SOURCE: TLC Vision Corporation

TLC Vision Corporation

August 13, 2009 16:00 ET

TLCVision Reports Second Quarter 2009 Results

ST. LOUIS, MO--(Marketwire - August 13, 2009) - TLC Vision Corporation (NASDAQ: TLCV) (TSX: TLC), North America's premier eye care services company, today announced results for the second quarter ended June 30, 2009.

James B. Tiffany, President and Chief Operating Officer of TLCVision, commented, "TLCVision posted strong operating results during the second quarter of 2009, despite the current economic environment. Our refractive centers procedure volume, down 28% from the prior year's quarter, outperformed industry estimates. Additionally, we were able to increase our market share in the second quarter to 15% versus 14% in the prior year period.

"Our non-refractive businesses, which include other surgical procedures and general eye care, accounted for 44% of our total revenue for the quarter. We also continue to realize significant cost reductions related to ongoing initiatives that generated approximately $11.4 million of cost savings in the second quarter of 2009 versus the prior year. Our cash balance at June 30, 2009 was $14.1 million.

"With respect to our credit facility, we recently secured a limited waiver extension from our lenders until September 9, 2009 and we continue to work with our lenders and advisors to secure a more flexible capital structure for the Company.

"We benefit from a strong foundation in our non-refractive businesses as they continue to contribute positive EBITDA and cash flow. Our better than market performance in our refractive business is the result of our multi-channel patient acquisition model and the dedicated effort of TLCVision employees across North America who continue to provide the best clinical outcomes in the industry."

                        Second Quarter 2009 Results

-- Revenue for the second quarter was $58.5 million, a 21% decrease over
   prior year revenue of $74.1 million, with refractive revenues showing
   a decline of 31%.
    - Refractive Centers revenue of $27 million decreased by 31%, as
      majority-owned center procedures declined by 29%, less than
      estimated market declines.
    - Doctor Services revenue of $24 million decreased by 4%, reflecting
      weakness in the refractive access business partially offset by
      growth in the cataract business.
    - Eye Care revenue of $7 million decreased 26%. This decrease was due
      to the timing of the Vision Source annual national meeting which was
      held in Q1 2009 this year compared to Q2 2008. Excluding annual
      meeting revenue in Q2 2008, Eye Care recorded an increase in revenue
      of 13% for Q2 2009 due primarily to an increase in franchise revenue.
-- General and administrative and marketing costs declined by 31% or
   $5.3 million below prior year due to cost reduction initiatives.
-- Other expenses increased $6.0 million due to various restructuring
   activities including legal fees, consulting costs and severance
   charges.
-- Consolidated net loss attributable to TLC Vision Corporation for the
   second quarter was ($6.9) million, compared to ($2.2) million from the
   prior year period. Net loss attributable to TLC Vision Corporation per
   diluted share for the second quarter was ($0.14), compared to net a
   loss of ($0.04) for the prior year period.
-- Pro-forma net loss attributable to TLC Vision Corporation for the
   second quarter (excluding severance and restructuring charges) was
   ($1.3) million or ($0.03) per fully diluted share, compared with
   ($2.2) million, or ($0.04) per fully diluted share in the second
   quarter of 2008.
-- Adjusted EBITDA for the second quarter was $6.0 million, or $0.12 per
   fully diluted share, compared to $5.7 million, or $0.11 per fully
   diluted share for the second quarter of 2008.


                        Six Month 2009 Results

-- Revenue for the six months ended June 30, 2009, was $127.9 million, a
   22% decrease over prior year revenue of $164.5 million, with refractive
   revenues showing a decline of 36%.
    - Refractive Centers revenue of $63 million decreased by 36%, as
      majority-owned center procedures declined by 35%.
    - Doctor Services revenue of $48 million decreased by 5%, reflecting
      weakness in the refractive access business partially offset by
      growth in the cataract business.
    - Eye Care revenue of $17 million increased 7% as a result of
      increased franchises and revenue per franchisee.
-- General and administrative and marketing costs declined by 34% or
   $12.5 million below prior year due to cost reduction initiatives.
-- Other expenses increased $8.7 million due to various restructuring
   activities including legal fees, consulting costs and severance charges.
-- Consolidated net loss attributable to TLC Vision Corporation for the
   six months ended June 30, 2009 was ($8.2) million, compared to net
   income of $3.9 million from the prior year period. Net loss attributable
   to TLC Vision Corporation per diluted share for the six months ended
   June 30, 2009, was ($0.16), compared to net income per diluted share of
   $0.08 for the prior year period.
-- Pro-forma net income attributable to TLC Vision Corporation for the six
   months ended June 30, 2009 (excluding severance and restructuring
   charges) was $0.1 million, or $0.00 per fully diluted share, compared
   with $3.9 million, or $0.08 per fully diluted share for the prior year
   period.
-- Adjusted EBITDA for the six months ended June 30, 2009 was $14.6
   million, or $0.29 per fully diluted share, compared to $19.6 million,
   or $0.39 per fully diluted share, for the first six months of 2008.

