TLC Vision Corporation
TSX : TLC
NASDAQ : TLCV

TLC Vision Corporation

November 05, 2007 07:30 ET

TLCVision Reports 10% Increase In Revenue

Same Store Centers Revenue up 13%

ST. LOUIS, MISSOURI--(Marketwire - Nov. 5, 2007) - TLC Vision Corporation (TSX:TLC)(NASDAQ:TLCV), North America's premier eye care services company, today announced results for the third quarter ended September 30, 2007.

- Revenue for the third quarter was $70.7 million, a 10% increase over prior year revenue of $64.5 million.

- Consolidated net loss for the third quarter was ($21.5) million ($0.43 per diluted share), compared to net income of $0.3 million from the prior year period. The quarterly net loss includes charges totaling $16.2 million related principally to the impairment of the Company's investments in stand-alone ambulatory surgery centers (which TLCVision is in advanced discussions to sell), and one time non-cash income tax expenses.

- Pro forma net loss before AMD, excluding non-cash losses from the Company's interest in OccuLogix, Inc., and the charges noted above, as well as normalizing interest expense and income taxes, was ($3.7) million, or ($0.07) per diluted share, compared to income of $0.8 million, or $0.02 per diluted share, in the prior year period. Pro forma results are presented to facilitate a comparison of current year and prior year results. A reconciliation of reported net income to pro forma net income for both the quarter and the nine months is included in the attached Consolidated Statements of Operations.

- Third quarter operating cash flow was $8.2 million, or $0.16 per share, compared to $7.7 million, or $0.11 per share, in the prior year period.

Jim Wachtman, President and Chief Executive Officer of TLCVision, commented, "The overall company strategy continues to gain traction as evidenced by the procedure and revenue growth announced today. We remain very focused on continuing to improve the performance of our refractive centers while leveraging the strength of the doctor services and eye care businesses.

Consistent with that mission, today we are announcing that the company is in advanced discussions to sell our stand-alone ambulatory surgery business. The potential sale of these facilities will provide a better overall strategic alignment for TLCV. We are confident that these initiatives will drive increased shareholder value for the long-term."

Business Unit Review(i)

- Refractive Centers includes the Company's 80 centers that provide laser vision correction surgery. Total centers revenues were up 13% to $39.8 million. Total procedures of 28,700, including minority-owned centers, growing 6% overall and growing 7% on a same store basis.

- Doctor Services revenues increased 4.9% to $24.8 million, led by an 8.7% increase in mobile cataract access revenue.

- Eye Care revenues grew 10% over prior year as a result of new franchises and higher fees per franchisee.

Year-to Date Results

- Revenue for the nine months ended September 30, 2007, was $235.0 million, compared to $218.3 million for the prior year period, an increase of 8%.

- Consolidated net loss was ($17.1) million ($0.27 per fully diluted share) compared to net income of $13.9 million, or $0.20 per fully diluted share, for the prior year period, and reflects the impact of the non-cash charges in the third quarter.

- Pro forma net income before AMD, excluding non-cash losses from the Company's interest in OccuLogix, Inc., and the charges noted above, as well as normalizing interest expense and income taxes, was $5.7 million, or $0.09 per diluted share, compared to $14.7 million, or $0.24 per diluted share in the prior year period.

- Year-to-date operating cash flow was $29.9 million, or $0.48 per share, compared to $35.3 million, or $0.51 per share, in the prior year period. The primary reason for the decrease was the incremental investment in the Refractive Centers business.

(i) The unaudited, interim consolidated financial statements for the three and nine months ended September 30, 2006 include certain reclassifications to conform with the business-line and segment classifications for the three and nine months ended September 30, 2007.

Conference Call

TLCVision invites all interested parties to participate in a conference call during which time the financial and operating results will be discussed. The call will be held today, at 10:00 a.m. Eastern Standard Time. To participate, please dial 888-575-8232 or 416-406-6419 (international callers). The call will be broadcast live on the Company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section.

