NATIONAL VISION HOLDINGS, INC. – 10-K – Management report and analysis of the financial situation and operating results

The following discussion contains management's discussion and analysis of our
financial condition and results of operations and should be read together with
the consolidated financial statements and the related notes thereto included
elsewhere in this Form 10-K (this "Form 10-K"). This discussion contains
forward-looking statements that reflect our plans, estimates and beliefs and
involve numerous risks and uncertainties, including, but not limited to, those
described in the "Risk Factors" section included in Part I. Item 1A. in this
Form 10-K, as such risk factors may be updated from time to time in our periodic
filings with the SEC. Actual results may differ materially from those contained
in any forward-looking statements. You should carefully read "Special Note
Regarding Forward-Looking Statements" in this Form 10-K.

We conduct substantially all of our activities through our indirect wholly-owned
subsidiary, NVI, and its subsidiaries. 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. 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 includes 13 weeks of operations and the fourth quarter
includes 14 weeks of operations. References herein to "fiscal year 2021" relate
to the 52 weeks ended January 1, 2022, references herein to "fiscal year 2020"
relate to the 53 weeks ended January 2, 2021 and references herein to "fiscal
year 2019" relate to the 52 weeks ended December 28, 2019.

The disclosures contained in this Form 10-K are made only as of the date hereof,
and we undertake no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or otherwise, except as
required by law. For further information, please see "Risk Factors" and
"Forward-Looking Statements."

Overview

We are one of the largest and fastest growing optical retailers in the United
States and a leader in the attractive value segment of the U.S. optical retail
industry. We believe that vision is central to quality of life and that people
deserve to see their best to live their best, regardless of their budget. Our
mission is to make quality eye care and eyewear affordable and accessible to all
Americans. We achieve this by providing eye exams, eyeglasses and contact lenses
to value seeking and lower income consumers. We deliver exceptional value and
convenience to our customers, with an opening price point that strives to be
among the lowest in the industry, enabled by our low-cost operating platform. We
reach our customers through a diverse portfolio of 1,278 retail stores across
five brands and 18 consumer websites as of fiscal year end 2021.

Brand and segment information

Our activities consist of two reportable segments:

•Owned & Host - As of fiscal year end 2021, our owned brands consisted of 840
America's Best Contacts and Eyeglasses ("America's Best") retail stores and 125
Eyeglass World retail stores. In America's Best stores, vision care services are
provided by optometrists employed by us or by independent professional
corporations or similar entities. America's Best stores are primarily located in
high-traffic strip centers next to value-focused retailers. Eyeglass World
locations primarily feature eye care services provided by independent
optometrists and optometrists employed by independent professional corporations
or similar entities and on-site optical laboratories that enable stores to
quickly fulfill many customer orders and make repairs on site. Eyeglass World
stores are primarily located in freestanding or in-line locations near
high-foot-traffic shopping centers. Our Host brands consisted of 54 Vista
Optical locations on select military bases and 29 Vista Optical locations within
select Fred Meyer stores as of fiscal year end 2021. We have strong,
long-standing relationships with our Host partners and have maintained each
partnership for over 20 years. These brands provide eye exams primarily by
independent optometrists. All brands utilize our centralized laboratories. This
segment also includes sales from our America's Best, Eyeglass World, and
Military omni-channel websites.

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•Legacy - We manage the operations of, and supply inventory and laboratory
processing services to, 230 Vision Centers in Walmart retail locations as of
fiscal year end 2021. This strategic relationship with Walmart is in its 32nd
year. Pursuant to a January 2020 amendment to our management & services
agreement with Walmart, we added five additional Vision Centers in Walmart
stores in fiscal year 2020. On July 17, 2020, NVI and Walmart extended the
current term and economics of the management & services agreement by three years
to February 23, 2024; refer to Note 14. "Segment Reporting" included in Part II.
Item 8. of this Form 10-K for further information. Under the management &
services agreement, our responsibilities include ordering and maintaining
merchandise inventory; arranging the provision of optometry services; providing
managers and staff at each location; training personnel; providing sales
receipts to customers; maintaining necessary insurance; obtaining and holding
required licenses, permits and accreditations; owning and maintaining store
furniture, fixtures and equipment; and developing annual operating budgets and
reporting. We earn management fees as a result of providing such services and
therefore we record revenue related to sales of products and product protection
plans to our Legacy partner's customers on a net basis. Our management &
services agreement also allows our Legacy partner to collect penalties if the
Vision Centers do not generate a requisite amount of revenues. No such penalties
have been assessed under our current arrangement, which began in 2012. We also
sell to our Legacy partner merchandise that is stocked in retail locations we
manage pursuant to a separate supplier agreement, and provide centralized
laboratory services for the finished eyeglasses for our Legacy partner's
customers in stores that we manage. We lease space from Walmart within or
adjacent to each of the locations we manage and use this space for vision care
services provided by independent optometrists or optometrists employed by us or
by independent professional corporations or similar entities. During the fiscal
year 2021, sales associated with this arrangement represented 8.0% of
consolidated net revenue. This exposes us to concentration of customer risk.

Our consolidated results also include the following activity recorded in our
Business/Other category:

•Our e-commerce platform of 14 dedicated websites managed by AC Lens. Our
e-commerce business consists of five proprietary branded websites, including
aclens.com, discountglasses.com and discountcontactlenses.com, and nine
third-party websites with established retailers, such as Walmart, Sam's Club and
Giant Eagle as well as mid-sized vision insurance providers. AC Lens handles
site management, customer relationship management and order fulfillment and also
sells a wide variety of contact lenses, eyeglasses and eye care accessories.
•AC Lens also distributes contact lenses wholesale to Walmart and Sam's Club. We
incur costs at a higher percentage of sales than other product categories. AC
Lens sales associated with Walmart and Sam's Club contact lenses distribution
arrangements represented 6.5% of consolidated net revenue.
•Managed care business conducted by FirstSight, our wholly-owned subsidiary that
is licensed as a single-service health plan under California law, which arranges
for the provision of optometric services at the offices next to certain Walmart
stores throughout California, and also issues individual vision plans in
connection with our America's Best operations in California.
•Unallocated corporate overhead expenses, which are a component of selling,
general and administrative expenses and are comprised of various home office
expenses such as payroll, occupancy costs and consulting and professional fees.
Corporate overhead expenses also include field services for our five retail
brands.

Reportable segment information is presented on the same basis as our
consolidated financial statements, except reportable segment sales 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 our
chief operating decision maker ("CODM") regularly reviews. Reconciliations of
segment results to consolidated results include financial information necessary
to adjust reportable segment revenues to a consolidated basis in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP"), specifically the change in unearned and deferred revenues during the
period. There are no revenue transactions between reportable segments, and there
are no other items in the reconciliations other than the effects of unearned and
deferred revenue. See Note 14. "Segment Reporting" in our consolidated financial
statements included in Part II. Item 8. of this Form 10-K.

Deferred revenue represents the timing difference of when we collect the cash
from the customer and when services related to product protection plans and eye
care club memberships are performed. Increases or decreases in deferred revenue
during the reporting period represent cash collections in excess of, or below
the recognition of, previous deferrals.

Unearned revenue represents the time difference between when we collect cash from
customer and customer delivery/acceptance, and includes sales of
prescription glasses for approximately the last seven to ten days of the
reporting period.

Advertising

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Trends and Other Factors Affecting Our Business

Various trends and other factors will affect or have affected our operations
results, including:

Impact of COVID-19

The COVID-19 pandemic and related federal, state and local governmental and
healthcare authority guidelines materially impacted our business and results of
operations in 2020 and continue to impact our business results. In 2020, the
COVID-19 pandemic directly and indirectly impacted our operations, consumer
behavior, comparable store sales, our associates and optometrists and the
overall market. In the early stages of the pandemic, we temporarily closed all
of our stores to the public across the U.S. on March 19, 2020 and announced the
successful completion of the reopening process with enhanced safety and cleaning
protocols on June 8, 2020. The decrease in revenue from our temporary store
closures was not offset by proportional decreases in expense, as we continued to
incur store occupancy costs even while stores were temporarily closed, costs
directly related to adapting the Company's operations to the COVID-19 pandemic
such as personal protective equipment and other supplies needed to operate our
stores safely and certain other costs such as compensation, a tangible
appreciation bonus paid to our customer-facing doctors and associates, and other
administrative expenses, resulting in a negative effect on profitability. We
also implemented capital spending and expense reduction initiatives, including a
temporary pause in new store openings between March and June 2020, reduced near
term marketing, a temporary reduction in compensation across the organization
until the second quarter of 2020, a suspension of non-essential travel,
implementation of a remote work policy for certain corporate associates, and we
worked with a base of vendors and landlords to extend payment terms and modify
existing contracts. While we experienced stronger comparable store sales growth
in the third and fourth quarters of 2020, the comparable store sales growth
figure of (5.6)% for fiscal year 2020 reflected the effects of store closures
and the pandemic.

During fiscal year 2021, our business continued to be impacted by the pandemic,
including continued volatility in the overall market, targeted and temporary
reductions in certain store hours and temporary store closures, and changes in
consumer purchasing patterns. Despite the continued COVID-19 disruption and
volatility, our net revenue in fiscal year 2021 increased compared to fiscal
year 2020 due in part to the effects of our stores being temporarily closed to
the public in fiscal year 2020 and government stimulus as a result of COVID-19.
Our net revenue in 2020 was essentially flat in comparison to fiscal year 2019.
As a result, comparability of our financial performance between these periods
may be impacted and our rate of growth should not be viewed as indicative of our
potential results in future periods.

The COVID-19 pandemic has resulted in, and may continue to result in, state,
city or local quarantines, labor stoppages and shortages, changes in consumer
purchasing patterns, mandatory or voluntary shut-downs of retail locations,
supply chain issues, severe market volatility, liquidity disruptions, and
overall economic instability, which, in many cases, have had, and could continue
to have, adverse impacts on our business, financial condition and results of
operations. The scope and nature of these impacts continue to evolve on a daily
basis. Although the global distribution of vaccines continues to progress, the
future impact of the COVID-19 pandemic remains highly uncertain. Resurgences of
COVID-19 cases and the emergence of new variants have led to reduced consumer
confidence and changes in shopping patterns, which may adversely impact store
traffic.

We continue to monitor the evolving situation as there remain many uncertainties
regarding the pandemic, its resurgence through new variants, its anticipated
duration, related healthcare authority guidelines, efficacy of vaccination
initiatives, and potential federal and state level vaccine and testing mandates.
We could experience further material impacts as a result of COVID-19.

We also continue to monitor any potential COVID-19 related impacts on our
domestic labs and our outsourced third party optical laboratories in China and
Mexico, and potential disruptions of product deliveries. To date, we have been
able to meet customer demand with operations at our laboratories. We source
merchandise from suppliers located in China and a significant amount of
domestically-purchased merchandise is manufactured in China. We have partnered
with our suppliers and third party laboratories to mitigate any potential
significant delays in delivery of merchandise. We have made, and may continue to
make, inventory forward buys to help manage potential supply chain disruptions.