Use of Non-GAAP Measures

Pro-forma results are presented to facilitate a comparison of current year and prior year results. The calculations of pro-forma results are not specified by United States generally accepted accounting principles ("GAAP"). Our calculations of pro-forma results may not be comparable to similarly-titled measures of other companies. A reconciliation of reported net income to pro-forma net income for the quarter and six months ended June 30, 2009 and 2008, is included in the attached Consolidated Statements of Operations.

Adjusted EBITDA is a non-GAAP financial measure. It is used in addition to and in conjunction with results presented in accordance with GAAP. This non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. A schedule detailing the calculation of Adjusted EBITDA is attached to this release.

Non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with generally accepted accounting principles.

Conference Call

The company will host a conference call and live webcast with investors and analysts on Thursday, August 13, 2009 at 5:00 p.m. (EDT). To access, please dial 888-359-3632 or 719-785-1754 (international callers) and enter the pass code 2703574. The call will be broadcast live on the company's website at www.tlcv.com under the "Webcasts" link in the Investor Relations section.

A replay of the conference call will be available until August 27, 2009. To access the replay, dial 888-203-1112 or 719-457-0820 (international callers) and enter the pass code: 2703574. 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, Section 21E of the U.S. Securities Exchange Act of 1934 and Canadian Provincial Securities Laws, 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. We caution that all forward-looking information is inherently uncertain and that actual results may differ materially from the assumptions, estimates or expectations reflected in the forward-looking information. A number of factors could cause actual results to differ materially from those in forward-looking statements, including but not limited to economic conditions, the level of competitive intensity for laser vision correction, the market acceptance of laser vision correction, concerns about potential side effects and long term effects of laser vision correction, the ability to maintain agreements with doctors on satisfactory terms, quarterly fluctuation of operating results that make financial forecasting difficult, the volatility of the market price of our common shares, profitability of investments, successful execution of our direct-to-consumer marketing programs, the ability to open new centers, the reliance on key personnel, medical malpractice claims and the ability to maintain adequate insurance therefore, claims for federal, state and local taxes, compliance with industry regulation, compliance with U.S. and Canadian healthcare regulations, disputes regarding intellectual property, many of which are beyond our control.

Therefore, should one or more of theses risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary significantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering any such forward-looking information herein and to not place undue reliance on such statements and assumptions. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any forward-looking statements or assumptions whether as a result of new information, future events or otherwise, except as required by law.

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, technology access service models, extensive optometric relationships, direct to consumer advertising and managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract and Eye Care markets. Information about vision correction surgery can be found on the TLC Laser Eye Centers' website at www.lasik.com. More information about TLCVision can be found on the Company's website at www.tlcv.com.

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

                                                        Three months ended
                                                             June 30,
                                                        ------------------
                                                          2009      2008
                                                        --------  --------
Revenues:
  Refractive centers                                    $ 26,948  $ 39,057
  Doctor services                                         24,492    25,528
  Eye care                                                 7,019     9,512
                                                        --------  --------
Total revenues                                            58,459    74,097

Cost of revenues (excluding amortization):
  Refractive centers                                      21,595    29,409
  Doctor services                                         17,757    18,680
  Eye care                                                 3,150     4,691
                                                        --------  --------
Total cost of revenues (excluding amortization)           42,502    52,780
                                                        --------  --------

Gross profit                                              15,957    21,317
                                                        --------  --------

General and administrative                                 6,392     6,986
Marketing and sales                                        5,509    10,209
Amortization of intangibles                                  582       803
Other expense (income), net                                5,628      (359)
                                                        --------  --------
  Total operating costs                                   18,111    17,639
                                                        --------  --------
  Operating (loss) income                                 (2,154)    3,678