A replay of the conference call will be available until November 19, 2007. To access the replay, dial 800-408-3053 or 416-695-5800 (international callers) and enter the pass code: 3238933. The call will also be archived on the Company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section.

Forward Looking Statements

This press release contains certain forward looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934, which statements can be identified by the use of forward looking terminology, such as "may", "will", "expect", "intend", "anticipate", "estimate", "predict", "plans" or "continue" or the negative thereof or other variations thereon or comparable terminology referring to future events or results. The Company's actual results could differ materially from those anticipated in these forward looking statements as a result of numerous factors, including the timing of expenditures, effects of competition, changes to pricing, acquisitions and expansion opportunities, any of which could cause actual results to vary materially from current results or TLCVision's anticipated future results. See the Company's reports filed with the Canadian Securities Regulators and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from results referred to in forward looking statements. TLCVision assumes no obligation to update the information contained in this press release.

About TLCVision

TLCVision is North America's premier eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality patient care. Through its centers management, and technology access service models, extensive optometric relationships, aggressive consumer advertising and managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract and Eye Care markets. More information about TLCVision can be found on the website at www.tlcv.com. Information about vision correction surgery can be found on the TLC Laser Eye Centers website at www.tlcvision.com.



TLC VISION CORPORATION
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)


Three Months Ended Three Months Ended
September 30, 2007 September 30, 2006
---------------------------- --------------------------
Results Results
Before Total Before Total
AMD AMD TLC- AMD AMD TLC-
Segment Segment Vision Segment Segment Vision
---------------------------- --------------------------
Revenues:
Refractive
centers $ 39,849 $ - $ 39,849 $ 35,397 $ - $ 35,397
Doctor services 24,755 - 24,755 23,602 - 23,602
Eye care 6,062 - 6,062 5,490 - 5,490
---------------------------- --------------------------
Total revenues 70,666 - 70,666 64,489 - 64,489

Cost of revenues
(excluding
amortization):
Refractive
centers 30,568 - 30,568 26,268 - 26,268
Doctor
services 18,093 - 18,093 16,960 - 16,960
Eye care 2,624 - 2,624 2,304 - 2,304
---------------------------- --------------------------
Total cost of
revenues
(excluding
amortization) 51,285 - 51,285 45,532 - 45,532
---------------------------- --------------------------

Gross profit 19,381 - 19,381 18,957 - 18,957
---------------------------- --------------------------

General and
administrative 7,492 - 7,492 8,066 - 8,066
Marketing
and sales 11,469 - 11,469 6,649 - 6,649
Research and
development,
clinical and
regulatory - - - - - -
Amortization of
intangibles 860 - 860 873 - 873
Goodwill impairment 12,400 - 12,400 - - -
Other expenses, net 417 - 417 (230) - (230)
---------------------------- --------------------------
Total operating
costs 32,638 - 32,638 15,358 - 15,358
---------------------------- --------------------------
Operating income (13,257) - (13,257) 3,599 - 3,599

Gain on sale of
OccuLogix,
Inc. stock - - - - - -
Interest income 246 - 246 568 - 568
Interest expense (2,280) - (2,280) (387) - (387)
Minority interests (1,975) - (1,975) (2,210) - (2,210)
Earnings (losses)
from equity
investments (199) (1,561) (1,760) 849 (1,453) (604)
---------------------------- --------------------------
Income (loss) before
income taxes (17,465) (1,561) (19,026) 2,419 (1,453) 966

Income tax benefit
(expense) (2,427) - (2,427) (665) - (665)
---------------------------- --------------------------

Net income (loss) $ (19,892) $(1,561) $(21,453) $ 1,754 $(1,453) $ 301
---------------------------- --------------------------
---------------------------- --------------------------

