noncurrent assets of discontinued operations | $— | $2,194 |
| Current liabilities: | ||
| Current operating lease obligations | $— | $302 |
| Total current liabilities of discontinued operations | $— | $302 |
The following table presents income(loss) from discontinued operations, net of tax:
| In thousands | Three Months EndedMarch 30, 2024 | Three Months EndedApril 1, 2023 |
|---|---|---|
| Revenue: | ||
| Net product sales | $13,871 | $28,647 |
| Net sales of services and plans | 4,513 | 12,925 |
| Total net revenue | 18,384 | 41,572 |
| Costs applicable to revenue (exclusive of depreciation and amortization): | ||
| Products | 6,508 | 12,768 |
| Services and plans | 2,755 | 5,875 |
| Total costs applicable to revenue | 9,263 | 18,643 |
| Operating expenses: | ||
| Selling, general and administrative expenses | 11,386 | 16,591 |
| Depreciation and amortization | 544 | 2,079 |
| Asset impairment | — | 33 |
| Total operating expenses | 11,930 | 18,703 |
| Earnings (loss) from discontinued operations before income taxes | (2,809) | 4,226 |
| Income tax provision (benefit) from discontinued operations | (2,255) | 1,929 |
| Income (loss) from discontinued operations, net of tax | $(554) | $2,297 |
The following table presents significant non-cash items and cash flows from investing activities related to discontinued operations:
| Three Months Ended | |||
|---|---|---|---|
| March 30, 2024 · April 1, 2023 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | $544 | $2,079 | |
| Stock-based compensation expense | 30 | 228 | |
| Inventory adjustments | 377 | (6) | |
| Other | (1,592) | — | |
| Cash flows from investing activities: | |||
| Purchase of property and equipment | — | (420) | |
| Other | 1,728 | — | |
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