Interest income                                               34       216
Interest expense                                          (2,462)   (2,414)
Earnings (loss) from equity investments                      442      (319)
                                                        --------  --------
Loss (Income) before income taxes                         (4,140)    1,161
Income tax expense                                          (274)     (285)
                                                        --------  --------

Net (loss) income                                         (4,414)      876

   Less: Net income attributable to noncontrolling
    interest                                               2,445     3,076
                                                        --------  --------

Net loss attributable to TLC Vision Corporation         $ (6,859) $ (2,200)
                                                        ========  ========
Net loss per share attributable to TLC Vision
 Corporation, diluted                                   $  (0.14) $  (0.04)
                                                        ========  ========

Weighted average number of common shares outstanding,
 diluted                                                  50,565    50,292

Calculation of Pro Forma Net Loss and EPS
  Net loss attributable to TLC Vision Corporation, as
   reported                                             $ (6,859) $ (2,200)
    Add: Severance and restructuring charges               5,572         0
                                                        --------  --------
  Pro forma net loss attributable to TLC Vision
   Corporation                                          $ (1,287) $ (2,200)
                                                        ========  ========
  Pro forma net loss per share attributable to TLC
   Vision Corporation, diluted                          $  (0.03) $  (0.04)
                                                        ========  ========
Calculation of Adjusted EBITDA
  Net loss attributable to TLC Vision Corporation, as
   reported                                             $ (6,859) $ (2,200)
    Add: Income tax expense                                  274       285
             Depreciation and amortization                 3,997     4,982
             Interest expense, net                         2,428     2,198
             Non-cash compensation                           135       354
             Foreign exchange loss                           401        82
             Severance and restructuring charges           5,572         -
             Other                                             7         -
                                                        --------  --------
  Adjusted EBITDA                                       $  5,955  $  5,701
                                                        ========  ========
  Adjusted EBITDA per share, diluted                    $   0.12  $   0.11
                                                        ========  ========




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

                                                         Six months ended
                                                             June 30,
                                                        ------------------
                                                          2009      2008
                                                        --------  --------
Revenues:
  Refractive centers                                    $ 62,948  $ 98,024
  Doctor services                                         48,048    50,591
  Eye care                                                16,885    15,837
                                                        --------  --------
Total revenues                                           127,881   164,452

Cost of revenues (excluding amortization):
  Refractive centers                                      47,630    66,766
  Doctor services                                         36,091    36,821
  Eye care                                                 7,922     7,513
                                                        --------  --------
Total cost of revenues (excluding amortization)           91,643   111,100
                                                        --------  --------

Gross profit                                              36,238    53,352
                                                        --------  --------

General and administrative                                12,328    15,353
Marketing and sales                                       12,337    21,860
Amortization of intangibles                                1,165     1,633
Other expense (income), net                                8,146      (556)
                                                        --------  --------
  Total operating costs                                   33,976    38,290
                                                        --------  --------
  Operating income                                         2,262    15,062

Interest income                                              168       426
Interest expense                                          (5,563)   (4,890)
Earnings (loss) from equity investments                      792      (102)
                                                        --------  --------
(Loss) income before income taxes                         (2,341)   10,496
Income tax expense                                          (484)     (732)
                                                        --------  --------

Net (loss) income                                         (2,825)    9,764

   Less: Net income attributable to noncontrolling
    interest                                               5,358     5,892
                                                        --------  --------

Net (loss) income attributable to TLC Vision
 Corporation                                            $ (8,183) $  3,872
                                                        ========  ========
Net (loss) income per share attributable to TLC Vision
 Corporation, diluted                                   $  (0.16) $   0.08
                                                        ========  ========

Weighted average number of common shares outstanding,
 diluted                                                  50,542    50,293

Calculation of Pro Forma Net (Loss) Income and EPS
  Net (loss) income attributable to TLC Vision
   Corporation, as reported                             $ (8,183) $  3,872
    Add: Restructuring and severance charges               8,258         0
                                                        --------  --------
  Pro forma net income attributable to TLC Vision
   Corporation                                          $     75  $  3,872
                                                        ========  ========
  Pro forma net income per share attributable to TLC
   Vision Corporation, diluted                          $   0.00  $   0.08
                                                        ========  ========

Calculation of Adjusted EBITDA
  Net (loss) income attributable to TLC Vision
   Corporation, as reported                             $ (8,183) $  3,872
    Add: Income tax expense                                  484       732
             Depreciation and amortization                 8,009     9,877
             Interest expense, net                         5,395     4,464
             Non-cash compensation                           343       711
             Foreign exchange loss (gain)                    309       (81)
             Severance and restructuring charges           8,258         -
             Other                                             7         -
                                                        --------  --------
  Adjusted EBITDA                                       $ 14,622  $ 19,575
                                                        ========  ========
  Adjusted EBITDA per share, diluted                    $   0.29  $   0.39
                                                        ========  ========