It is possible that our preparations for the events listed above are not
adequate to mitigate their impact, and that these events could further adversely
affect our business and results of operations. For a discussion of significant
risks that have the potential to cause our actual results to differ materially
from our expectations, refer to "Item 1A. Risk Factors."

New store openings

We expect that new stores will be a key driver of growth in our net revenue and
operating profit in the future. Our results of operations have been and will
continue to be materially affected by the timing and number of new store

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openings. As stores mature, profitability typically increases significantly. The
performance of new stores is dependent upon factors such as the time of year of
a particular opening, the amount of store pre-opening costs, labor and occupancy
costs in the specified market, level of participation in managed care plans, and
location, including whether they are in new or existing markets. The impact of
the COVID-19 pandemic on our ability to open new stores, the multi-year
maturation process of our stores and customer purchasing behaviors and patterns
remain uncertain and effects and relevant risk exposures may be exacerbated by
the ongoing COVID-19 pandemic.

Same store sales growth

Same-store sales growth is a key driver of our business. Many factors
affect comparable store sales, including:

•consumer confidence, preferences and buying trends and overall economic trends
including inflation and the amount and timing of tax refunds;
•the availability of optometrists and other vision care professionals;
•advertising strategies;
•participation in managed care programs;
•the recurring nature of eye care purchases;
•our ability to identify and respond effectively to customer preferences and
trends;
•our ability to provide an assortment of high quality/low cost product offerings
that generate new and repeat visits to our stores;
•foot traffic in retail shopping centers where our stores are predominantly
located;
•the customer experience we provide in our stores;
•our ability to source and receive products accurately and timely;
•changes in product pricing, including promotional activities;
•the number of items purchased per store visit;
•the number of stores that have been in operation for more than 12 months;
•impact of competition and consolidation in the U.S. optical retail industry;
•impact and timing of weather related store closures; and
•effects and relevant risk exposures may be exacerbated by the ongoing threat of
the COVID-19 pandemic

A new store is included in the comparable store sales calculation during the
13th full fiscal month following the store's opening. Closed stores are removed
from the calculation for time periods that are not comparable. In the past, we
have closed stores as a result of poor store performance, lease expiration or
non-renewal and/or the terms of our arrangements with our Host and Legacy
partners.

Managed care and insurance

Managed care has become increasingly important to the optical retail industry.
An increasing percentage of our customers receive vision care insurance coverage
through managed care payors. Our participation in these programs represent an
increasingly significant portion of our overall revenues and represented
approximately one third of our overall revenues in fiscal year 2021. While we
have relationships with almost all vision care insurers in the United States and
with all of the major carriers, currently, a relatively small number of payors
comprise the majority of our managed care revenues, subjecting us to
concentration risk. As our participation in managed care programs continues to
expand, we have incurred and expect to incur additional costs related to this
area of our business. Our comparable store sales growth as noted above as well
as overall future operational success could depend on our ability to negotiate,
maintain and extend contracts with managed vision care companies, vision
insurance providers and other third-party payors, several of whom have
significant market share. Coverage and payment levels are determined at each
third-party payor's discretion, and we have limited control over a third-party
payor's decision-making with respect to coverage and payment levels. Coverage
restrictions and reductions in reimbursement levels or payment methodologies may
negatively impact our sales and profits. In addition, as our participation in
managed care programs continues to approach overall industry penetration levels,
we expect our associated managed care revenue growth rate to slow over time.

Recruitment of eye care professionals, coverage and expanded offers

Our ability to continue to attract and retain qualified vision care
professionals is key to store operations, as well as maintaining our
relationships with independent optometrists and professional corporations owned
by eye care practitioners that provide vision care services in our stores. We
have also begun to pilot remote medicine technologies in a limited number of
locations to enable the provision of remote eye examinations, which have
expanded our offerings. The effects and relevant risk exposures of labor
shortages, increased wage rates to attract and retain vision care professionals
or other increases in labor costs may be exacerbated by the ongoing threat of
the COVID-19 pandemic and resulting macroeconomic factors.

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Overall Economic Trends

Macroeconomic factors that may affect customer spending patterns, and thereby
our results of operations, include employment rates, business conditions,
changes in the housing market, the availability of credit, interest rates, tax
rates and fuel and energy costs. During periods of economic downturn and
uncertainty, our customers especially benefit from our low prices. Additionally,
eye care purchases are predominantly a medical necessity and are considered
non-discretionary in nature. Therefore, the overall economic environment and
related changes in consumer behavior may have less of an impact on our business
than for retailers in other industries; however, the long-term effects of the
COVID-19 pandemic on overall economic trends and consumer spending patterns
remain uncertain.

Inflation

Substantial increases in product costs due to increases in materials cost or
general inflation could lead to greater profitability pressure as we may not be
able to pass costs on to consumers. To date, changes in materials prices and
general inflation have not materially impacted our business. Wage investments,
along with increased raw material costs as a result of inflation or supply
issues, may have an impact on our profitability that may not be offset by
leverage from revenue growth, productivity efficiency and, as appropriate,
various pricing actions.

Consumer preferences and demand

Our ability to maintain our appeal to existing customers and attract new
customers depends on our ability to originate, develop and offer a compelling
product assortment responsive to customer preferences and design trends. We
estimate that optical consumers typically replace their eyeglasses every two to
three years, and contact lens customers order new lenses every six to 12 months,
reflecting the predictability of these recurring purchase behaviors; however,
the long-term effects of the COVID-19 pandemic on consumer preferences and
recurring purchase behaviors remain uncertain.

Investment in infrastructure

Our historical results of operations reflect the impact of our ongoing
investments in infrastructure to support our growth, including additional
investments in remote medicine. We have made significant investments in
information technology systems, supply chain systems, marketing, and personnel,
including experienced industry executives, and management and merchandising
teams to support our long-term growth objectives. We intend to continue to make
targeted investments in our infrastructure to support our growth.

Pricing strategy

We are committed to providing our products to our customers at low prices. We
generally employ a simple low price/high value strategy that consistently
delivers savings to our customers without the need for extensive promotions.
Inflationary pressures, including wage investments, consumer confidence and
preferences and increased raw material costs, could impact our profitability and
lead us to attempt to offset such increases through various pricing actions.

Our ability to efficiently source and distribute products

Our revenue and operating income are affected by our ability to purchase our
products in sufficient quantities at competitive prices. We have made, and may
continue to make, inventory forward buys to help manage supply chain
disruptions. While we believe our vendors have adequate capacity to meet our
current and anticipated demand, our level of revenue could be adversely affected
in the event we face a worsening of constraints in our supply chain, including
the inability of our vendors to produce sufficient quantities of merchandise in
a manner that is able to match market demand from our customers due to a
worsening COVID-19 pandemic or other factors. We rely on a small number of
vendors to supply the majority of our eyeglass lenses and contact lenses, and
are thus exposed to supplier concentration risk. In particular, we have agreed
to exclusively purchase almost all of our spectacle lenses from one supplier.
During fiscal year 2021, 90% of spectacle lens expenditures were from this
vendor and 92% of contact lens expenditures were with three vendors. We are less
exposed to a supplier risk for our eyeglass frames as only 57% of frame
expenditures were with two vendors.

We source merchandise from suppliers located in China, a significant amount of
our domestically-purchased merchandise is manufactured in China, and one of our
outsourced third-party laboratories is located in China. Historically, tariffs
have not materially affected our financial results, and we believe that less
than 15% of costs applicable to revenue are subject to tariffs on Chinese
imports. We continue to monitor ongoing political relations between China and
the United States.

Intermediate results and seasonality

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Historically, our business has realized a higher portion of net revenue,
operating income, and cash flows from operations in the first half of the fiscal
year, and a lower portion of net revenue, operating income, and cash flows from
operations in the fourth fiscal quarter. The seasonally larger first half of the
fiscal year is attributable primarily to the timing of our customers' income tax
refunds and annual health insurance program start/reset periods. Because our
target market consists of value seeking and lower income consumers, a delay in
the issuance of tax refunds or changes in the amount of tax refunds can have a
negative impact on our financial results. Consumers could also alter how they
utilize tax refund proceeds. With respect to our fourth quarter results,
compared to other retailers, our products and services are less likely to be
included in consumer's holiday spending budgets, therefore reducing spending on
personal vision correction during the weeks preceding December 25th of each
year. Additionally, although the period between December 25th and the end of our
fiscal year is typically a high-volume period, the net revenue associated with
substantially all orders of prescription eyeglasses and contact lenses during
that period is deferred until the following fiscal period due to our policy of
recognizing revenue only after the product has been accepted by the customer.
Consumer behavior driven by the COVID-19 pandemic has resulted in a departure
from seasonal norms we have experienced in recent years and may continue to
disrupt the historical quarterly cadence of our results of operations for an
unknown period of time.

For fiscal year 2021, approximately 23% of our revenue was recorded in the
fourth quarter, but approximately 25% of annual SG&A costs were recorded in the
fourth quarter. Compared to prior fiscal years, in fiscal year 2020, we
experienced stronger comparable store sales growth in the fourth quarter from
strong customer demand, including the effect of our stores being temporarily
closed to the public earlier in the year. Additionally, SG&A costs, primarily
advertising expense, during the second and third quarters of fiscal year 2020
were lower than in the corresponding quarters of prior fiscal years due to
impacts of the COVID-19 pandemic.

Industry competition and consolidation

The U.S. optical retail industry is highly competitive and fragmented with
competition generally based upon brand name recognition, price, convenience,
selection, service and product quality. We operate within the value segment,
which emphasizes price and value, and compete with mass merchants, specialty
retail chains, online retailers and independent eye practitioners and opticians.
We also compete with large national retailers such as, in alphabetical order,
LensCrafters, Pearle Vision and Visionworks. Ongoing consolidation activity has
created, and further consolidation activity may create, organizations that are
involved in virtually every sector of the optical industry, from retail and
wholesale to frames, spectacle lenses, and managed vision care. This increased
consolidation activity may enable these companies to benefit from purchasing
advantages and the ability to leverage management capabilities across a larger
business base. The COVID-19 pandemic may lead to changes in both the number and
positioning of our competitors.

How we assess the performance of our business

We consider a variety of financial and operating measures in assessing the
performance of our business. The key measures we use to determine how our
consolidated business and operating segments are performing are net revenue,
costs applicable to revenue, and selling, general, and administrative expenses,
which are described further in Note 1. "Business and Significant Accounting
Policies," to our consolidated financial statements included in Part II. Item 8.
of this Form 10-K. In addition, we also review store growth, Adjusted Comparable
Store Sales Growth, Adjusted Operating Income, Adjusted Operating Margin,
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS.

Net revenue

We report as net revenue amounts generated in transactions with retail customers
who are the end users of our products, services, and plans. Comparable store
sales growth and new store openings are key drivers of net revenue and are
discussed below. Also, the timing of unearned revenue can affect revenue
recognized in a particular period.