Earnings (loss) per
share - diluted $ (0.40) $ (0.03) $ (0.43) $ 0.03 $ (0.03) $ 0.00
---------------------------- --------------------------
---------------------------- --------------------------
Weighted average
number of
common shares
outstanding -
diluted 49,758 49,758 49,758 69,737 69,737 69,737

Calculation of Pro
Forma Net Income
and EPS
Net income (loss),
as reported (19,892) 1,754
Add: Non-recurring
costs 12,817 (188)
Interest expense
from Dutch tender 0 (1,173)
Adjust income tax
expense to 21% 3,403 429
--------- ---------
Pro forma net (loss)
income (3,672) 822
--------- ---------
--------- ---------
Pro forma earnings
(loss) per share $ (0.07) $ 0.02
--------- ---------
--------- ---------

Note: The AMD segment includes the Company's interest in OccuLogix, Inc.




TLC VISION CORPORATION
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)


Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2006
--------------------------- ---------------------------
Results Results
Before Total Before Total
AMD AMD TLC- AMD AMD TLC-
Segment Segment Vision Segment Segment Vision
--------------------------- ---------------------------

Revenues:
Refractive centers $138,505 $ - $ 138,505 $127,170 $ - $ 127,170
Doctor services 76,636 - 76,636 73,901 - 73,901
Eye care 19,849 - 19,849 17,214 - 17,214
--------------------------- ---------------------------
Total revenues 234,990 234,990 218,285 - 218,285
--------------------------- ---------------------------

Cost of revenues
(excluding
amortization):
Refractive centers 97,421 - 97,421 88,228 - 88,228
Doctor services 54,732 - 54,732 51,741 - 51,741
Eye care 9,059 - 9,059 7,307 1,659 8,966
--------------------------- ---------------------------
Total cost of
revenues (excluding
amortization) 161,212 - 161,212 147,276 1,659 148,935
--------------------------- ---------------------------

Gross profit (loss) 73,778 - 73,778 71,009 (1,659) 69,350
--------------------------- ---------------------------

General and
administrative 26,404 - 26,404 24,219 1,759 25,978
Marketing and sales 30,591 - 30,591 20,155 169 20,324
Research and
development,
clinical and
regulatory - - - - 1,475 1,475
Amortization of
intangibles 2,579 - 2,579 2,611 - 2,611
Goodwill impairment 12,400 - 12,400 - - -
Other expenses, net 934 - 934 (756) 849 93
--------------------------- ---------------------------
Total operating
costs 72,908 - 72,908 46,229 4,252 50,481
--------------------------- ---------------------------
Operating income
(loss) 870 - 870 24,780 (5,911) 18,869

Gain on sale of
OccuLogix,
Inc. stock - 933 933 - 1,450 1,450
Interest income 1,394 - 1,394 1,437 366 1,803
Interest expense (3,408) - (3,408) (1,066) - (1,066)
Minority interests (7,275) - (7,275) (7,677) 2,715 (4,962)
Earnings (losses)
from equity
investments 1,110 (5,692) (4,582) 2,723 (3,303) (580)
--------------------------- ---------------------------
Income (loss) before
income taxes (7,309) (4,759) (12,068) 20,197 (4,683) 15,514


Income tax expense (5,031) - (5,031) (1,634) - (1,634)
--------------------------- ---------------------------

Net income (loss) $(12,340) $(4,759) $(17,099) $18,563 $(4,683) $ 13,880
--------------------------- ---------------------------
--------------------------- ---------------------------

Earnings (loss) per
share - diluted $ (0.20) $(0.07) $ (0.27) $ 0.27 $ (0.07) $ 0.20
--------------------------- ---------------------------
--------------------------- ---------------------------

Weighted average
number of common
shares outstanding
- diluted 62,243 62,243 62,243 69,833 69,833 69,833

Calculation of Pro
Forma Net Income
and EPS
Net income (loss),
as reported (12,340) 18,563
Add: Non-recurring
costs 14,536 (188)
Interest expense
from Dutch tender 0 (1,437)
Adjust income tax
expense to 21% 3,514 (2,281)
------- -------
Pro forma net income 5,710 14,657
------- -------
------- -------
Pro forma earnings
(loss) per share $ 0.09 $ 0.24
------- -------
------- -------

Note: The AMD segment includes the Company's interest in OccuLogix, Inc.