TLC VISION CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

                                                  (Unaudited)
                                                     As of        As of
                                                    June 30,   December 31,
                                                      2009         2008
                                                  -----------  -----------
ASSETS
Current assets:
   Cash and cash equivalents                      $    14,055  $     4,492
   Accounts receivable, net                            17,697       16,870
   Prepaid expenses, inventory and other               11,393       14,214
                                                  -----------  -----------
      Total current assets                             43,145       35,576

Restricted cash                                           943            -
Investments and other assets, net                      11,479       11,694
Goodwill                                               28,570       28,570
Other intangible assets, net                            9,318       10,628
Fixed assets, net                                      46,204       50,514
                                                  -----------  -----------
         Total assets                             $   139,659  $   136,982
                                                  ===========  ===========

LIABILITIES
Current liabilities:
   Accounts payable                               $    15,906  $    17,897
   Accrued liabilities                                 23,500       28,076
   Current maturities of long-term debt
    (including $76.7 million of term debt at
    June 30, 2009 and $82.7 million in default
    December 31, 2008)                                106,837       89,081
                                                  -----------  -----------
      Total current liabilities                       146,243      135,054

Long-term debt, less current maturities                15,749       16,500
Other long-term liabilities                             4,626        5,444
                                                  -----------  -----------
      Total liabilities                               166,618      156,998
                                                  -----------  -----------

STOCKHOLDERS' DEFICIT
TLC Vision Corporation stockholders' deficit:
   Common stock, no par value                         339,477      339,112
   Option and warrant equity                              745          745
   Accumulated other comprehensive loss                (1,167)      (1,545)
   Accumulated deficit                               (381,841)    (373,658)
                                                  -----------  -----------
      Total TLC Vision Corporation stockholders'
       deficit                                        (42,786)     (35,346)
Noncontrolling interest                                15,827       15,330
                                                  -----------  -----------
      Total stockholders' deficit                     (26,959)     (20,016)
                                                  -----------  -----------

         Total liabilities and stockholders'
          deficit                                 $   139,659  $   136,982
                                                  ===========  ===========




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

                                                         Six months ended
                                                             June 30,
                                                        ------------------
                                                          2009      2008
                                                        --------  --------
OPERATING ACTIVITIES
Net (loss) income                                       $ (2,825) $  9,764

Adjustments to reconcile net (loss) income to net cash
 from operating activities:
  Depreciation and amortization                            8,009     9,877
  (Earnings) loss from equity investments                   (792)      102
  Gain on sales and disposals of fixed assets               (277)     (289)
  Gain on sale of businesses                                   -      (145)
  Non-cash compensation expense                              343       711
  Other                                                      550       354
Changes in operating assets and liabilities, net of
 acquisitions and dispositions:                             (542)    2,173
                                                        --------  --------
Cash provided by operating activities                      4,466    22,547
                                                        --------  --------

INVESTING ACTIVITIES
Purchases of fixed assets                                   (773)   (1,957)
Proceeds from sales of fixed assets                          345       550
Distributions and loan payments received from equity
 investments                                               1,071       945
Acquisitions and equity investments                       (4,838)   (7,533)
Divestitures of businesses                                     -     1,179
Other                                                        104       (28)
                                                        --------  --------
Cash used in investing activities                         (4,091)   (6,844)
                                                        --------  --------

FINANCING ACTIVITIES
Restricted cash movement                                    (943)      893
Principal payments of debt financing and capital leases   (2,924)  (17,411)
Proceeds from debt financing                              17,971     7,385
Capitalized debt costs                                       (78)     (534)
Distributions to noncontrolling interests                 (4,861)   (5,175)
Proceeds from issuances of common stock                       23       275
                                                        --------  --------
Cash provided by (used in) financing activities            9,188   (14,567)
                                                        --------  --------

Net increase in cash and cash equivalents during the
 period                                                    9,563     1,136
Cash and cash equivalents, beginning of period             4,492    12,925
                                                        --------  --------
Cash and cash equivalents, end of period                $ 14,055  $ 14,061
                                                        ========  ========

Operating cash flow per diluted share                   $   0.09  $   0.45

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