Costs applicable to revenue

Customer tastes and preferences, product mix, changes in technology, significant
increases or slowdowns in production, and other factors impact costs applicable
to revenue. The components of our costs applicable to revenue may not be
comparable to other retailers.

Selling, general and administrative expenses

SG&A generally fluctuates consistently with revenue due to the variable store,
field office and corporate support costs; however, some fixed costs slightly
improve as a percentage of net revenue as our net revenues grow over time.

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New Store Openings

The total number of new stores per year and the timing of store openings has,
and will continue to have, an impact on our results. In an effort to conserve
cash early in the COVID-19 pandemic, we temporarily paused new store openings
during a portion of fiscal year 2020. We opened 75 stores during fiscal year
2021. We will continue to monitor and determine our plans for future new store
openings based on health, safety and economic conditions.

Adjusted same store sales growth

We measure Adjusted Comparable Store Sales Growth as the increase or decrease in
sales recorded by the comparable store base in any reporting period, compared to
sales recorded by the comparable store base in the prior reporting period, which
we calculate as follows: (i) sales are recorded on a cash basis (i.e., when the
order is placed and paid for or submitted to a managed care payor, compared to
when the order is delivered), utilizing cash basis point of sale information
from stores; (ii) stores are added to the calculation during the 13th full
fiscal month following the store's opening; (iii) closed stores are removed from
the calculation for time periods that are not comparable; (iv) sales from
partial months of operation are excluded when stores do not open or close on the
first day of the month; and (v) when applicable, we adjust for the effect of the
53rd week. Quarterly, year-to-date and annual adjusted comparable store sales
are aggregated using only sales from all whole months of operation included in
both the current reporting period and the prior reporting period. When a partial
month is excluded from the calculation, the corresponding month in the
subsequent period is also excluded from the calculation. There may be variations
in the way in which some of our competitors and other retailers calculate
comparable store sales. As a result, our adjusted comparable store sales may not
be comparable to similar data made available by other retailers. We did not
revise our calculation of Adjusted Comparable Store Sales Growth for the
temporary closure of our stores to the public as a result of the COVID-19
pandemic.

Adjusted Comparable Store Sales Growth is a non-GAAP financial measure, which we
believe is useful because it provides timely and accurate information relating
to the two core metrics of retail sales: number of transactions and value of
transactions. We use Adjusted Comparable Store Sales Growth as the basis for key
operating decisions, such as allocation of advertising to particular markets and
implementation of special marketing programs. Accordingly, we believe that
Adjusted Comparable Store Sales Growth provides timely and accurate information
relating to the operational health and overall performance of each brand. We
also believe that, for the same reasons, investors find our calculation of
Adjusted Comparable Stores Sales Growth to be meaningful.

Adjusted Operating Income, Adjusted Operating Margin, Adjusted EBITDA, Adjusted
EBITDA Margin, and Adjusted Diluted EPS (collectively, the "Company Non-GAAP
Measures")

The Company Non-GAAP Measures are key measures used by management to assess our
financial performance. The Company Non-GAAP Measures are also frequently used by
analysts, investors and other interested parties. We use the Company Non-GAAP
Measures to supplement U.S. GAAP measures of performance to evaluate the
effectiveness of our business strategies, to make budgeting decisions, to
establish discretionary annual incentive compensation and to compare our
performance against that of other peer companies using similar measures. See
"Non-GAAP Financial Measures" for definitions of the Company Non-GAAP Measures
and for additional information.


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Results of Operations

The following table summarizes the main components of our results of operations for
the periods indicated, both in dollars and as a percentage of our net revenues.

In thousands, except earnings per share,
percentage and store data                        Fiscal Year 2021         Fiscal Year 2020           Fiscal Year 2019

Income:

Net product sales                                $   1,718,344          $       1,418,283          $       1,426,136
Net sales of services and plans                        361,181                    293,477                    298,195
Total net revenue                                    2,079,525                  1,711,760                  1,724,331
Costs applicable to revenue (exclusive of
depreciation and amortization):
Products                                               633,116                    551,783                    574,351
Services and plans                                     271,663                    234,841                    232,168
Total costs applicable to revenue                      904,779                    786,624                    806,519
Operating expenses:
Selling, general and administrative expenses           900,798                    724,985                    744,488
Depreciation and amortization                           97,089                     91,585                     87,244
Asset impairment                                         4,427                     22,004                      8,894
Other expense (income), net                             (2,505)                      (445)                     3,611
Total operating expenses                               999,809                    838,129                    844,237
Income from operations                                 174,937                     87,007                     73,575
Interest expense, net                                   25,612                     48,327                     33,300
Loss on extinguishment of debt                               -                          -                      9,786
Earnings before income taxes                           149,325                     38,680                     30,489
Income tax provision (benefit)                          21,081                      2,403                     (2,309)
Net income                                       $     128,244          $          36,277          $          32,798

Operating data:
Number of stores open at end of period                   1,278                      1,205                      1,151
New stores opened during the period                         75                         62                         75
Adjusted Operating Income                        $     204,749          $         134,148          $         114,300
Diluted EPS                                      $        1.43          $            0.44          $            0.40
Adjusted Diluted EPS                             $        1.48          $            0.91          $            0.75
Adjusted EBITDA 1                                $     294,350          $         218,307          $         194,139
Note: Fiscal years 2021 and 2019 include 52 weeks. Fiscal year 2020 includes 53 weeks.
1 Adjusted EBITDA no longer excludes new store pre-opening expenses and non-cash rent. Refer to Non-GAAP Financial
Measures section below for our presentation of Adjusted EBITDA.



                                                  Fiscal Year 2021         Fiscal Year 2020         Fiscal Year 2019

Percentage of net revenue:
Total costs applicable to revenue                           43.5  %                  46.0  %                  46.8  %
Selling, general and administrative                         43.3  %                  42.4  %                  43.2  %
Total operating expenses                                    48.1  %                  49.0  %                  49.0  %
Income from operations                                       8.4  %                   5.1  %                   4.3  %
Net income                                                   6.2  %                   2.1  %                   1.9  %
Adjusted Operating Income                                    9.8  %                   7.8  %                   6.6  %
Adjusted EBITDA                                             14.2  %                  12.8  %                  11.3  %



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Fiscal Year 2021 compared to Fiscal Year 2020

As a result of the COVID-19 pandemic, our retail stores closed to the public
beginning on March 19, 2020. We began reopening our stores to the public on
April 27, 2020 and on June 8, 2020, we announced the successful completion of
the reopening process. Comparisons of current year results to prior year results
reflect the material and unprecedented impact of these temporary store closures.
Fiscal year 2021 consists of 52 weeks compared to 53 weeks in fiscal year 2020.

Net revenue

The following table shows, by segment and by brand, comparable store sales growth,
stores open at the end of the period and net sales for the 2021 financial year
compared to fiscal year 2020.

                                     Comparable store sales growth(1)                 Stores open at end of period                                           Net revenue(2)
In thousands, except                  Fiscal Year          Fiscal Year                                          Fiscal Year
percentage and store data                2021                 2020             Fiscal Year 2021                    2020                  Fiscal Year 2021                      Fiscal Year 2020
Owned & Host segment
America's Best                              23.5  %             (5.2) %                840                          773           $      1,423,386        68.4  %       $      1,131,016        66.1  %
Eyeglass World                              25.2  %             (2.7) %                125                          119                    225,096        10.8  %                179,934        10.5  %
Military                                    15.8  %            (15.5) %                 54                           54                     23,103         1.1  %                 20,428         1.2  %
Fred Meyer                                  13.4  %            (21.6) %                 29                           29                     12,130         0.6  %                 11,021         0.6  %
Owned & Host segment total                                                           1,048                          975           $      1,683,715        80.9  %       $      1,342,399        78.4  %
Legacy segment                              19.3  %            (12.3) %                230                          230                    165,477         8.0  %                142,017         8.3  %
Corporate/Other                                -                   -                     -                            -                    236,299        11.4  %                234,403        13.7  %
Reconciliations                                -                   -                     -                            -                     (5,966)       (0.3) %                 (7,059)       (0.4) %
Total                                       22.4  %             (5.6) %              1,278                        1,205           $      2,079,525       100.0  %       $      1,711,760       100.0  %
Adjusted Comparable Store
Sales Growth(3)                             23.0  %             (6.1) %


_________
Note: Fiscal year 2021 includes 52 weeks. Fiscal year 2020 includes 53 weeks.
(1)We calculate total comparable store sales based on consolidated net revenue
excluding the impact of (i) Corporate/Other segment net revenue, (ii) sales from
stores opened less than 13 months, (iii) stores closed in the periods presented,
(iv) sales from partial months of operation when stores do not open or close on
the first day of the month and (v) if applicable, the impact of a 53rd week in a
fiscal year. Brand-level comparable store sales growth is calculated based on
cash basis revenues consistent with what the CODM reviews, and consistent with
reportable segment revenues presented in Note 14. "Segment Reporting" in our
consolidated financial statements included in Part II. Item 8. of this Form
10-K, with the exception of the Legacy segment, which is adjusted as noted in
clause (ii) of footnote (3) below.
(2)Percentages reflect line item as a percentage of net revenue, adjusted for
rounding.
(3)There are two differences between total comparable store sales growth based
on consolidated net revenue and Adjusted Comparable Store Sales Growth: (i)
Adjusted Comparable Store Sales Growth includes the effect of deferred and
unearned revenue as if such revenues were earned at the point of sale, resulting
in an increase of 0.7% and a decrease of 0.4% from total comparable store sales
growth based on consolidated net revenue for fiscal year 2021 and fiscal year
2020, respectively, and (ii) Adjusted Comparable Store Sales Growth includes
retail sales to the Legacy partner's customers (rather than the revenues
recognized consistent with the management & services agreement with the Legacy
partner), resulting in a decrease of 0.1% and a decrease of 0.1% from total
comparable store sales growth based on consolidated net revenue for the fiscal
years 2021 and 2020, respectively.

Total net revenue of $2,079.5 million for fiscal year 2021 increased $367.7
million, or 21.5%, from $1,711.8 million for fiscal year 2020. Of the increase
approximately 90% was driven by comparable store sales growth driven by customer
demand, primarily the effect of our stores being temporarily closed to the
public for a portion of fiscal year 2020 and government stimulus, approximately
20% was driven by new store growth and maturation and was partially offset by
$32.2 million (or approximately 10%) of net revenue attributable to the 53rd
week in fiscal year 2020.

During fiscal year 2021, we opened 69 new America's Best stores and six new
Eyeglass World stores and closed two America's Best stores. The total net new
locations in fiscal year 2021 for America's Best and Eyeglass World are 67 and
six, respectively. Overall, store count grew 6.1% from the end of fiscal year
2020 to the end of fiscal year 2021.

Comparable store sales growth and Adjusted Comparable Store Sales Growth for
fiscal year 2021 were 22.4% and 23.0%, respectively. The increases in comparable
store sales growth and Adjusted Comparable Store Sales Growth were primarily
driven by an increase in customer transactions and, to a lesser extent, higher
average ticket as a result

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of customer demand, primarily the effect of our stores being temporarily closed
for a portion of fiscal year 2020 and government stimulus.

