TLC Vision Corporation

TLC Vision Corporation

March 07, 2005 16:59 ET

TLCVision Achieves Record Profitability of $0.61 per share in 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: TLC VISION CORPORATION

TSX SYMBOL: TLC
NASDAQ SYMBOL: TLCV

MARCH 7, 2005 - 16:59 ET

TLCVision Achieves Record Profitability of $0.61 per
share in 2004

ST. LOUIS, MISSOURI--(CCNMatthews - March 7, 2005) - TLC Vision
Corporation (NASDAQ:TLCV)(TSX:TLC), North America's premier eye care
services company, today announced its financial results for the three
and twelve month periods ended December 31, 2004. All dollar amounts are
expressed in U.S. currency and results are reported in accordance with
U.S. generally accepted accounting principles (U.S. GAAP) unless
otherwise noted.

2004 Highlights

- Revenues improved 24% year-over-year, to $242.2 million

- Net income increased $53.1 million for the year and generated EPS of
$0.61 compared to a loss of ($0.15) per share in 2003

-- 2004 includes a favorable impact from OccuLogix IPO participation

- Cash position rose 179%, year-over-year, to $84.5 million

-- $144 million after consolidating OccuLogix's cash balance of $60
million

Revenue

Revenues for the 4th quarter and the year increased as a result of
higher refractive procedure volumes, growing custom mix and continued
strong performance from the other healthcare services segment.

Full year total revenues for 2004 increased 24% to $242.2 million from
$195.7 million in 2003. Total revenues for the 4th quarter 2004 rose 15%
to $55.7 million compared to $48.5 million for the same period a year
ago.

For the full year, refractive revenues were up 21% to $177.4 million.
Refractive revenues for the 4th quarter 2004 increased 13% to $39.2
million compared to $34.7 million in 2003.

Other healthcare revenues continued to demonstrate steady growth of 19%
for the 4th quarter year-over-year comparisons and an increase of 31%
for the full year. This was led by ambulatory surgery center (ASC)
business revenues which increased 84% over 2003 levels, due to
additional investments in surgery centers combined with higher surgical
volume. Overall, revenues from other healthcare services generated 27%
of total net revenues compared to 25% in the 2003 twelve-month period.

Earnings

TLCVision experienced record earnings for the quarter and the year which
is attributable to refractive and cataract procedure volume increases,
higher gross margins and the contribution from the Company's
participation in the initial public offering of OccuLogix Inc. in
December 2004.

Net income increased $53.1 million for the year to $43.7 million or
$0.61 per share. For the same twelve month period in 2003, TLCVision
recorded a net loss of ($9.4 million) or ($0.15) per share. Net income
rose $29 million in the 4th quarter to achieve $26.1 million or $0.36
per share. TLCVision reported a net loss of ($2.9 million) or ($0.04)
per share for the same period a year ago. Without the impact from our
age-related macular degeneration (AMD) business segment, earnings per
share reached $0.29 for the year compared to a loss of ($0.11) for 2003,
and $0.02 for the 4th quarter compared to a loss of ($0.03) for the same
period last year.

"This has been an outstanding year for the Company as we achieved record
earnings and all of our business segments grew at an impressive rate,"
commented Jim Wachtman, President and Chief Executive Officer.
"TLCVision is well positioned to grow the business for the long term
with strong financials, extensive geographic coverage and a disciplined
operating system."

Other Refractive Operating Metrics

Volume: The 4th quarter refractive procedure volumes from the same store
centers business increased 12.6% year-over-year, which out-performed the
estimated industry average of 11.5%. Total paid laser procedures
increased to 42,200 compared to 38,600 in the same period a year ago.
Overall procedures grew 9.3% and access procedures were up by 5.2%. The
procedure volume mix in Q4-04 was 60% centers and 40% access.

For the full year, 196,000 refractive procedures were performed, which
is 11.5% higher than the 2003 results. The centers business procedure
volume grew 18.3% for the year, on a same store basis, and out-performed
the industry average of 16.7%.

CustomLASIK: Higher pricing and gross margins associated with
CustomLASIK procedures continue to support TLCVision's strong operating
performance. CustomLASIK procedures represented approximately 58% of
Q4-04 center volumes, up from 55% in the prior quarter and 43% in the
same period in 2003.

Margins: Refractive gross profit margins, for 2004, increased 5.6% to
29.4% due to higher refractive volume and improved custom and centers
mix. Refractive margins, in the 4th quarter, increased 3.6% to 23.3%.

Cash

The Company ended the twelve-month period in a strong financial position
with cash and short-term investments totaling $84.5 million on December
31, 2004, 179% higher than the level in 2003. With consolidation of
OccuLogix's cash position, TLCVision's cash balance totaled $144.5
million.