TLC VISION CORPORATION
CONSOLIDATING BALANCE SHEETS
(In thousands)

September 30,
2007 (Unaudited) December 31, 2006
--------------------------- ---------------------------
Results
Before
Results AMD AMD
Before Segment Segment Total
AMD AMD Total (unau- (unau- TLC-
Segment Segment TLCVision dited) dited) Vision
--------------------------- ---------------------------
--------------------------- ---------------------------
ASSETS
Current assets
Cash and cash
equivalents $ 17,097 $ - $ 17,097 $ 28,917 $28,917
Short-term
investments - - - 11,575 11,575
Accounts receivable,
net 19,092 2,000 21,092 19,315 19,315
Deferred tax asset 5,032 - 5,032 7,153 7,153
Prepaid expenses,
inventory and other 14,337 - 14,337 13,911 13,911
--------------------------- ---------------------------
Total current assets 55,558 2,000 57,558 80,871 - 80,871

Intercompany - - - - -
Restricted cash 1,087 - 1,087 1,035 1,035
Investments and
other assets 25,542 7,603 33,145 24,495 14,362 38,857
Goodwill 85,234 - 85,234 96,148 96,148
Other intangible
assets, net 17,891 - 17,891 20,503 20,503
Fixed assets, net 63,184 - 63,184 56,888 56,888
--------------------------- ---------------------------
Total assets $ 248,496 $ 9,603 $ 258,099 $279,940 $14,362 $ 294,302
--------------------------- ---------------------------
--------------------------- ---------------------------

LIABILITIES
Current liabilities
Accounts payable $ 17,575 $ - 17,575 $ 12,314 12,314
Accrued liabilities 19,142 19,142 20,231 20,231
Current maturities
of long-term debt 10,490 - 10,490 8,311 8,311
--------------------------- ---------------------------
Total current
liabilities 47,207 - 47,207 40,856 - 40,856

Long-term debt, less
current maturities 101,949 - 101,949 15,122 15,122
Other long-term
liabilities 4,977 - 4,977 4,442 4,442
Minority interests 15,466 - 15,466 14,583 14,583
--------------------------- ---------------------------
Total liabilities 169,599 - 169,599 75,003 - 75,003
--------------------------- ---------------------------

STOCKHOLDERS' EQUITY
Common stock 306,441 30,366 336,807 419,767 30,366 450,133
Option and warrant
equity 981 - 981 1,806 1,806
Other comprehensive
income (299) (299)
Accumulated deficit (228,226)(20,763) (248,989)(216,636)(16,004) (232,640)
--------------------------- ---------------------------
Total stockholders'
equity 78,897 9,603 88,500 204,937 14,362 219,299
--------------------------- ---------------------------

Total liabilities
and stockholders'
equity $ 248,496 $ 9,603 $ 258,099 $279,940 $14,362 $294,302
--------------------------- ---------------------------
--------------------------- ---------------------------

Note: The AMD segment includes the Company's interest in OccuLogix, Inc.