Net product sales comprised 82.6% and 82.9% of total net revenue for fiscal
years 2021 and 2020, respectively. Net product sales increased $300.1 million,
or 21.2% during fiscal year 2021 compared to fiscal year 2020, primarily due to
a $255.3 million, or 27.0% increase in eyeglass sales and to a lesser extent, a
$35.0 million, or 10.3% increase in contact lens sales.

Net sales of services and plans increased $67.7 million, or 23.1%, primarily
driven by a $38.4 million, or 25.4% increase in eye exam revenue and a $15.9
million, or 26.4% increase in product protection plan revenue, primarily the
effect of our stores being temporarily closed for a portion of fiscal year 2020.

Owned and Hosting segment net revenue. Net sales increased $341.3 millionWhere
25.4%, mainly driven by comparable store sales growth and new store openings.

Legacy segment net revenue. Net income increased $23.5 millioni.e. 16.5%, driven by
comparable store sales growth.

Corporate/Other segment net revenue. Net sales increased $1.9 millionWhere
0.8%, due to increased wholesale execution.

Net revenue reconciliations. The impact of reconciliations positively impacted
net revenue by $1.1 million during fiscal year 2021 compared to fiscal year
2020. Net revenue was positively impacted by $7.6 million due to the timing of
unearned revenue. The balance of unearned revenue as of fiscal year 2020
reflected pent-up demand following the temporary closure of our stores to the
public. Net revenue was negatively impacted by $6.5 million due to higher
product protection plan and club membership deferred revenue balances in current
period compared to the prior year period. Product protection plan and club
membership deferred revenue balances were lower in the prior year, primarily due
to the effect of our stores being temporarily closed for a portion of fiscal
year 2020.

Costs applicable to revenue

Costs applicable to revenue of $904.8 million for fiscal year 2021 increased
$118.2 million, or 15.0%, from $786.6 million for fiscal year 2020. As a
percentage of net revenue, costs applicable to revenue decreased from 46.0% for
fiscal year 2020 to 43.5% for fiscal year 2021. This decrease as a percentage of
net revenue was primarily driven by increased eyeglass mix and lower growth in
optometrist-related costs, primarily due to the effect of our stores being
temporarily closed for a portion of fiscal year 2020 not experienced in fiscal
year 2021.

Costs of products as a percentage of net product sales decreased from 38.9% for
fiscal year 2020 to 36.8% for fiscal year 2021 primarily driven by increased
eyeglass mix and higher eyeglass and contact lens margin, primarily the effect
of our stores being temporarily closed for a portion of fiscal year 2020 not
experienced in fiscal year 2021.

Owned & Host segment costs of products. Costs of products as a percentage of net
product sales decreased from 28.0% for fiscal year 2020 to 27.4% for fiscal year
2021 driven by increased eyeglass mix and higher eyeglass margin, primarily the
effect of the temporary store closures in fiscal year 2020.

Legacy segment costs of products. Costs of products as a percentage of net
product sales decreased slightly from 47.8% for fiscal year 2020 to 47.7% for
fiscal year 2021. The decrease was primarily driven by the effect of the
temporary store closures in fiscal year 2020, which was partially offset by a
lower mix of managed care customer transactions versus non-managed care customer
transactions. Legacy segment managed care net product revenue is recorded in net
product sales while revenue associated with servicing non-managed care customers
is recorded in net sales of services and plans. Eyeglass and contact lens
product costs for both managed care and non-managed care net revenue are
recorded in costs of products. Increases in managed care mix decrease costs of
products as a percentage of net product sales and have a corresponding negative
impact on costs of services as a percentage of net sales of services and plans
in our Legacy segment.

Costs of services and plans as a percentage of net sales of services and plans
decreased from 80.0% for fiscal year 2020 to 75.2% for fiscal year 2021. The
decrease was driven by lower growth in optometrist-related costs and higher eye
exam revenue, primarily due to the impact of the temporary store closures to the
public in fiscal year 2020 not experienced in fiscal year 2021. These
improvements were partially offset by the deferred revenue effects mentioned
above.

Owned & Host segment costs of services and plans. Costs of services and plans as
a percentage of net sales of services and plans decreased from 86.0% for fiscal
year 2020 to 80.1% for fiscal year 2021. The decrease was driven by lower growth
in optometrist-related costs and higher eye exam revenue, primarily the impact
of the temporary store closures to the public in fiscal year 2020.

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Legacy segment costs of services and plans. Costs of services and plans as a
percentage of net sales of services and plans decreased from 46.5% for fiscal
year 2020 to 40.7% for fiscal year 2021. The decrease was primarily driven by
higher management fees from our Legacy partner and lower growth in
optometrist-related costs, the effect of the temporary store closures to the
public in fiscal year 2020.

Selling, general and administrative expenses

SG&A of $900.8 million for fiscal year 2021 increased $175.8 million, or 24.3%,
from fiscal year 2020. As a percentage of net revenue, SG&A increased from 42.4%
for fiscal year 2020 to 43.3% for fiscal year 2021. This increase as a
percentage of net revenue was primarily driven by increases in advertising and
performance-based incentive compensation partially offset by decreases in store
payroll and occupancy expenses, which were primarily due to the effect of
temporary store closures to the public in fiscal year 2020 not experienced in
fiscal year 2021, and an individual one-time cash bonus paid in fiscal year 2020
to our front-line associates and doctors.

SG&A for fiscal year 2021 and fiscal year 2020 includes $1.5 million and $8.6
million, respectively, of incremental costs directly related to adapting the
Company's operations during the COVID-19 pandemic; of these costs, $0.6 million
were reflected as adjustments for the Company's presentation of non-GAAP
measures below for fiscal year 2020.

Owned & Host segment SG&A. SG&A as a percentage of net revenue increased from
36.5% for fiscal year 2020 to 36.7% for fiscal year 2021. This increase as a
percentage of net revenue was primarily driven by higher advertising expense
partially offset by payroll and occupancy leverage, the effect of the temporary
store closures to the public in fiscal year 2020.

Legacy segment SG&A. SG&A as a percentage of net revenue decreased from 36.5%
for fiscal year 2020 to 35.0% for fiscal year 2021 primarily driven by payroll
and occupancy leverage, the effect of the temporary store closures to the public
in fiscal year 2020.

Depreciation and amortization

Depreciation of $97.1 million for fiscal year 2021
increase $5.5 millioni.e. 6.0%, of $91.6 million for fiscal year 2020
mainly driven by new store openings.

Asset impairment

We recognized $4.4 million for impairment primarily of tangible long-lived
assets and ROU assets associated with our retail stores in fiscal
year 2021 compared to $22.0 million recognized in fiscal year 2020. The store
asset impairment charge is primarily related to our Owned & Host segment and is
driven by lower than projected customer sales volume in certain stores and other
entity-specific assumptions. We considered multiple factors including, but not
limited to: forecasted scenarios related to store performance and the likelihood
that these scenarios would be ultimately realized; and the remaining useful
lives of the assets. The asset impairment expense for fiscal years 2021 and 2020
also includes $0.8 million and $1.1 million, respectively, related to a
write-off of certain software assets that were deemed to be obsolete. Asset
impairment expenses were recognized in Corporate/Other.

Other expenses (income), net

We recognized a gain of $2.4 million in Other expense (income), net in fiscal
year 2021 in connection with the acquisition of our equity method investee by a
third party. See Note 1. "Business and Significant Accounting Policies" for
further details.

Interest expense, net

Interest expense, net, of $25.6 million for fiscal year 2021 decreased $22.7
million, or 47.0%, from $48.3 million for fiscal year 2020. The decrease was
primarily driven by lower derivative costs of $10.9 million, reduced term loan
outstanding balance and credit facility utilization, and lower interest expense
on the 2025 Notes as a result of the adoption of ASU 2020-06.

Provision for income tax

Our income tax provision for fiscal year 2021 reflected our statutory federal
and state rate of 25.5%, offset by a benefit of $16.5 million primarily from the
exercise of stock options and stranded tax effect associated with our interest
rate swaps that matured in the first quarter of 2021. In comparison, the income
tax provision associated with fiscal year 2020 reflected our statutory federal
and state rate of 25.5% combined with a benefit of $8.0 million associated
primarily with the stock option exercises.
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Fiscal Year 2020 compared to Fiscal Year 2019

Net revenue

The following table shows, by segment and by brand, comparable store sales growth,
stores open at the end of the period and net sales for the 2020 financial year
compared to the 2019 financial year.

                                     Comparable store sales growth(1)                Stores open at end of period                                           Net revenue(2)
In thousands, except                  Fiscal Year         Fiscal Year                                          Fiscal Year
percentage and store data                2020                 2019            Fiscal Year 2020                    2019                  Fiscal Year 2020                      Fiscal Year 2019
Owned & Host segment
America's Best                              (5.2) %             7.1  %                773                          725           $      1,131,016        66.1  %       $      1,108,760        64.3  %
Eyeglass World                              (2.7) %             5.8  %                119                          117                    179,934        10.5  %                178,841        10.4  %
Military                                   (15.5) %             1.4  %                 54                           54                     20,428         1.2  %                 23,694         1.4  %
Fred Meyer                                 (21.6) %            (4.4) %                 29                           29                     11,021         0.6  %                 13,705         0.8  %
Owned & Host segment total                                                            975                          925           $      1,342,399        78.4  %       $      1,325,000        76.9  %
Legacy segment                             (12.3) %             3.1  %                230                          226                    142,017         8.3  %                160,049         9.3  %
Corporate/Other                                -                  -                     -                            -                    234,403        13.7  %                245,218        14.2  %
Reconciliations                                -                  -                     -                            -                     (7,059)       (0.4) %                 (5,936)       (0.4) %
Total                                       (5.6) %             6.5  %              1,205                        1,151           $      1,711,760       100.0  %       $      1,724,331       100.0  %
Adjusted Comparable Store
Sales Growth(3)                             (6.1) %             6.2  %


_________
Note: Fiscal year 2020 includes 53 weeks. Fiscal year 2019 includes 52 weeks.
(1)We calculate total comparable store sales based on consolidated net revenue
excluding the impact of (i) Corporate/Other segment net revenue, (ii) sales from
stores opened less than 13 months, (iii) stores closed in the periods presented,
(iv) sales from partial months of operation when stores do not open or close on
the first day of the month and (v) if applicable, the impact of a 53rd week in a
fiscal year. Brand-level comparable store sales growth is calculated based on
cash basis revenues consistent with what the CODM reviews, and consistent with
reportable segment revenues presented in Note 14. "Segment Reporting" in our
consolidated financial statements included in Part II. Item 8. of this Form
10-K, with the exception of the Legacy segment, which is adjusted as noted in
clause (ii) of footnote (3) below.
(2)Percentages reflect line item as a percentage of net revenue, adjusted for
rounding.
(3)There are two differences between total comparable store sales growth based
on consolidated net revenue and Adjusted Comparable Store Sales Growth: (i)
Adjusted Comparable Store Sales Growth includes the effect of deferred and
unearned revenue as if such revenues were earned at the point of sale, resulting
in a decrease of 0.4% and a decrease of 0.1% from total comparable store sales
growth based on consolidated net revenue for fiscal year 2020 and fiscal year
2019, respectively, and (ii) Adjusted Comparable Store Sales Growth includes
retail sales to the Legacy partner's customers (rather than the revenues
recognized consistent with the management & services agreement with the Legacy
partner), resulting in a decrease of 0.1% and a decrease of 0.2% from total
comparable store sales growth based on consolidated net revenue for the fiscal
years 2020 and 2019, respectively.