Operating cash flow per share, fully diluted, for the full year
increased significantly to $0.50 compared to $0.07 in 2003. For the 4th
quarter, operating cash flow per share rose 212% to $0.09 from $0.03 in
the same prior year period.

Q1 2005 Financial Outlook

For Q1-05, based on preliminary financial analysis, the Company expects
to report net earnings per fully diluted share in an approximate range
of $0.13-$0.15, excluding the impact of the AMD business. The Company
expects operating cash flow per share to be in the range of $0.14-$0.16.
Actual Q1-05 results could vary and will be announced in early May.

Full Year 2005 Operating Metrics

For full year 2005, the Company expects to achieve the following growth
trends and target ranges, before considering the impact of the AMD
business:

- Refractive Procedure Growth:

-- Industry: 6.2%-8.5%

-- Centers: 8-10%

-- Access: flat to low single digits

- Refractive Seasonality: Follows historical trends, Q1 is highest
volume and decreases each sequential quarter

- Custom: 65-70% in Centers business by end of 2005

- Revenue Growth in Other Heathcare Services: 20% to 25%

- Operating Expenses: $3.5-$4.0 million additional spend, due
principally to additional marketing, staffing and $1.4 million of stock
option expense in the last half of 2005

- Operating Cash Flow: Continued cash generation well in excess of
earnings

Conference Call

TLCVision is pleased to invite all interested parties to participate in
a conference call during which these results will be discussed. The call
will be held today, March 7, at 5:15 p.m. Eastern Time at
1-800-443-6324. The call will also be broadcast live and archived on the
Company's web site at www.tlcv.com under the "Webcasts" link in the
Investor Relations section. In addition, the live web cast will be
available at various other popular portals and financial web sites.

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 care. We maintain leading positions in Refractive, Cataract
and Optometric Services markets, plus the AMD market through our
significant ownership in OccuLogix, Inc (NASDAQ: RHEO, TSX: RHE). The
key drivers of TLCVision's strategy are our affiliated network of over
13,000 eye doctors, proven corporate and consumer marketing and
education programs, and access to state of the art clinical
technologies. We are supported by strong financial performance, a
culture of operational excellence and an experienced management team..
The Company's common shares trade on the NASDAQ National Market under
the symbol 'TLCV' and on the Toronto Stock Exchange under the symbol
'TLC'. More information about the Company can be found on the TLCVision
web site at www.tlcv.com.

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.



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

THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
2004 2003 2004 2003
---------------------------------------------------------------------
Revenues
Refractive
Centers $30,563 $ 27,960 136,730 $ 110,052
Access 8,676 6,703 40,659 36,140
Other healthcare services 16,476 13,881 64,806 49,488
---------------------------------------------------------------------
Total revenues 55,715 48,544 242,195 195,680
---------------------------------------------------------------------

Cost of revenues
Refractive
Centers 23,438 22,627 96,388 86,045
Access 6,646 5,223 28,863 25,424
Other healthcare services 10,751 8,654 40,435 31,836
---------------------------------------------------------------------
Total cost of revenues 40,835 36,504 165,686 143,305
---------------------------------------------------------------------
Gross margin 14,880 12,040 76,509 52,375
---------------------------------------------------------------------

General and administrative 9,675 7,333 33,128 31,688
Marketing 3,706 3,819 13,385 14,094
Amortization of intangibles 1,013 1,670 4,098 6,685
Research and development -- 623 849 1,598
Adjustment to the fair value
of investments and long-term
receivables -- 11 (1,206) (206)
Restructuring and other
charges -- 320 2,755 2,040
---------------------------------------------------------------------
14,394 13,776 53,009 55,899
---------------------------------------------------------------------
Operating income (loss) 486 (1,736) 23,500 (3,524)
Other income and (expense):
Other income, net 26,078 29 26,367 669
Interest expense, net 198 (278) (663) (1,364)
Minority interests (951) (1,060) (6,953) (4,672)
Earnings from equity
investments 490 -- 2,057 --
---------------------------------------------------------------------
Earnings (loss) before income
taxes 26,301 (3,045) 44,308 (8,891)
Income tax expense (206) 119 (600) (508)
---------------------------------------------------------------------
Net income (loss) $26,095 $ (2,926) $ 43,708 $ (9,399)
---------------------------------------------------------------------
---------------------------------------------------------------------

Earnings (loss) per share -
diluted $ 0.36 $ 0.04 $ 0.61 $ (0.15)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average number of
common shares outstanding -
diluted 71,846 66,046 71,088 64,413


COMPONENTS OF NET INCOME:
Consolidated, as reported $26,095 $(2,926) $43,708 $(9,399)
Gain from Occulogix IPO 25,792 -- 25,792 --
AMD business excluding IPO gain (783) (778) (2,592) (2,071)
---------------------------------------------------------------------
Net income before AMD $ 1,086 $(2,148) $20,508 $(7,328)
---------------------------------------------------------------------
---------------------------------------------------------------------

