NVI National Vision

National Vision Reports Operating Results for 2004 Fiscal First Quarter LAWRENCEVILLE, Ga., May 17 /PRNewswire-FirstCall/ -- National Vision, Inc. today announced operating results for its fiscal first quarter ended April 3, 2004. Total net revenue from continuing operations for the first quarter of 2004 was $64.0 million, a 12% increase over total net revenue from continuing operations of $57.2 million in the prior year's first quarter. The Company achieved a year-over-year comparable store sales increase of +11%. Net income for 2004's first quarter was $3.1 million, or $0.56 per share on a diluted basis, in comparison with a net loss of $2.0 million, or -$0.41 per share, in the first quarter of 2003. The prior year's first quarter net loss included a charge of $564,000, or -$0.11 per share, representing the cumulative effect of a change in accounting principle. "NVI delivered a very strong quarter," stated Reade Fahs, CEO and President. "In spite of having 50 fewer stores, we made large strides in overall profitability -- with net income up over +$5 million and EBITDA up approximately +$3.8 million versus a year ago. We did this via double-digit comparable sales, significant margin improvements and cost controls -- all of which were accomplished via the tremendous efforts of the talented team of optical retailers who are dedicated to making NVI successful." Fahs further commented, "While our first quarter performance was highly encouraging, the current retailing environment has become more challenging, as consumers cope with rapidly rising gasoline prices and the consequent pressures on disposable incomes. Further, we are now beginning to comp against the stronger sales results that commenced in the second quarter of 2003 as a result of last year's re-engineering of our store operations." The Company also announced that, on May 13, 2004, its Board of Directors authorized management to expend up to $12 million to repurchase outstanding Senior Subordinated Notes, subject to compliance with applicable debt covenants. The Board also engaged TM Capital Corp. as its financial advisor to review the Company's strategic alternatives, which may include a possible recapitalization or refinancing of debt, sale of the Company or sale of a controlling interest in the Company. Any sale of the Company could possibly include equity participation by current members of senior management. There is no assurance that any such transaction will be effected or even pursued by the Company. The Company will hold an Investor Relations Conference Call on Tuesday, May 18, 2004, at 11:00 a.m. EDST to discuss its first quarter results. The general public can access this conference call via the Company's website at http://www.nationalvision.com/ . Following the conclusion of the prepared remarks by management, the Company will accept and address questions from institutional investors. The Company's financial disclosures refer to EBITDA because it is the basis for calculating excess cash flow principal repayments required under the Company's Senior Subordinated Notes, and it is a widely accepted financial indicator of a company's ability to service or incur indebtedness. EBITDA is calculated as net earnings before interest, taxes, depreciation, amortization, the cumulative effect of a change in accounting principle, non-cash items and reorganization items as defined under the Senior Subordinated Debt Indenture. A reconciliation of net earnings (loss) to EBITDA is presented in the attached financial tables. National Vision, Inc. is a retail optical company that operates vision centers within host environments in the United States and Mexico. Our vision centers sell a wide range of optical products including eyeglasses, contact lenses and sunglasses. As of May 17, 2004, the Company operated a total of 442 vision centers, of which 333 were located inside domestic Wal-Mart stores, 37 were located within Wal-Mart de Mexico stores, 47 were located inside Fred Meyer stores and 25 were located on military bases within the United States. In 2004, through May 17, the Company has closed 28 stores (including 26 domestic Wal-Mart stores) and opened two stores on military bases. As of May 17, 2004, the Company also operated two home medical equipment stores inside domestic Wal-Mart stores. The Company depends on its domestic Wal-Mart vision centers for substantially all of its revenues and cash flow. The Company's agreement with Wal-Mart gave it the right to open 400 vision centers, the last of which opened in 2001. The Company does not currently expect Wal-Mart to renew any of the Company's vision center leases upon their expirations (other than automatic renewals occurring upon relocation of current Company locations in connection with conversions to supercenters). For the remainder of 2004, the Company expects an additional 32 leases for vision