Total net revenue of $1,711.8 million for fiscal year 2020 decreased $12.5
million, or 0.7%, from $1,724.3 million for fiscal year 2019. This decrease was
driven by the temporary closure of our stores to the public for a portion of
fiscal year 2020 due to the COVID-19 pandemic, and was partially offset by new
store sales as well as $32.2 million of net revenue attributable to the 53rd
week in fiscal year 2020. Total net revenue was also negatively impacted by
changes in unearned revenue.

During fiscal year 2020, we opened 55 new America's Best stores, two new
Eyeglass World stores, and transitioned five additional Legacy stores to our
management. During fiscal year 2020, we closed seven America's Best stores and
one Legacy store as a result of our Legacy partner's decision to cease its
overall operations at the location. The total net new locations in fiscal year
2020 for America's Best, Eyeglass Word, and Legacy are 48, two and four,
respectively. Overall, store count grew 4.7% from the end of fiscal year 2019 to
the end of fiscal year 2020.

Comparable store sales growth and Adjusted Comparable Store Sales Growth for
fiscal year 2020 were (5.6)% and (6.1)%, respectively. The decreases in
comparable store sales growth and Adjusted Comparable Store Sales Growth were
driven by the temporary closure of our stores to the public.

Net product sales comprised 82.9% and 82.7% of total net revenue for fiscal
years 2020 and 2019, respectively. Net product sales decreased $7.9 million, or
0.6% during fiscal year 2020 compared to fiscal year 2019, primarily due to the
temporary closure of our stores to the public and lower wholesale fulfillment
that was partially offset by additional revenue from the 53rd week and increased
sales of contact lenses. Net sales of services and plans decreased $4.7 million,
or 1.6%, primarily due to the temporary closure of our stores to the public.

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Owned & Host segment net revenue. Net revenue increased $17.4 million, or 1.3%
as stronger sales in fiscal year 2020, and in the 53rd week, were partially
offset by declines due to the temporary closure of our stores to the public.

Legacy segment net revenue. Net income decreased $18.0 millioni.e. 11.3%, due to
the temporary closure of our stores to the public.

Corporate/Other segment net revenue. Net income decreased $10.8 millionWhere
4.4%, due to lower wholesale execution, partially offset by growth in our
online retail.

Net revenue reconciliations. Reconciliations for fiscal year 2020 and fiscal
year 2019 include increases in deferred revenue of $2.3 million and $5.1
million, respectively and increases in unearned revenue of $4.8 million and $0.8
million, respectively. The increase in deferred revenue for fiscal year 2020 was
driven by growth in eye care club membership sales; we believe that the
increases in deferred revenue were limited somewhat by the temporary closure of
our stores to the public. The increase in unearned revenue compared to the prior
period is due to higher sales in the 53rd week of the fiscal year. In 53-week
fiscal years we have historically experienced higher volumes in the 53rd week
compared to the 52nd week.

Costs applicable to revenue

Costs applicable to revenue of $786.6 million for fiscal year 2020 decreased
$19.9 million, or 2.5%, from $806.5 million for fiscal year 2019. As a
percentage of net revenue, costs applicable to revenue decreased from 46.8% for
fiscal year 2019 to 46.0% for fiscal year 2020. This decrease as a percentage of
net revenue was driven by higher eyeglass margin, partially offset by increased
contact lens mix and optometrist costs while our stores were temporarily closed
to the public.

Product costs as a percentage of net product sales decreased 40.3% for
for fiscal year 2019 to 38.9% for fiscal year 2020, driven by the rise in eyewear
margin, partially offset by the increased contact lens mix.

Owned & Host segment costs of products. Costs of products as a percentage of net
product sales decreased from 28.9% for fiscal year 2019 to 28.0% for fiscal year
2020 driven by higher eyeglass margin, partially offset by increased contact
lens mix.

Legacy segment costs of products. Costs of products as a percentage of net
product sales increased from 46.2% for fiscal year 2019 to 47.8% for fiscal year
2020. The increase was primarily driven by increased contact lens mix and a
higher mix of non-managed care customer transactions versus managed care
customer transactions. Legacy segment managed care net product revenue is
recorded in net product sales while revenue associated with servicing
non-managed care customers is recorded in net sales of services and plans.
Eyeglass and contact lens product costs for both managed care and non-managed
care net revenue are recorded in costs of products. Decreases in managed care
mix increase costs of products as a percentage of net product sales and have a
corresponding positive impact on costs of services as a percentage of net sales
of services and plans in our Legacy segment.

Costs of services and plans as a percentage of net sales of services and plans
increased from 77.9% for fiscal year 2019 to 80.0% for fiscal year 2020. The
increase was primarily driven by optometrist costs incurred during the temporary
closure of our stores to the public.

Owned & Host segment costs of services and plans. Costs of services and plans as
a percentage of net sales of services and plans increased from 83.2% for fiscal
year 2019 to 86.0% for fiscal year 2020. The increase was driven by optometrist
and technician costs incurred during the temporary closure of our stores to the
public.

Legacy segment costs of services and plans. Costs of services and plans as a
percentage of net sales of services and plans increased from 46.3% for fiscal
year 2019 to 46.5% for fiscal year 2020. The increase was primarily driven by
optometrist costs incurred during the temporary closure of our stores to the
public.

Selling, general and administrative expenses

SG&A of $725.0 million for fiscal year 2020 decreased $19.5 million, or 2.6%,
from fiscal year 2019. As a percentage of net revenue, SG&A decreased from 43.2%
for fiscal year 2019 to 42.4% for fiscal year 2020. This decrease as a
percentage of net revenue was primarily driven by lower advertising investment
partially offset by store and corporate payroll and occupancy costs incurred
during the temporary closure of our stores to the public. SG&A for fiscal year
2020 includes $8.6 million of incremental costs directly related to adapting the
Company's operations during the COVID-19 pandemic; of these costs, $0.6 million
were reflected as adjustments for the Company's presentation of non-GAAP
measures below.

Owned & Host segment SG&A. SG&A as a percentage of net revenue decreased from
38.4% for fiscal year 2019 to 36.5% for fiscal year 2020. This decrease as a
percentage of net revenue was primarily driven by lower

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advertising investment partially offset by store payroll and occupancy costs
incurred during the temporary closure of our stores to the public.

Legacy segment SG&A. SG&A as a percentage of net revenue increased from 35.1%
for fiscal year 2019 to 36.5% for fiscal year 2020 primarily driven by store
payroll costs incurred during the temporary closure of our stores to the public.

Depreciation and amortization

Depreciation and amortization expense of $91.6 million for fiscal year 2020
increased $4.3 million, or 5.0%, from $87.2 million for fiscal year 2019
primarily driven by new store openings and investments in information technology
and doctor equipment. Our property and equipment balance, net, decreased $25.5
million, or 6.9%, during fiscal year 2020, reflective of $76.2 million in
purchases of property and equipment, $1.1 million in new finance leases, less
$84.2 million in depreciation expense and $18.6 million in impairment and other
adjustments.

Asset impairment

We recognized $22.0 million for impairment primarily of tangible long-lived
assets and ROU assets associated with our retail stores in fiscal
year 2020 compared to $8.9 million recognized in fiscal year 2019. Expenses
recognized in fiscal year 2020 were related to impairments of long-lived
tangible assets at our retail stores and right of use ("ROU") assets related to
our retail stores. The increase in store asset impairment charges during fiscal
year 2020 was primarily related to our Owned & Host segment and was driven by
lower than projected customer sales volume in certain stores and other
entity-specific assumptions. We considered multiple factors including, but not
limited to: forecasted scenarios related to store performance and the likelihood
that these scenarios would be ultimately realized; the historical performance of
the stores before the temporary closure of our stores to the public; the effect
of store closures and uncertainty in store revenues over the remaining useful
life of the asset group as a result of the COVID-19 pandemic; and the remaining
useful lives of the assets. The asset impairment expense for fiscal year 2020
also includes $1.1 million related to a write-off of certain software assets
that were deemed to be obsolete. Asset impairment expenses were recognized in
Corporate/Other.

Interest expense, net

Interest expense, net, of $48.3 million for fiscal year 2020 increased $15.0
million, or 45.1%, from $33.3 million for fiscal year 2019. The increase was
primarily driven by losses related to immediate recognition of changes in fair
value of ineffective hedges of $4.0 million and charges related to interest
payments and amortization of debt discounts related to the 2025 Notes of $17.3
million that were partially offset by a reduction in our term loan and Revolving
Credit Facility utilization.

Income tax provision

Our income tax provision for fiscal year 2020 reflected our federal law
and status rate of 25.5%, combined with a discrete advantage of $8.0 million
primarily related to the exercise of stock options. In comparison, the
income tax benefit associated with fiscal year 2019, reflects income tax
spending at our federal and state statutory rate of 25.5% offset by a $10.1
million
tax benefit resulting from the exercise of stock options.

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Non-GAAP Financial Measures

We define Adjusted Operating Income as net income, plus interest expense and
income tax provision (benefit), further adjusted to exclude stock compensation
expense, loss on extinguishment of debt, asset impairment, litigation
settlement, secondary offering expenses, management realignment expenses,
long-term incentive plan expenses, amortization of acquisition intangibles and
other expenses. We define Operating Margin as Adjusted Operating Income as a
percentage of net revenue. We define EBITDA as net income, plus interest
expense, income tax provision (benefit) and depreciation and amortization. We
define Adjusted EBITDA as net income, plus interest expense, income tax
provision (benefit) and depreciation and amortization, further adjusted to
exclude stock compensation expense, loss on extinguishment of debt, asset
impairment, litigation settlement, secondary offering expenses, management
realignment expenses, long-term incentive plan expenses, and other expenses. We
define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net revenue.
We define Adjusted Diluted EPS as diluted earnings per share, adjusted for the
per share impact of stock compensation expense, loss on extinguishment of debt,
asset impairment, litigation settlement, secondary offering expenses, management
realignment expenses, long-term incentive plan expenses, amortization of
acquisition intangibles, amortization of debt discounts and deferred financing
costs of our term loan borrowings, amortization of the conversion feature and
deferred financing costs of our 2025 Notes when not required under U.S. GAAP to
be added back for diluted earnings per share, losses (gains) on change in fair
value of derivatives, other expenses, and tax benefit of stock option exercises,
less the tax effect of these adjustments.