EPS BEFORE AMD - DILUTED $ 0.02 $ (0.03) $ 0.29 $ (0.11)
---------------------------------------------------------------------
---------------------------------------------------------------------


TLC VISION CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

DECEMBER 31,
2004 2003
---------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 144,450 $ 29,580
Short-term investments -- 748
Accounts receivable 17,443 15,617
Prepaid expenses, inventory and other 13,555 11,646
---------------------------------------------------------------------
Total current assets 175,448 57,591

Restricted cash 932 1,376
Investments and other assets 10,482 3,102
Goodwill 53,774 48,829
Other intangible assets 18,140 22,959
Fixed assets 46,465 56,891
---------------------------------------------------------------------
Total assets $ 305,241 $ 190,748
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES
Current liabilities:
Accounts payable $ 8,716 $ 10,627
Accrued liabilities 27,139 25,811
Current maturities of long-term debt 8,664 10,285
---------------------------------------------------------------------
Total current liabilities 44,519 46,723

Other long-term liabilities 2,722 2,607
Long-term debt, less current maturities 9,991 19,242
Minority interests 37,222 10,907

STOCKHOLDERS' EQUITY
Common stock, no par value; unlimited
number authorized 458,959 397,878
Option and warrant equity 2,872 8,143
Accumulated deficit (251,044) (294,752)
---------------------------------------------------------------------
Total stockholders' equity 210,787 111,269
---------------------------------------------------------------------
Total liabilities and stockholders'
equity $ 305,241 $ 190,748
---------------------------------------------------------------------
---------------------------------------------------------------------


TLC VISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
YEAR ENDED DECEMBER 31,
2004 2003
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 43,708 $ (9,399)
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation and amortization 17,681 22,593
Write-off of investment in research and
development arrangements 849 1,598
Minority interests 6,953 4,672
Gain on sale of subsidiary stock (25,792) --
Gain on sale of interest in subsidiary (1,143) --
Earnings from equity investments (2,057) --
Loss (gain) on sale of fixed assets 839 (484)
Non-cash compensation expense 484 125
Adjustment to the fair value of
investments and long-term receivables
and impairment of fixed assets (1,206) (206)
Non-cash restructuring and other costs -- 677
Changes in operating assets and
liabilities, net of acquisitions and
dispositions
Accounts receivable (1,449) (489)
Prepaid expenses, inventory and other
current assets (1,535) (964)
Accounts payable and accrued
liabilities (1,706) (13,831)
---------------------------------------------------------------------
Cash from operating activities 35,626 4,292
---------------------------------------------------------------------

INVESTING ACTIVITIES
Purchases of fixed assets (5,457) (4,433)
Proceeds from sale of fixed assets 1,565 578
Proceeds from divestitures of investments
and subsidiaries, net of cash 729 221
Distributions and loan payments received
from equity investments 2,518 --
Investment in research and development
arrangements (849) (1,598)
Acquisitions and investments, net of cash
acquired (10,067) (8,015)
Proceeds from sale of short-term
investments 313 809
Other 60 (229)
---------------------------------------------------------------------
Cash from investing activities (11,188) (12,667)
---------------------------------------------------------------------

FINANCING ACTIVITIES
Restricted cash movement 444 2,599
Proceeds from debt financing -- 3,450
Principal payments of debt financing and
capital leases (13,669) (8,018)
Proceeds from sale of subsidiary stock,
net 25,792 --
Distributions to minority interests (7,216) (4,901)
Proceeds from issuance of subsidiary
stock, net and cash acquired upon
reorganization 59,850 --
Proceeds from issuance of common stock 25,231 8,744
---------------------------------------------------------------------
Cash from financing activities 90,432 1,874
---------------------------------------------------------------------

Net increase (decrease) in cash and cash
equivalents during the period 114,870 (6,501)
Cash and cash equivalents, beginning of
period 29,580 36,081
---------------------------------------------------------------------
Cash and cash equivalents, end
of period $ 144,450 $ 29,580
---------------------------------------------------------------------
---------------------------------------------------------------------

COMPONENTS OF OPERATING CASH FLOW:
Consolidated, as reported $ 35,626 $ 4,292
AMD Business (2,523) (2,024)
---------------------------------------------------------------------
Operating cash flow before AMD $ 38,149 $ 6,316
---------------------------------------------------------------------
---------------------------------------------------------------------



-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    TLC Vision Corporation
    Anna Austin, EVP, Corporate Communications
    (314) 523-8354
    or
    TLC Vision Corporation
    Ian Chadsey, Manager, Investor Relations
    (905) 238-3904
    investor.relations@tlcvision.com