TLC VISION CORPORATION
CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands, except per share amounts)

Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2006
--------------------------- ---------------------------
Results Results
Before Total Before Total
AMD AMD TLC- AMD AMD TLC-
Segment Segment Vision Segment Segment Vision
--------------------------- ---------------------------

OPERATING ACTIVITIES
Net income (loss) $(12,340) $(4,759) $(17,099) $18,563 $(4,683) $ 13,880

Adjustments to
reconcile net income
(loss) to net cash
from operating
activities:
Depreciation and
amortization 13,828 13,828 11,764 34 11,798
Amortization of
deferred finance
costs -
Reimbursements from
investments in
research and
development
arrangements - - - (300) - (300)
Impairment of
goodwill 12,400 12,400
Minority interests 7,275 - 7,275 7,677 (2,715) 4,962
(Earnings) losses
from equity
investments (1,111) 5,692 4,581 (2,723) 3,303 580
Deferred taxes 3,511 - 3,511 2,744 - 2,744
Excess tax benefits
from stock-based
compensation expense -
Loss (gain) on sales
and disposals of
fixed assets 137 137 (12) 29 17
Gain on sale of
OccuLogix,
Inc. stock - (933) (933) - (1,450) (1,450)
Write-down of
OccuLogix, Inc.
inventory - - - - 1,625 1,625
Loss (gain) on sale
of business 171 171 (188) (188)
Non-cash
compensation expense 960 - 960 1,120 186 1,306
Other 199 199 26 26
Changes in operating
assets and
liabilities, net of
acquisitions and
dispositions: 4,821 4,821 (3,310) (1,225) (4,535)
--------------------------- ---------------------------
Cash from operating
activities 29,851 - 29,851 35,335 (4,870) 30,465
--------------------------- ---------------------------

INVESTING ACTIVITIES
Purchases of fixed
assets (11,106) - (11,106) (8,140) - (8,140)
Proceeds from sales
of fixed assets 1,038 - 1,038 635 - 635
Distributions and
loan payments
received from equity
investments 2,368 - 2,368 2,662 - 2,662
Reimbursements from
investments in
research and
development
arrangements - - - 300 - 300
Acquisitions and
equity investments (4,815) - (4,815) (4,859) - (4,859)
Proceeds from sales
of short-term
investments 17,375 - 17,375 300 9,925 10,225
Purchases of
short-term
investments (5,800) - (5,800) (3,775) - (3,775)
Proceeds from sale
of OccuLogix, Inc.
stock, net - 2,000 2,000 2,226 2,226
Divestitures of
business 584 584
OccuLogix, Inc. cash
balance at time of
deconsolidation - - - - (14,814) (14,814)
Other 187 187 80 (71) 9
--------------------------- ---------------------------
Cash from investing
activities (169) 2,000 1,831 (12,797) (2,734) (15,531)
--------------------------- ---------------------------

FINANCING ACTIVITIES
Restricted cash
movement (52) (52) (60) - (60)
Principal payments
of debt financing
and capital leases (4,506) - (4,506) (4,019) - (4,019)
Proceeds from debt
financing 85,317 - 85,317 441 - 441
Capitalized debt
costs (1,951) - (1,951) - - -
Distributions to
minority interests (7,199) - (7,199) (6,668) - (6,668)
Proceeds from
issuances of common
stock 2,422 - 2,422 467 - 467
Proceeds from
issuances of
OccuLogix, Inc.
stock - - - - 233 233
Transfer from AMD
segment 2,000 (2,000) - 2,226 (2,226) -
Purchases of
treasury stock (117,533) - (117,533)
--------------------------- ---------------------------
Cash from financing
activities (41,502) (2,000) (43,502) (7,613) (1,993) (9,606)
--------------------------- ---------------------------

Net increase in cash
and cash equivalents
during the period (11,820) - (11,820) 14,925 (9,597) 5,328
Cash and cash
equivalents,
beginning of period 28,917 28,917 22,122 9,607 31,729
--------------------------- ---------------------------
Cash and cash
equivalents, end of
period $ 17,097 $ - $ 17,097 $ 37,047 $ 10 $ 37,057
--------------------------- ---------------------------
--------------------------- ---------------------------
Operating cash flow
per diluted share $ 0.48 $ - $ 0.48 $ 0.51 $(0.07) $ 0.44

Note: The AMD segment includes the Company's interest in OccuLogix, Inc.


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