In 2020, we introduced Adjusted Operating Income and Adjusted Operating Margin
as measures of performance we planned to use in addition to Adjusted EBITDA,
Adjusted EBITDA Margin and Adjusted Diluted EPS. We believe Adjusted Operating
Income and Adjusted Operating Margin enhance an understanding of our performance
by highlighting the results from ongoing operations and the profitability of our
business. We continue to evaluate our use of the Company Non-GAAP measures in
the context of the development of our business, and may introduce or discontinue
certain measures in the future as we deem appropriate.

Further, consistent with our presentation of Adjusted Operating Income, we no
longer exclude new store pre-opening expenses and non-cash rent from our
presentation of Adjusted EBITDA and Adjusted Diluted EPS. New store pre-opening
expenses totaled $3.4 million, $2.6 million and $3.3 million for the fiscal
years 2021, 2020 and 2019, respectively; and non-cash rent totaled $1.3 million,
$2.6 million and $3.2 million for fiscal years 2021, 2020 and 2019,
respectively. The presentation of Adjusted EBITDA and Adjusted Diluted EPS for
the fiscal year end 2019 has been recast to reflect these changes. See our Form
8-K filed with the SEC on February 26, 2020 for more information.

EBITDA and the Company Non-GAAP Measures can vary substantially in size from one
period to the next, and certain types of expenses are non-recurring in nature
and consequently may not have been incurred in any of the periods presented
below. EBITDA and the Company Non-GAAP Measures have been presented as
supplemental measures of financial performance that are not required by, or
presented in accordance with U.S. GAAP, because we believe they assist investors
and analysts in comparing our operating performance across reporting periods on
a consistent basis by excluding items that we do not believe are indicative of
our core operating performance. Management believes EBITDA, and the Company
Non-GAAP Measures are useful to investors in highlighting trends in our
operating performance, while other measures can differ significantly depending
on long-term strategic decisions regarding capital structure, the tax
jurisdictions in which we operate and capital investments. We also use EBITDA
and the Company Non-GAAP Measures to supplement U.S. GAAP measures of
performance in the evaluation of the effectiveness of our business strategies,
to make budgeting decisions, to establish discretionary annual incentive
compensation and to compare our performance against that of other peer companies
using similar measures. Management supplements U.S. GAAP results with Non-GAAP
financial measures to provide a more complete understanding of the factors and
trends affecting the business than U.S. GAAP results alone.

EBITDA and the Company Non-GAAP Measures are not recognized terms under U.S.
GAAP and should not be considered as an alternative to net income or income from
operations as a measure of financial performance or cash flows provided by
operating activities as a measure of liquidity, or any other performance measure
derived in accordance with U.S. GAAP. Additionally, these measures are not
intended to be a measure of free cash flow available for management's
discretionary use as they do not consider certain cash requirements such as
interest payments, tax payments and debt service requirements. In evaluating
EBITDA and the Company Non-GAAP Measures we may incur expenses in the future
that are the same as or similar to some of the adjustments in this presentation.
Our presentation of EBITDA and the Company Non-GAAP Measures should not be
construed to imply that our future results will be unaffected by any such
adjustments. Management compensates for these limitations by primarily relying
on our U.S. GAAP results in addition to using EBITDA and the Company Non-GAAP
Measures.

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The presentations of these measures have limitations as analytical tools and
should not be considered in isolation, or as a substitute for analysis of our
results as reported under U.S. GAAP. Some of these limitations are:

•they do not reflect costs or cash outlays for capital expenditures or
contractual commitments;
•they do not reflect changes in, or cash requirements for, our working capital
needs;
•EBITDA, Adjusted EBITDA and Adjusted Operating Income do not reflect the
interest expense, or the cash requirements necessary to service interest or
principal payments, on our debt;
•EBITDA, Adjusted EBITDA and Adjusted Operating Income do not reflect period to
period changes in taxes, income tax expense or the cash necessary to pay income
taxes;
•they do not reflect the impact of earnings or charges resulting from matters we
consider not to be indicative of our ongoing operations;
•although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and
EBITDA and Adjusted EBITDA do not reflect cash requirements for such
replacements; and
•other companies in our industry may calculate these measures differently than
we do, limiting their usefulness as comparative measures.

Due to these limitations, the Company’s EBITDA and non-GAAP measures are expected to
not to be considered measures of discretionary cash available to invest in
business growth or to reduce debt.

The following table reconciles our adjusted operating income, our adjusted operating income
Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin on net income; and
Adjusted diluted EPS for the periods presented:

In thousands                                     Fiscal Year 2021                         Fiscal Year 2020                         Fiscal Year 2019
Net income                              $       128,244             6.2  %       $        36,277             2.1  %       $        32,798              1.9  %
Interest expense                                 25,612             1.2  %                48,327             2.8  %                33,300              1.9  %
Income tax provision (benefit)                   21,081             1.0  %                 2,403             0.1  %                (2,309)            (0.1) %
Stock compensation expense (a)                   14,886             0.7  %                10,740             0.6  %                12,670              0.7  %
Loss on extinguishment of debt (b)                    -               -  %                     -               -  %                 9,786              0.6  %
Asset impairment (c)                              4,427             0.2  %                22,004             1.3  %                 8,894              0.5  %
Litigation settlement (d)                         1,500             0.1  %                 4,395             0.3  %                     -                -  %
Secondary offering expenses (e)                       -               -  %                     -               -  %                   401                -  %
Management realignment expenses (f)                   -               -  %                     -               -  %                 2,155              0.1  %
Long-term incentive plan (g)                          -               -  %                     -               -  %                 2,830              0.2  %
Amortization of acquisition intangibles
(h)                                               7,488             0.4  %                 7,426             0.4  %                 7,405              0.4  %
Other (k)                                         1,511             0.1  %                 2,576             0.2  %                 6,370              0.4  %
Adjusted Operating Income / Adjusted
Operating Margin                        $       204,749             9.8  %       $       134,148             7.8  %       $       114,300              6.6  %
Note: Fiscal years 2021 and 2019 include 52 weeks. Fiscal year 2020 includes 53 weeks.
Percentages reflect line item as a percentage of net revenue, adjusted for rounding.
Some of the percentage totals in the table above do not foot due to rounding differences.


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In thousands                                     Fiscal Year 2021                          Fiscal Year 2020                          Fiscal Year 2019
Net income                              $       128,244              6.2  %       $        36,277              2.1  %       $        32,798              1.9  %
Interest expense                                 25,612              1.2  %                48,327              2.8  %                33,300              1.9  %
Income tax provision (benefit)                   21,081              1.0  %                 2,403              0.1  %                (2,309)            (0.1) %
Depreciation and amortization                    97,089              4.7  %                91,585              5.4  %                87,244              5.1  %
EBITDA                                          272,026             13.1  %               178,592             10.4  %               151,033              8.8  %

Stock compensation expense (a)                   14,886              0.7  %                10,740              0.6  %                12,670              0.7  %
Loss on extinguishment of debt (b)                    -                -  %                     -                -  %                 9,786              0.6  %
Asset impairment (c)                              4,427              0.2  %                22,004              1.3  %                 8,894              0.5  %
Litigation settlement (d)                         1,500              0.1  %                 4,395              0.3  %                     -                -  %
Secondary offering expenses (e)                       -                -  %                     -                -  %                   401                -  %
Management realignment expenses (f)                   -                -  %                     -                -  %                 2,155              0.1  %
Long-term incentive plan (g)                          -                -  %                     -                -  %                 2,830              0.2  %
Other (k)                                         1,511              0.1  %                 2,576              0.2  %                 6,370              0.4  %
Adjusted EBITDA / Adjusted EBITDA
Margin                                  $       294,350             14.2  %       $       218,307             12.8  %       $       194,139             11.3  %
Note: Fiscal years 2021 and 2019 include 52 weeks. Fiscal year 2020 includes 53 weeks.
Percentages reflect line item as a percentage of net revenue, adjusted for rounding.
Some of the percentage totals in the table above do not foot due to rounding differences.


In thousands, except per share amounts Fiscal year 2021 Fiscal year 2020

           Fiscal Year 2019
Diluted EPS                                $            1.43          $            0.44          $            0.40
Stock compensation expense (a)                          0.15                       0.13                       0.16
Loss on extinguishment of debt (b)                         -                          -                       0.12
Asset impairment (c)                                    0.05                       0.27                       0.11
Litigation settlement (d)                               0.02                       0.05                          -
Secondary offering expenses (e)                            -                          -                       0.00
Management realignment expenses (f)                        -                          -                       0.03
Long-term incentive plan expense (g)                       -                          -                       0.03
Amortization of acquisition intangibles
(h)                                                     0.08                       0.09                       0.09
Amortization of debt discounts and
deferred financing costs (i)                            0.02                       0.14                       0.02
Losses (gains) on change in fair value of
derivatives (j)                                        (0.03)                      0.05                          -
Other (n)                                              (0.01)                      0.03                       0.08
Tax benefit of stock option exercises (l)              (0.15)                     (0.10)                     (0.12)
Tax effect of total adjustments (m)                    (0.08)                     (0.19)                     (0.16)
Adjusted Diluted EPS                       $            1.48          $            0.91          $            0.75

Weighted average diluted shares
outstanding                                           96,134                     82,793                     81,683

Note: The 2021 and 2019 fiscal years include 52 weeks. Fiscal 2020 consists of 53 weeks.
Some of the totals in the table above do not add up due to rounding differences.

____________

(a)Non-cash charges related to stock-based compensation programs, which vary
from period to period depending on the timing of awards and performance vesting
conditions.
(b)Reflects write-off of deferred financing fees related to the extinguishment
of debt.
(c)Reflects write-off of primarily property, equipment and lease related assets
on closed or underperforming stores.
(d)Expenses associated with settlement of certain litigation.
(e)Expenses related to our secondary public offerings.
(f)Expenses related to a non-recurring management realignment described on Form
8-K filed with the SEC on January 10, 2019.
(g)Expenses pursuant to a long-term incentive plan for non-executive associates
who were not participants in the management equity plan. This plan was effective
in 2014 following the acquisition of the Company by affiliates of KKR & Co. Inc.
(the "KKR Acquisition").
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(h)Amortization of the increase in carrying values of finite-lived intangible
assets resulting from the application of purchase accounting to the KKR
Acquisition.
(i)Amortization of deferred financing costs and other non-cash charges related
to our long-term debt, including amortization of the conversion feature related
to the 2025 Notes of $10.0 million for fiscal year 2020. We adjust for
amortization of deferred financing costs related to the 2025 Notes only when
adjusting these costs is not required in the calculation of diluted earnings per
share in accordance with the if-converted method under U.S. GAAP. Amortization
of debt discount and deferred financing costs total $2.1 million, $11.9 million
and $1.3 million for the fiscal years 2021, 2020 and 2019, respectively.
(j)Reflects losses (gains) recognized in interest expense on change in fair
value of de-designated hedges of $(3.3) million and $4.0 million for fiscal
years 2021 and 2020.
(k)Other adjustments include amounts that management believes are not
representative of our operating performance (amounts in brackets represent
reductions in Adjusted Operating Income, Adjusted Diluted EPS and Adjusted
EBITDA) including our share of (gains) losses on equity method investments of
$(2.4) million and $1.8 million for fiscal years 2021 and 2019, respectively;
and other expenses and adjustments which are primarily related to excess payroll
taxes on stock option exercises, executive severance and relocation.
(l)Tax benefit associated with accounting guidance requiring excess tax benefits
related to stock option exercises to be recorded in earnings as discrete items
in the reporting period in which they occur.
(m)Represents the income tax effect of the total adjustments at our combined
statutory federal and state income tax rates.
(n)Reflects other expenses in (k) above, including the impact of stranded tax
effect of $(2.1) million for fiscal year 2021 associated with our interest rate
swaps that matured in 2021.