centers within Wal-Mart to expire. Investments in the debt and equity securities of National Vision, Inc. are subject to substantial risks as described in the Company's public filings with the Securities and Exchange Commission. This release includes statements concerning the Company's plans, beliefs and expectations for future periods. These "forward-looking statements" may be identified by the use of words such as "intends," "contemplates," "believes," "anticipates," "expects," "should," "could," "would" and words of similar import. These forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from the expectations expressed or implied in such statements. With respect to such forward-looking statements and others that may be made by, or on behalf of, the Company, the factors described as "Risk Factors" in the Company's Reports filed with the SEC, could materially affect the Company's actual results. These risks and uncertainties include, among others, impaired relationships with the Company's vendors or customers as a result of the Company's high leverage and its potential inability to repay its debt, an adverse change in the Company's relationship with Wal-Mart, changes in economic conditions (including an increase in interest rates), financial markets or customer demand, the level of competition in the retail eyecare industry, federal and state regulation of the healthcare and insurance industries (particularly in California), the Company's financial condition and other risks and uncertainties set forth in the Company's filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon management's present expectations and the information available at this time. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or other factors. NATIONAL VISION, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share information) (Unaudited) Three months Three months ended ended April 3, 2004 March 29, 2003 Retail sales, net $61,713 $55,591 Premium revenue 1,896 1,343 Other revenue 427 219 Total net revenue 64,036 57,153 Cost of goods sold 26,647 25,341 Gross profit 37,389 31,812 Selling, general & administrative expense 31,229 29,972 Operating income 6,160 1,840 Other expense, net (2,871) (3,305) Earnings (loss) before taxes, discontinued operations and cumulative effect of a change in accounting principle 3,289 (1,465) Income tax expense (185) Net earnings (loss) before discontinued operations and cumulative effect of a change in accounting principle 3,104 (1,465) Discontinued operations: Operating income (loss) from discontinued operations (35) 28 Gain (loss) on disposal 22 (47) Loss from discontinued operations (13) (19) Earnings (loss) before cumulative effect of a change in accounting principle 3,091 (1,484) Cumulative effect of a change in accounting principle (564) Net earnings (loss) $3,091 $(2,048) Earnings (loss) per common share: Basic $0.61 $(0.41) Diluted $0.56 $(0.41) NATIONAL VISION, INC. CONDENSED CONSOLIDATED BALANCE SHEETS April 3, 2004 and January 3, 2004 (In thousands) April 3, 2004 January 3, (unaudited) 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $9,091 $3,545 Accounts receivable (net of allowance: 2004 - $678; 2003 - $769) 3,963 3,078 Inventories 16,774 17,387 Other current assets 1,331 1,278 Deferred income tax asset 7,630 7,305 Total current assets 38,789 32,593 PROPERTY AND EQUIPMENT, net 12,659 13,619 INTANGIBLE VALUE OF CONTRACTUAL RIGHTS (net of accumulated amortization: 2004 - $21,342; 2003 - $19,466) 91,403 93,279 OTHER ASSETS AND DEFERRED COSTS (net of accumulated amortization: 2004 - $1,021; 2003 - $964) 772 806 $143,623 $140,297 LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable $4,587 $3,506 Accrued expenses and other current liabilities 24,440 25,132 Current portion of long-term debt 545 Total current liabilities 29,027 29,183 DEFERRED INCOME TAX LIABILITY 7,630 7,305 SENIOR SUBORDINATED NOTES 94,939 94,939 SHAREHOLDERS' EQUITY: Common stock $0.01 par value; 10,000,000 shares authorized, 5,239,359 and 5,243,047 shares issued and outstanding at April 3, 2004, and January 3, 2004, respectively 52 52 Additional paid-in capital 25,138 25,129 Deferred stock compensation (74) (108) Retained deficit (12,841) (15,932) Accumulated other comprehensive loss (248) (271) Total shareholders' equity 12,027 8,870 $143,623 $140,297 NATIONAL VISION, INC. COMPUTATION OF CONSOLIDATED EBITDA Three Months Ended April 3, 2004 and March 29, 2003 (In thousands) First Quarter 2004 2003 Net earnings (loss) $3,091 $(2,048) Adjustment to net earnings (loss): Interest expense, net 2,871 3,305 Income tax expense 185 Cumulative effect of a change in accounting principle 564 Depreciation and amortization 3,540 4,086 EBITDA $9,687 $5,907 DATASOURCE: National Vision, Inc. CONTACT: Paul A. Criscillis, Jr., Senior Vice President and CFO of National Vision, Inc., +1-770-822-4262 Web site: http://www.nationalvision.com/

Copyright