Cash and capital resources

Our primary cash needs are for inventory, payroll, store rent, advertising,
capital expenditures associated with new stores and updating existing stores, as
well as information technology and infrastructure, including our corporate
office, distribution centers and laboratories. When appropriate, the Company may
utilize excess liquidity towards debt service requirements, including voluntary
debt prepayments, or required interest and principal payments, if any, as well
as repurchases of common stock, based on excess cash flows. We continue to
prioritize cash conservation and prudent use of cash, while safely conducting
normal operations. The most significant components of our operating assets and
liabilities are inventories, accounts receivable, prepaid expenses and other
assets, accounts payable, deferred and unearned revenue and other payables and
accrued expenses. While we have historically exercised prudence in our use of
cash, the COVID-19 pandemic has required us to closely monitor various items
related to cash flow including, but not limited to, cash receipts, cash
disbursements, payment terms and alternative sources of funding. We continue to
be focused on these items in addition to other key measures we use to determine
how our consolidated business and operating segments are performing. We believe
that cash on hand, cash expected to be generated from operations and the
availability of borrowings under our revolving credit facility will be
sufficient to fund our working capital requirements, liquidity obligations,
anticipated capital expenditures and payments due under our existing debt for
the next 12 months and thereafter for the foreseeable future. Depending on our
liquidity levels, conditions in the capital markets and other factors, we may
from time to time consider the refinancing or issuance of debt, issuance of
equity or other securities, the proceeds of which could provide additional
liquidity for our operations, as well as modifications to our term loan where
possible. However, our ability to maintain sufficient liquidity may be affected
by numerous factors, many of which are outside of our control. We primarily fund
our working capital needs using cash provided by operations. Our working capital
requirements for inventory will increase as we continue to open additional
stores.

As of fiscal year end 2021, we had $305.8 million in cash and cash equivalents
and $293.6 million of availability under our revolving credit facility, which
includes $6.4 million in outstanding letters of credit.

The following table summarizes cash flows provided by (used for) operating
activities, investing activities and financing activities for the periods
indicated:

                                                   Fiscal Year          Fiscal Year          Fiscal Year
In thousands                                           2021                 2020                 2019
Cash flows provided by (used for):
Operating activities                              $   258,938          $   234,981          $   165,081
Investing activities                                  (92,897)             (76,410)            (100,631)
Financing activities                                 (234,324)             176,281              (42,141)
Net increase (decrease) in cash, cash equivalents
and restricted cash                               $   (68,283)         $   

334,852 $22,309
Note: The 2021 and 2019 fiscal years include 52 weeks. Fiscal 2020 consists of 53 weeks.

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Net cash from operating activities

Cash flows provided by operating activities increased by $24.0 million to $258.9
million, or 10.2%, during fiscal year 2021 from $235.0 million during fiscal
year 2020 as a result of net income of $92.0 million, offset by a decrease in
non-cash expense items of $13.2 million, and changes in net working capital and
other assets and liabilities, which used an additional $54.8 million in cash
compared to fiscal year 2020.

Working capital was most significantly impacted by changes in inventories,
accounts payable, other liabilities, and accounts receivable. Increases in
inventory and decreases in accounts payable, which used $26.3 million and $24.6
million in year-over-year cash, respectively, were primarily due to increased
purchases including inventory forward buys and other payments during 2021.
Decreases in other liabilities used $17.8 million in year-over-year cash
primarily due to decreases in compensation related accruals of $17.1 million
including payment of CARES Act deferred employer payroll taxes and lease
concessions and deferrals of $5.9 million, partially offset by lower payments of
litigation settlements and increases in advertising and promotional efforts
during the year. Offsetting these items were decreases in accounts receivable
balances, which contributed $14.9 million in year-over-year cash, primarily due
to year-over-year decreases in outstanding credit card receivables as a result
of lower sales in the last week of fiscal year 2021 when compared to the same
period of 2020.

Cash flows provided by operating activities increased by $69.9 million to $235.0
million, or 42.3%, during fiscal year 2020 from $165.1 million during fiscal
year 2019. The increase in net cash provided by operating activities consisted
of an increase in net income of $3.5 million, and an increase in non-cash
expense items of $12.0 million including asset impairment charges of $13.1
million, amortization of debt discount and deferred financing costs of $10.6
million, depreciation and amortization of $4.3 million, deferred income tax
expense of $2.1 million and losses recognized for the changes in fair value of
derivatives of $4.0 million partially offset by a decrease in loss on
extinguishment of debt of $9.8 million, decrease of stock compensation expense
of $1.9 million, and decrease of $11.0 million in other non-cash expenses.

Changes in net working capital and other assets and liabilities contributed an
additional $54.5 million in cash compared to fiscal year 2019. Increases in
other liabilities contributed $17.6 million in year-over-year cash primarily due
to an increase in deferral of employer payroll taxes of $12.8 million as a
result of the CARES Act, increases in compensation related accruals of $2.2
million due primarily to timing, increases of $3.1 million due to lease
concessions and deferrals and other increases in miscellaneous accruals due to
timing, partially offset by decreases in accrued advertising and payments of
litigation settlements during the year. Increases in accounts payable
contributed $26.9 million in year-over-year cash, primarily as a result of
increased purchases and replenishing activity due to both store growth and
increased sales in December of 2020 as compared to the same period of 2019 and
increases in advertising. Decreases in inventory contributed $27.3 million in
year-over-year cash, primarily due to no forward buys occurring after the first
quarter of 2020.

Offsetting these items were increases in other assets which used $14.0 million
in year-over-year cash, consisting of $8.9 million of cloud hosted software
asset development costs, $6.2 million in rent-related items and other prepaid
balances. Additionally, accounts receivable balances used $6.8 million in
year-over-year cash, primarily reflective of year-over-year increases in
outstanding credit card receivables due to higher sales in the last week of 2020
as compared to the same period of 2019 and timing of credit card processing.
Changes in deferred revenue contributed $2.8 million less cash when compared to
2019 driven by decreased sales of our eye care club membership and product
protection plans. This was more than offset by a $3.9 million increase in
year-over-year cash due to timing of unearned revenue.

Net cash used for investment activities

Net cash used for investing activities increased by $16.5 million, to $92.9
million, during fiscal year 2021 from $76.4 million during fiscal year 2020. The
increase was primarily due to new store openings, offset partially by proceeds
of $2.4 million in connection with the sale of the Company's equity method
investee. Refer to Note 1. "Business and Significant Accounting Policies" for
more information on the sale. We purchased $95.5 million in capital items during
fiscal year 2021. Approximately 80% of our capital spend is related to our
expected growth (i.e., new stores, optometric equipment, additional capacity in
our optical laboratories and distribution centers, and our IT infrastructure,
including omni-channel platform related investments).

Net cash used for investing activities decreased by $24.2 million, to $76.4
million, during fiscal year 2020 from $100.6 million during fiscal year 2019.
The decrease was primarily due to cash conservation measures during the
temporary store closure period, which resulted in reduced store openings and
lower IT investment for the full year.

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Net cash provided by (used for) financing activities

Net cash provided by (used for) financing activities decreased $410.6 million,
from $176.3 million provision of cash to $234.3 million use of cash during
fiscal year 2021. The decrease in cash provided by financing activities was
primarily due to the prepayment of our term loan of $167.4 million and increases
in purchases of treasury stock of $72.6 million in the current fiscal year
compared to proceeds of $548.8 million from the issuance of the 2025 Notes and
borrowings on our revolving credit facility partially offset by principal
payments on long-term debt of $369.3 million during fiscal year 2020.

Net cash provided by (used for) financing activities increased $218.4 million,
from $42.1 million use of cash to $176.3 million provision of cash during fiscal
year 2020. The increase in cash provided by financing activities was primarily
due to lower repayments on long-term debt of $222.6 million and decreased
purchases of treasury stock of $25 million, offset by decreases in cash provided
by borrowings on long-term debt of $17.8 million and an increase in cash used
for payments of debt issuance costs of $9.5 million.

long-term debt

The following table sets forth the amounts owed under our term loan and the 2025
Notes and the interest rate on such outstanding amounts, and the amount
available for additional borrowing thereunder, as of the end of fiscal year
2021:

                                                                                                         Amount Available
                                                                                      Amount              for Additional
In thousands                                          Interest Rate (2)             Outstanding             Borrowing
2025 Notes, due May 15, 2025                                Fixed                 $    402,500          $             -
Term loan, due July 18, 2024                               Variable                    150,000                        -
Revolving credit facility, due July 18,
2024(1)                                                    Variable                          -                  293,619
Total                                                                             $    552,500          $       293,619


____________

(1)At January 1, 2022, the amount available under our revolving credit facility
reflected a reduction of $6.4 million of letters of credit outstanding.
(2)The interest rate on the term loan and revolving credit facility pursuant to
the Credit Agreement is at an Applicable Margin of 1.25% for LIBOR Loans with
LIBOR to not be lower than 0.00% in any period, and an Applicable Margin of
0.25% for ABR Loans, as of fiscal year end 2021. The 2025 Notes pay interest
semi-annually in arrears on May 15 and November 15 of each year, commencing on
November 15, 2020, at an annual rate of 2.50%.

Power to repurchase shares

Effective November 8, 2021, the Company's Board of Directors authorized the
Company to repurchase up to $50 million aggregate amount of shares of the
Company's common stock. 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. Repurchases may be made from time to time
in the Company's discretion through one or more open market or privately
negotiated transactions, and pursuant to pre-set trading plans meeting the
requirements of all applicable securities laws and regulations. Shares may be
repurchased under the program through December 30, 2023. The timing and amounts
of any such repurchases will depend on a variety of factors, including the
market price of the Company's shares and general market and economic conditions.
The Company expects to fund the share repurchases using cash on hand. During
fiscal year 2021, the Company repurchased 1.4 million shares of its common stock
for $69.9 million under the share repurchase program. After these repurchases,
$130 million remains available under the share repurchase authorization.

Capital expenditure

In thousands                                     Fiscal Year 2021          Fiscal Year 2020           Fiscal Year 2019
New stores (owned brands)                       $         40,058          $         27,865          $          37,734
Laboratories, distribution centers and
optometric equipment                                      20,900                    19,882                     19,690
Information technology and other                          34,557                    29,076                     43,901
Total                                           $         95,515          $ 

$76,823,101,325
Note: The 2021 and 2019 fiscal years include 52 weeks. Fiscal 2020 consists of 53 weeks.

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We expect capital expenditures in fiscal year 2022 to be approximately between
$110 million and $115 million and to be used primarily in supporting the
Company's growth through investments in new stores and information technology
improvements. We expect to fund capital expenditures with cash flows from
operations, but may also use existing cash balances or funds available through
our revolving credit facility.

Material cash needs

At the end of fiscal 2021, our current and long-term significant cash requirements
include the following contractual commitments and obligations:

In thousands                          2022               2023               2024               2025              2026            Thereafter             Total
Term loan(a)                      $       -          $       -          $ 150,000          $       -          $      -          $        -          $   150,000
2025 Notes(b)                             -                  -                  -            402,500                 -                   -              402,500
Revolving credit
facility(c)                               -                  -                  -                  -                 -                   -                    -
Estimated interest(d)                12,808             12,808             11,189              3,773                 -                   -               40,578
Noncancelable operating
leases(e)                            77,373             84,471             73,461             68,409            51,160             111,468              466,342
Finance leases(f)                     6,752              6,252              4,753              4,913             4,519               6,917               34,106
Other commitments(g)                 48,035             28,589             21,623             19,244               524                  84              118,099
Total                             $ 144,968          $ 132,120          $ 261,026          $ 498,839          $ 56,203          $  118,469          $ 1,211,625


____________

(a)Refer to Note 4. "Long-term Debt" to our consolidated financial statements
included in Part II. Item 8 of this Form 10-K for more information on our term
loan long-term debt.
(b)Refer to Note 4. "Long-term Debt" for more information on the 2025 Notes and
Note 13. "Earnings Per Share" for the treatment of earnings per share in
relation to the 2025 Notes.
(c)Refer to Note 4. "Long-term Debt" for more information on our revolving
credit facility.
(d)We have estimated our interest payments on our term loan based on our current
interest elections described in "Liquidity and Capital Resources." Amounts and
timing may be different from our estimated interest payments due to potential
voluntary prepayments, borrowings and interest rate fluctuations. Expected
obligations on our hedging instruments are excluded from estimated interest
presented in the table above.
(e)We lease our retail stores, optometric examination offices, distribution
centers, office space and all of our optical laboratories with the exception of
our St. Cloud, Minnesota lab, which we own. The vast majority of our leases are
classified as operating leases under current accounting guidance. Although rent
expense on operating leases is recorded in SG&A on a straight-line basis over
the term of the lease, contractual obligations above represent required cash
payments. Our lease arrangements require us to pay executory costs such as
insurance, real estate taxes and common area maintenance and some of our leases
are based on a percentage of sales. These expenses are generally variable, not
included above, and were approximately $30.6 million during fiscal year ended
2021. Refer to Note 8. "Leases" for our current and long-term lease payment
obligations.
(f)For leases classified as finance leases, the finance lease asset is recorded
as property and equipment and a corresponding amount is recorded as a long-term
debt obligation in the Consolidated Balance Sheets at the net present value of
the minimum lease payments to be made over the lease term for new finance
leases. We allocate each lease payment between a reduction of the lease
obligation and interest expense using the effective interest method. Finance
lease amounts above represent required contractual cash payments in the periods
presented. Refer to Note 8. "Leases" for our current and long-term lease payment
obligations.
(g)Other commitments include minimum purchase commitments with certain trade
vendors and contractual agreements to purchase goods or services in the ordinary
course of business.

In addition to lease commitments and contractual obligations, our material cash
requirements also include operating expenses such as payroll, store rent, and
advertising expenses, which we expect to fund primarily with cash on hand and
cash expected to be generated from operations.

We follow U.S. GAAP in making the determination as to whether or not to record
an asset or liability related to our arrangements with third parties. Consistent
with current accounting guidance, we do not record an asset or liability
associated with long-term purchase, marketing and promotional commitments, or
commitments to philanthropic endeavors. We have disclosed the amount of future
commitments associated with these items in our consolidated financial
statements. We are not a party to any other off-balance sheet arrangements.

Significant Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. GAAP requires
management to make estimates and assumptions about future events that affect
amounts reported in our consolidated financial statements and related notes, as
well as the related disclosure of contingent assets and liabilities at the date
of the financial statements. Management evaluates the accounting policies,
estimates and judgments on an ongoing basis. We base our estimates and judgments
on historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions and conditions.

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We have evaluated the accounting policies used in the preparation of the
Company's consolidated financial statements and related notes and believe those
policies to be reasonable and appropriate. Certain of these accounting policies
require the application of significant judgment in selecting appropriate
assumptions for calculating financial estimates. By their nature, these
judgments are subject to an inherent degree of uncertainty. These judgments are
based on historical experience, trends in the industry, information provided by
customers and information available from other outside sources, as appropriate.
More information on all of our significant accounting policies can be found in
Note 1. "Business and Significant Accounting Policies," to our consolidated
financial statements included in Part II. Item 8. of this Form 10-K, as well as
in certain other notes to the consolidated financial statements as indicated
below.

Revenue Recognition

At our America's Best brand, our signature offer is two pairs of eyeglasses and
a free eye exam for one low price. Since an eye exam is a key component in the
ability for acceptable prescription eyewear to be delivered to a customer, we
concluded that the eye exam service, while capable of being distinct from the
eyeglass product delivery, was not distinct in the context of the two-pair
offer. As a result, we do not allocate revenue to the eye exam associated with
the two-pair offer, and we record all revenue associated with the offer in net
product sales when the customer has received and accepted the merchandise.

We recognize revenue across our product protection plan and club membership
contract portfolio based on the value delivered to the customers relative to the
remaining services promised under the programs. We determine the value delivered
based on the expected timing and amount of customer usage of benefits over the
terms of the contracts. A 100 basis point change in our estimate of value
delivered to customers compared to expected customer usage of benefits would
have affected revenues in fiscal year 2021 by approximately $2 million; this
amount would have been recognized at different times over the contract period.

Unearned revenue at the end of a reporting period is estimated based on
processing and delivery times throughout the current month and generally ranges
from approximately seven to 10 days. All unearned revenue at the end of a
reporting period is recognized in the next fiscal period. A one day increase in
our estimate of the average days needed to process delivery would have affected
revenues in fiscal year 2021 by approximately $4 million, which would ultimately
have been recorded in the next fiscal year.

The Company considers its revenue from managed care customers to include
variable consideration and estimates such amounts associated with managed care
customer revenues using the history of concessions provided and cash receipts
from managed care providers; a 100 basis point change in our rate of concessions
granted would have reduced our revenues in fiscal year 2021 by approximately $2
million.

See note 7. “Revenues from contracts with customers” of our audited consolidated report.
financial statements included in Part II. Item 8. of this Form 10-K for
Further information.

Impairment of P&E and ROU assets

In evaluating store-level property and equipment and ROU assets for
recoverability and impairment, we may consider multiple factors including
financial performance of the stores, regional and local business climates,
future plans for the store operations and other qualitative factors. We estimate
the fair value of the asset group using an income approach based on discounted
cash flows, which requires estimates and assumptions of forecasted store revenue
growth rates and store profitability. We consider market-based indications of
prevailing rental rates, lease incentives and discount rates for retail space
when estimating the fair value of ROU assets. Developing the estimates and
assumptions used in our recovery and impairment evaluations require significant
judgment. The cash flows used in estimating fair value were discounted using a
rate of 7.5% in fiscal year 2021.

We had $346.4 million of property and equipment, net, and ROU assets of $354.9
million as of January 1, 2022. Changes in estimates and assumptions used in our
impairment testing of property and equipment could result in future impairment
losses, which could be material.

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Impairment of Goodwill and Intangible Assets

We calculate the fair value of our reporting units using the income approach
based on discounted cash flows analysis whereby estimated after-tax cash flows
are discounted using a weighted average cost of capital. The cash flows used in
the analysis are based on financial forecasts developed internally by management
and require significant judgment. Significant unobservable inputs used in the
fair value measurement of the reporting units include revenue growth rates,
payroll and other expense growth rates, capital expenditures and discount rates.
These assumptions are sensitive to future changes in the business profitability,
changes in our business strategy, customer concentration risk and external
market conditions, among other factors. See Note 3. "Goodwill and Intangible
Assets" to our consolidated financial statements included in Part II. Item 8. of
this Form 10-K for further detail on goodwill impairment.

As of January 1, 2022, we had $777.6 million of goodwill, $240.5 million of
non-amortizing intangible assets, and $42.0 million of other intangible assets,
net of accumulated amortization. Changes in estimates and assumptions used in
our impairment testing could result in future impairment losses, which could be
material. Significant judgments and assumptions are required in our impairment
evaluations.

In the impairment analysis for goodwill, fair value exceeded carrying value by
at least 30% for all of our reporting units. Future changes in reporting unit's
business profitability, expected cash flows, changes in business strategy and
external market conditions, among other factors, could require us to record an
impairment charge for goodwill. A 100 basis point increase in discount rates
used to estimate the fair value of the Company's reporting units would not
result in an impairment of the Company's goodwill balance at fiscal year-end.

When evaluating indefinite-lived, non-amortizing trademarks and trade names for
impairment, we use the relief-from-royalty method to estimate fair value,
whereby an estimated royalty rate is determined based on comparable licensing
arrangements, which is then applied to the revenue projections for the subject
asset. The estimated fair value is calculated using a discounted cash flow
analysis. We record an impairment charge as the excess of carrying value over
estimated fair value. A 100 basis point increase in discount rates used to
estimate the fair value of the Company's trademarks and trade names would not
result in an impairment at fiscal year-end.

If impairment indicators related to finite-lived, 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 the
estimated fair value. We did not test any finite-lived intangible assets for
impairment in fiscal year 2021.

Income taxes

Calculations and assessments of uncertain tax positions involve estimates and
complex judgments because the ultimate tax outcomes are uncertain and future
events are unpredictable. Our net deferred liability balance as of January 1,
2022 was $82.8 million. Changes in assumptions in our estimates could result in
material changes to these balances. See Note 6. "Income Taxes" to our
consolidated financial statements included in Part II. Item 8 of this Form 10-K.

Inventories

Inventory shrinkage is estimated and recorded throughout the period in cost of
sales based on historical results and current inventory levels. Inventory values
are adjusted for estimated obsolescence and written down to net realizable value
("NRV") based on estimates of current and anticipated demand, customer
preference, merchandise age, planned promotional activities, compliance with
contact lens vendor return policies, and estimates of future retail sales
prices. Actual shrinkage is recorded throughout the year based upon periodic
physical counts. As of January 1, 2022, our total inventory balance was $123.7
million. A 10% increase in the obsolescence and shrinkage reserves will not have
a material impact on our financial position. See Note 2. "Business and
Significant Accounting Policies" to our consolidated financial statements
included in Part II. Item 8 of this Form 10-K.

Recently issued accounting pronouncements

For more information on recently published accounting pronouncements, see note 1.
“Business Methods and Significant Accounting Policies” to our Consolidated Financial Statements
statements included in Part II. Item 8 of this Form 10-K.